CRA Audit vs Review: What’s the Difference and How to Handle Each

Many taxpayers panic when they receive a letter from CRA, but not all CRA contacts mean you're being audited. CRA conducts two very different types of examinations: a Review and an Audit. Understanding the difference is critical because each requires a different strategy, timeline, and level of documentation. Reviews are simpler and focused on specific items, while audits are deeper, more intrusive, and can expand into multiple years. This guide explains the difference between a CRA Review and a CRA Audit, how CRA selects files for each, and how to respond properly to protect yourself from reassessments, penalties, and interest.

Why CRA Does Reviews and Audits

CRA performs reviews to verify accuracy and prevent errors. Audits are more aggressive and aim to uncover unreported income, overstated expenses, non-compliance, or fraud. Reviews are part of CRA’s automated system; audits are conducted by trained auditors who physically analyze your books and records. Knowing which one you’re dealing with helps you respond strategically and avoid escalation.

What Is a CRA Review?

A Review is a limited-scope verification, usually done electronically or by correspondence. CRA might request documents for one or two specific items such as:
medical expenses
childcare costs
tuition
rental expenses
employment expenses
donations
home office claims
crypto transactions
CRA Reviews usually occur before or shortly after issuing your Notice of Assessment.

Types of CRA Reviews

1. Pre-Assessment Review

CRA checks specific claims before processing your return. This may delay your refund.

2. Processing Review

Occurs shortly after filing. CRA verifies slips, credits, and deductions.

3. Matching Review

CRA matches data from banks, employers, platforms, and institutions. Mismatches trigger reviews automatically.

4. Special Assessments

Targeted reviews focused on high-risk areas such as real estate, crypto, or GST/HST.

How to Handle a CRA Review

respond quickly
send only what CRA asks for
organize documents clearly
avoid explanations without proof
let a CPA reply if unsure
Reviews usually conclude within weeks if documentation is complete.

What Is a CRA Audit?

A CRA Audit is a deeper, full examination of your books, records, transaction history, and business structure. Audits may cover:
income
bank deposits
deductions
GST/HST
payroll
real estate
crypto
foreign assets
An audit can expand into multiple years and can lead to penalties and interest.

Types of CRA Audits

1. Office Audit

Conducted by email or phone but deeper than a review.

2. Field Audit

CRA visits your home, office, restaurant, rental property, or business. These are the most intrusive.

3. Desk Audit

Detailed review of records submitted electronically.

4. GST/HST Audit

Focused on ITCs, GST collected, sales records, merchant statements.

5. Payroll Audit

Focused on remittances, taxable benefits, and contractor classification.

6. Net Worth Audit

CRA reconstructs your entire financial life using bank deposit analysis and lifestyle reviews.

How CRA Selects Files for Audit

data mismatches
gig platform income
cash-based industries
large deductible expenses
vehicle and home-office claims
foreign accounts
real estate flips
crypto trading
GST/HST discrepancies
AI-driven risk scoring
CRA rarely audits randomly—most audits are triggered by red flags.

How to Handle a CRA Audit

respond immediately
let a CPA communicate with CRA
provide only requested documents
keep explanations factual
prepare reconciliations (bank deposits vs income)
organize receipts, invoices, contracts
don’t send sloppy or inconsistent data
A single mistake or contradiction can expand the audit further.

Key Differences: Review vs Audit

Scope

Review: specific items
Audit: full financial review

Documentation

Review: receipts only
Audit: full books, bank statements, ledgers

Risk

Review: low to medium
Audit: high

Expansion

Review: rare expansion
Audit: often expands to more years

Outcome

Review: minor adjustments
Audit: reassessments, penalties, interest

Consequences of a CRA Audit

If CRA disagrees, it may issue:
additional tax owing
GST/HST adjustments
penalties
gross negligence penalties
interest from original due date
Not responding or responding poorly significantly increases risks.

When a Review Turns Into an Audit

review documents contradict filing
CRA identifies additional issues
bank deposits exceed reported income
no receipts for claimed expenses
platform income missing
Real estate, crypto, GST/HST, and self-employment reviews often escalate.

After a Review or Audit — What Are Your Rights?

If CRA reassesses:
file a Notice of Objection within 90 days
request additional CRA explanations
negotiate payment arrangements
apply for Taxpayer Relief for penalties/interest
Taxpayers always have the right to dispute CRA conclusions.

Mackisen Strategy

At Mackisen CPA Montreal, we manage both CRA Reviews and Audits from start to finish. We analyze CRA letters, prepare audit-proof documentation, handle all communication, defend your deductions, reconstruct missing records, challenge CRA assumptions, and file Notices of Objection when needed. We ensure taxpayers avoid unnecessary reassessments and remain fully protected.

Real Client Experience

A Montreal consultant passed a CRA review after Mackisen organized vehicle and home-office documentation. A restaurant survived a GST/HST audit with no adjustments after we reconciled POS and supplier invoices. An investor avoided penalties during an audit after we rebuilt ACB for crypto and securities. A landlord reversed a rental-expenditure reassessment after step-by-step CRA rebuttal.

Common Questions

Is a review the same as an audit? No—reviews are limited; audits are full. Can a review become an audit? Yes. Do I need a CPA for a review? Recommended if unsure. How long do audits last? Weeks to months. Can CRA reassess multiple years? Yes.

Why Mackisen

With more than 35 years of combined CPA experience, Mackisen CPA Montreal helps taxpayers navigate CRA reviews and audits with confidence, clarity, and strong documentation, ensuring fair treatment and minimized risk.