CRA Review or Audit: What Financial Records Should a Business Prepare?
CRA business audits focus on whether the books and records support the amounts filed on tax returns. The strongest starting point is not a pile of receipts—it is a clear trail from source document to bookkeeping entry, reconciliation and reported amount.
CRA may examine business records such as ledgers, journals, invoices, receipts, contracts and bank statements, and can also request relevant electronic accounting records and explanations about how the books were prepared.
Think in record groups, not isolated documents
CRA states that a business audit can involve the business books and records, personal records of business owners, relevant records of related people or entities, and input from accountants, bookkeepers or employees about the records and reported amounts. The actual request depends on the audit.
Source documents
Sales invoices, purchase receipts, contracts, deposit support, expense documents and other transaction evidence.
Books & ledgers
General ledger, journals, accounts receivable/payable records and the accounting detail behind filed returns.
Bank & payment records
Business bank statements, credit-card records, cancelled cheques, deposit information and payment-platform activity where relevant.
Reconciliations
Bank, credit-card, sales-tax, payroll and other reconciliations that explain how the books connect to external records.
Electronic accounting data
Readable accounting-system files, transaction exports and prior-period electronic data when requested by the auditor.
Tax working records
Filed returns, year-end adjustments, accountant or bookkeeper entries and schedules supporting amounts reported to CRA.
The records should connect from transaction to tax return
CRA’s current record-keeping guidance emphasizes organized accounting records and an audit trail that allows business transactions to be recreated. A practical readiness review follows that same sequence.
Taxxel’s role is bookkeeping, reconciliation, record organization and supported reconstruction. Taxxel does not perform CRA audits or legal representation.
Source document
Invoice, receipt, contract, bank activity or other transaction support.
Bookkeeping entry
The transaction is posted to the appropriate account, customer, vendor or tax category.
Ledger & journal
The entry becomes part of the detailed accounting record for the period.
Reconciliation
Books are compared to bank, credit-card, payroll, HST/GST or other external records.
Return / report
The reconciled records support the amounts ultimately reported on tax returns and financial schedules.
What to organize before sending records
A clean submission package is easier to review than a large unsorted document dump.
Electronic records matter
CRA guidance says auditors will normally ask for electronic records when the business keeps them electronically, and electronic records must remain electronically readable for the applicable retention period.
Generally keep records for six years
CRA’s current guidance generally requires business records and supporting documents to be kept for six years from the end of the last tax year they relate to, although some situations require a different period.
Secure submission—not ordinary email
CRA says auditors cannot receive files by email for security reasons. The assigned auditor can provide secure online submission instructions or another accepted delivery method.
Do not confuse record reconstruction with inventing records
Catch-up work should rebuild the accounting trail from available, supportable evidence—bank records, invoices, receipts, payroll information, prior returns and other source documents. Unsupported assumptions should be identified rather than silently inserted into the books.
Explore catch-up bookkeepingFinancial-record support before and during a CRA business audit
Assess the CRA request against the records currently available
Bring bookkeeping current for the requested periods where support exists
Reconcile bank, credit-card, HST/GST, payroll and ledger balances
Trace selected transactions from source document through the books
Organize electronic exports and supporting documents by period
Prepare bookkeeping reports and working records for the business to review
CRA asked for business records?
Tell us what CRA requested, the period involved, and whether the books are current. We can help assess the bookkeeping and financial-record work needed within Taxxel’s scope.
Book a Records AssessmentOfficial CRA sources
- CRA — Business audits
- CRA — Keeping records
- CRA — Review of business systems and keeping audit trails
- CRA — Where to keep records and how long to keep them
This article is general bookkeeping and financial-record information, not legal advice or assurance. The actual documents required in a CRA audit depend on the auditor’s request and the business circumstances.