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There are serious differences between audits and investigations. An audit is a civil procedure and an investigation is a criminal procedure.

There are serious differences between audits and investigations. An audit is a civil procedure and an investigation is a criminal procedure.

You have very little rights when it comes to being audited. However, when an audit becomes an investigation it is often referred to as crossing the Rubicon. Once that river has been crossed your Charter of Rights are evoked and you have the right to not incriminate yourself.

CRA is supposed to inform you if they are doing an investigation. Although we have good reason to believe they don’t always do so.

If the business cards or letters say that the CRA staff is from “Enforcement,” you can be pretty darn sure you are being investigated.

If a Requirement to Provide Information letter has been issued to a third party this would be as part of an investigation and out of keeping with audits.

Also be aware that CRA can conduct simultaneous audits and investigations, so long as it is not by the same CRA staff.

If an auditor discovers information during an audit that they think is evidence of criminal activity such as tax evasion, they will forward that information to the investigations or enforcement unit. So long as the information was obtained when the primary purpose was to audit, then that information can be used in a criminal prosecution.

If you are being investigated it is very serous and you should get professional help before communicating any further with CRA.

If you are not sure where you stand in terms of risk with CRA you should consult with a Professional Tax Representative. You may need to so some serious risk management.

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