CRA Audit Triggers: What Makes a Review or Audit More Likely
Updated
Full CRA audits affect only about 1-2% of returns, and most reviews are simple document requests that resolve quickly. The CRA’s automated matching is thorough, though: every T4, T5 and property transaction is cross-referenced against your return, and cash-heavy businesses, self-employed filers and returns with large deductions relative to income draw the most scrutiny. This page lists what raises the odds of a review; it is part of the Dealing with the CRA directory.
Types of CRA reviews
Type
Description
Frequency
Processing review
Quick check during initial assessment
Common
Matching review
Comparing your return to T4/T5 slips
Very common
Pre-assessment review
Before issuing assessment
Occasional
Desk audit
CRA requests documents by mail
Moderate
Field audit
In-person at your home/business
Rare
Net worth audit
Lifestyle vs reported income
Rare, cash businesses
Top CRA Audit Triggers
High-Risk Deductions
Deduction
Why It’s a Trigger
Home office expenses
Frequently overclaimed
Vehicle expenses
Personal vs business blurred
Meal and entertainment
Often exaggerated
Travel expenses
Need clear business purpose
Cash expenses without receipts
Red flag
Charitable donations (large)
Especially if unusual
Self-Employment and Business
Factor
Audit Risk
Cash-heavy business
High risk
Reporting losses year after year
Red flag
High expense-to-income ratio
Triggers review
Significant revenue fluctuations
Draws attention
Large inventory claims
Needs documentation
Bartering income
Often unreported
Employment Deductions
Claim
Risk Level
Home office (employee)
Higher scrutiny post-COVID
Union dues
Low (matched by union)
Tools deduction
Must match profession
Moving expenses
Distance rules apply
Employment expenses (T2200)
Need signed form
What CRA Cross-References
Automatic Matching
CRA Knows About
Source
Employment income
T4 from employer
Investment income
T5 from banks
RRSP contributions
Receipts from institutions
TFSA overcontributions
Financial institutions
Home sales
Land registry
Rental income
Property records
Child care providers
Recipient claims
Third-Party Information
Information
How CRA Gets It
Large cash transactions
Bank reports ($10,000+)
Real estate transactions
Land title registry
Vehicle purchases
Registration records
International transfers
FINTRAC
Cryptocurrency
Exchange reporting
Contractor payments
Matching to payer claims
Red Flags by Situation
For Employees
Red Flag
Why
Claiming expenses without T2200
Form required
Large vehicle claims
Need employer certification
Excessive home office
Requires dedicated space
Inconsistent with T4 income
CRA notices
For Self-Employed
Red Flag
Why
Continuous business losses
Should be profitable eventually
Personal expenses as business
Common abuse
100% vehicle business use
Unlikely realistic
Large cash revenue, low reported
Lifestyle mismatch
Missing GST/HST registration
If revenue exceeds $30,000
For Investors
Red Flag
Why
Unreported foreign income
Serious offense
TFSA overcontribution
Automatic penalty
Day trading in TFSA
May be reclassified as business
Large capital gains, no reporting
Property sale matching
T1135 foreign property not filed
$100,000+ foreign assets
How CRA Selects Returns
Selection Methods
Method
Description
Random selection
Small % completely random
Computer scoring
Returns scored for risk
Industry campaigns
Targeting specific sectors
Referrals
Tips, other audits
Prior audit history
If issues found before
Statistical outliers
Claims outside normal range
The CRA doesn’t look at individual returns in isolation; it compares yours against statistical norms for your industry, income level, and region. For example, a restaurant owner reporting $80,000 in revenue with $75,000 in expenses
draws scrutiny because those margins are far below what is typical for restaurants. Similarly, claiming 100% business use of a vehicle is almost never accepted; even CRA auditors acknowledge a reasonable personal-use component. Importing slips through Auto-fill my return (see the My Account guide) avoids typing errors that cause matching reviews, and a simple mileage log or home office measurement can resolve most desk audits within a single letter.
A review starts with a letter that names the tax years and claims under review and the documents the CRA wants, usually with a 30-day deadline, and ends with a proposal letter before any change is made. The types of review, the documents to gather for each kind of claim and your rights during an audit are on the guide to responding to a CRA audit or review letter; if a reassessment follows and you disagree, the steps are in how to dispute a CRA assessment. The Taxpayer Bill of Rights sets out the CRA’s service commitments throughout.