What is the time limit on an income tax audit?

Question: What is the time limit on an income tax audit?

Answer:

There is no stated time limit on the tax audit process.

You shouldn't think that just because you've filed your income tax return and paid any taxes due that you're done with your business taxes for that year.

The Canada Revenue Agency (CRA) says, "Your tax return is recorded in a computer system that enables us to select returns to be audited... In some cases, we compare selected financial information for current and previous years of clients engaged in similar businesses or occupations."

So if your business is selected for a tax audit, the audit may include records from previous years.

Realistically, though, one would assume that a tax audit would not go back further than six fiscal years, as the CRA requires that business records be kept for six years.

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