Compliance priorities are published, not secret. Read the three key CRA documents and you can see roughly where the Agency intends to spend its examiners’ time before the letters go out. Audits are rarely random now. Here is what those documents say this year, with the figures and dates attached.
Key Takeaways
- Sales tax fraud and real estate are the two largest published enforcement pushes.
- Platform and crypto reporting rules mean CRA now receives your revenue data before you file.
- Bare trust filing has been deferred again, and the Underused Housing Tax is being repealed.
- The expanded audit and compliance measures everyone is discussing are still a bill, not law.
- Data matching, not random selection, decides which taxpayer files get opened.
What Is Driving CRA Tax Audit Activity in 2026
CRA’s compliance direction for the year is public. The Canada Revenue Agency’s 2026-27 Departmental Plan, published this past March, sets out three priorities. One of them is revenue generation, described as reducing the federal tax gap by “identifying compliance gaps with advanced data analytics and strengthened partnerships” and “addressing non-compliance through targeted audits and enhanced enforcement measures.”
Three signals in that plan matter for owner-managers:
- A new performance measure, Direct Compliance Revenue Effects, starts this fiscal year and tracks additional liabilities identified through reviews, examinations and penalty amounts.
- CRA reports having started over 200 artificial intelligence projects, with analytics now driving fraud detection and identity verification.
- Enforcement staffing is growing in targeted places, including money laundering investigative teams that expand from four to seven.
The results side is published separately. In its 2024-25 departmental results report, released in January, the Canada Revenue Agency reported completing 84,356 compliance cases with a fiscal impact of $18.1 billion, and adding 119 examination teams by the end of that year. Fiscal impact there means tax assessed, refunds reduced, interest and penalty amounts, and the present value of future federal tax assessable.
Context sits in the federal tax gap report published in April. For the 2022 tax year the gross gap reached $59.5 billion, or 16% of federal revenue, falling to $34.7 billion after compliance and collection work. Corporate income tax carried the widest gap at 25%. That number is why the pressure on the Canadian tax base is not easing. Large multinational groups also sit inside Canada’s global minimum tax regime, which runs as a separate compliance track from the audits described here.
What Triggers a CRA Audit of GST/HST Refund Claims
Sales tax is the sharpest edge this year. The departmental plan states that CRA “is increasing its efforts to combat aggressive GST/HST schemes, which weaken Canada’s revenue base,” and that it is “addressing complex fraud schemes, such as carousel fraud, by using early detection, audits, advanced analytics, and international co-operation.” CRA frames that work as protecting the integrity of Canada’s tax system.
The prior year’s published results say the same thing in numbers. Aggressive sales tax examinations targeting carousel schemes, along with wider coverage in the GST/HST Large Business Audit Program, were named among the drivers of that $18.1 billion. On unwarranted refunds and rebates specifically, the Agency set a $250 million recovery target and reported $169.2 million, missing it. Missed targets tend to be pursued harder the following year.
What this means practically: a sizeable input tax credit refund claim now invites pre-payment scrutiny, and CRA auditors test supplier legitimacy rather than assume it. If your business is claiming refunds regularly, the documentation standards in our guide to GST and HST for small business are the baseline you will be measured against.
Real Estate Remains a Standing CRA Review
Property has been a permanent programme since 2015, and CRA now publishes national rather than provincial figures. For the year running April 2024 to March 2025 it reported 14,854 real estate files assessed, totalling $849.0 million, against $648.5 million the previous year.
| Stream | Files | Assessed |
|---|---|---|
| Income tax | 5,945 | $507.1 million |
| GST/HST | 2,257 | $231.8 million |
| New housing and rental property rebates | 6,652 | $110.0 million |
The number worth pausing on is not the total. It is that 853 of those files also drew gross negligence penalties, roughly $103 million worth, up from 722 penalties the year before. Property files are drawing the punitive end of the range at a rising rate, and each penalty lands on the taxpayer rather than the adviser.
