Revenue Canada Personal Tax Audit?

Question

Do I have to produce bank statements and credit card statements for a PERSONAL audit? Is that relevant and can they enforce that? Has anyone gone through one with Revenue Canada?

Answer 1

You have to produce any accounting, financial and tax records including bank statments and credit card statements that support your claims on your tax returns.  If they think they are relevant to support your claims, but you refuse to produce them or have lost them or unable to produce duplicated copies, your expense or credit claims on your tax returns will be denied, or income increased.  This authority is provided in the cdn income tax act.

If they tell you that they are doing a net worth audit on you, you will be asked to provide all documents showing your assets (savings account, chequing account, house, car, etc.), liabilities (credit cards, mortgage, loans, etc.), annual travel expenses, cash expenses, all sources of revenue or receipts, contents in your safety deposit box, etc.

ADDITIONAL COMMENTS re your additional details:

Sometimes, they dont tell you that it is a net worth audit.  As it stands, whether a net worth audit or not, the CRA wants your bank statements to verify the the bank deposits (or revenue of your business), and distursements (expenses or expenditures), and the credit card statements to verify the expenses or expenditures.  It appears that, based on the statements requested by the CRA, you are self employed or have a business, and as such, the bank statements and credit card stmts are the minimum financial records to support your business income or loss reported on your tax returns.

The info requested always relates directly or indirectly to what is filed or claimed or reported on your tax returns -your business operations.  You cant refuse to produce them.  If u do, they will demand them with a penalty warning.  If you "lost" them, they will do a net worth on you, and that could be messy because the documents to be demanded from you would drive you nuts.

Answer 2

If you are talking about a Net Worth Audit, then YES you do.  This type of Audit is very aggressive as they will want you to prove how you live based on your declared revenue.

If they are just doing an Audit of your filed tax return then they can only ask for information relating to the information entered on your return.