If the CRA’s net worth audit has left you facing an unfair tax assessment, you have the right to appeal or dispute the findings. A net worth audit estimates your income based on your assets and liabilities, but these calculations are not always accurate. When the CRA's assumptions do not reflect your reality, it is crucial to act quickly and strategically.
The first step is to file a formal Notice of Objection for disputes that can’t be easily resolved. This is a written statement that explains why you disagree with the assessment, backed by evidence such as financial records, valuations, and supporting documentation. Timing matters. You have 90 days from the date of the assessment to file your objection.
Once your Notice of Objection is filed, the CRA’s Appeals Division will review your case. This stage often involves providing additional documents, clarifying misunderstandings, and negotiating with the appeals officer. If the issue is resolved at this level, the reassessment can be adjusted or even cancelled without the need for further action.
Getting your objection accepted reduces your tax bill and saves you from having to go through the costly and complicated appeals process to protect your rights. That’s why professional support from the Tax Audit Help team with your Notice of Objection is essential.
If the CRA upholds the original findings after the objection process, the next step is to escalate the matter
to the Tax Court of Canada.
Throughout the appeals and disputes process, working with our tax professionals helps ensure your case is organized, your evidence is thorough, and your arguments are framed in the strongest possible way to avoid having to go to court.
If you’re considering disputing a net worth audit, don’t navigate it alone. Proper advice early on gives you the best chance of a successful outcome.
Answers to Common Questions & Concerns Regarding CRA Net Worth Audits
Net worth audits help the CRA identify whether a taxpayer’s reported income aligns with their financial reality. If someone’s assets, liabilities, and lifestyle do not match the income they've reported on tax returns, the CRA may see that as a red flag for underreported income. A net worth audit becomes their method of reconstructing a financial picture to verify or challenge a taxpayer's filings.
Yes. During a net worth audit, the CRA has the authority to estimate your income based on available information. They start by calculating the difference in your net worth over a certain period. If the increase appears larger than what your reported income can explain, they assume the excess came from unreported sources. While the methodology is allowed under the Income Tax Act, it is not immune to errors, which is why professional support is critical during the audit process.
Expect the CRA to request a broad range of documents, including but not limited to bank statements, credit card statements, mortgage and loan documents, investment account records, business financials, and even personal items like vehicle registrations and property deeds. They will also ask about your living expenses, such as groceries, utilities, insurance, education costs, and travel. The goal is to develop a complete profile of both your assets and spending habits.
The CRA does not need your permission to obtain information from third parties, including banks, employers, and financial institutions. They can issue a Requirement for Information to these entities without notifying you first. However, auditors often begin by requesting the information from you voluntarily before taking formal steps.
Generally, the CRA can reassess tax returns up to three years after the original notice of assessment. However, if they suspect gross negligence or fraud, they can go back even further; sometimes ten years or more. In a net worth audit, allegations of misrepresentation or deliberate omission are not uncommon, so it is important to take the audit seriously from the start.
You have the right to challenge the CRA’s conclusions. If you believe their calculations are wrong, whether due to missing information, misinterpretation of transactions, or incorrect assumptions, you can provide clarifications or additional documentation. If disagreements persist, you can file a formal Notice of Objection, beginning the appeal process. Having a professional advocate at this stage improves your chances of resolving issues in your favour.
Penalties are a real risk. If the CRA concludes that you deliberately underreported income, they may impose gross negligence penalties, which can amount to 50% of the understated tax. Even if mistakes were unintentional, the CRA can still assess interest charges on any outstanding amounts. Full transparency, good record-keeping, and strong representation can help you avoid these consequences.
When the Canada Revenue Agency conducts a net worth audit, it can feel like every part of your financial life is under a microscope. These audits are complex, often invasive, and carry serious financial consequences if not handled properly. Expert guidance is not just helpful, but essential.
Sam Faris, CPA, and the Tax Audit Help team specialize in defending individuals and businesses during CRA net worth audits. We do more than just prepare paperwork. We step in immediately to protect your rights, manage communication with the CRA, and challenge any assumptions that do not accurately reflect your financial situation. Net worth audits are based on estimates and projections. Without professional representation, errors or misinterpretations can quickly lead to inflated tax assessments, penalties, and interest charges.
Working with us ensures that your case is approached with deep technical expertise and strategic insight. We meticulously review the CRA’s calculations, identify discrepancies, and build strong, evidence-based responses. Our team knows what the CRA looks for and what they overlook. We push back where necessary and negotiate on your behalf to achieve a fair and accurate outcome.
With Sam Faris and the Tax Audit Help team in your corner, you’re not navigating the audit alone. You are backed by a team that understands CRA audit tactics inside and out, knows how to present your case persuasively, and is committed to minimizing your financial exposure. Our goal is not just to resolve the audit, but to put you in the strongest possible position for your future financial health.
If you’re facing a net worth audit, getting help from our experts is the smartest financial move you can make.