Three rules generate most of that volume. The property flipping rule in ITA 12(12) and 12(13) deems a gain to be business income where a residential property was held under 365 consecutive days, subject to listed life-event exceptions, and it has applied since 1 January 2023. The principal residence exemption requires the disposition to be reported and designated on your return, mandatory since 2016. And short-term rental income is now cross-checked: CRA sent 33,220 educational letters in 2024-25 to people reporting rental income above $30,000.
One item to stop worrying about. The Underused Housing Tax is being eliminated for 2025 and later calendar years under legislation that received Royal Assent this past March. Obligations for 2022 through 2024 still stand.
Top CRA Audit Triggers in the Platform Economy
Part XX of the Income Tax Act now obliges reporting platform operators to hand over seller data annually. The first filing deadline was 31 January 2025, covering the 2024 calendar year, with the same date each year afterwards. Relevant activities include selling goods, providing personal services, and renting real property or a means of transport. Operators that file late face a penalty starting at $100 and reaching $7,500.
Read that as a change in sequence rather than a change in rules. Those rules allow the CRA to see your gross platform revenue before your tax return arrives, so a mismatch surfaces by matching rather than by examination. Rideshare drivers, short-term rental hosts, resellers and online creators are all inside the perimeter now. CRA processes that data before a single taxpayer is contacted. Our walkthrough of CRA audit questionnaires covers what the first letter typically asks when a mismatch surfaces.
Crypto, Trusts and Where the Taxpayer Reporting Rules Changed
Digital assets are on the same trajectory. Draft legislation released on 15 August 2025 would add Part XXI to the Act to implement the international Crypto-Asset Reporting Framework. Service provider due diligence began in January, with the first reports reaching the CRA in 2027 covering this calendar year. Collections work on crypto holdings is already named as an initiative in the 2024-25 results report, because collection of tax debt runs alongside audit rather than after it.
Trust reporting has moved so often that most owners have lost track, so here is the current position. Bare trusts were administratively excused from filing for 2023, 2024 and again for 2025, confirmed by the CRA in March. Legislation passed that same month pushes bare trust obligations to tax years ending on or after 31 December 2026, and carves out trusts in existence under three months as well as those holding $50,000 or less throughout the year in money, government debt obligations and listed securities. Ordinary express trusts still file a T3 with Schedule 15 within 90 days of year-end.
Foreign holdings remain a standing check, and CRA suspects under-reporting whenever a form is absent. Specified foreign property costing more than $100,000 triggers Form T1135, and non-filing draws CRA attention faster than almost anything else because the discrepancy is trivial to spot.
Personal Services Businesses and Corporate Tax Compliance
The incorporated-contractor project is the most concrete small-business programme running, and its published findings are blunt. In the first phase, 416 of the corporations examined, some 64%, were incorrectly claiming the small business deduction. Three sectors supplied 74% of them: transportation and warehousing at 35%, professional and scientific services at 26%, and construction at 13%.
The second phase contacted roughly 2,100 accounts. Of the 913 that agreed to a voluntary review, 291 were found to be operating as personal services businesses, and 245 of those had both claimed a deduction they were not entitled to and skipped the additional 5% tax that applies to this income. A separate information-sharing arrangement with the federal Labour Program, signed in March 2025, targets the trucking sector specifically.
If you invoice a single client through a corporation, that arithmetic should feel uncomfortable. Two thirds of the files reviewed were wrong. Tax planning built on a single-client corporation deserves a second look this year.
Bill C-31 Would Expand CRA Audit Powers and Penalties
You will read that the CRA has sweeping new compliance powers. It does not, yet. The measures first proposed in April 2024 died at prorogation in January 2025, resurfaced as draft proposals in August 2025, and were introduced as Bill C-31 in May. The bill passed second reading in June and sits at committee. It is not law.
What it would do, if enacted:
- Create a notice of non-compliance under a new ITA 231.9, carrying a penalty of $50 per day to a maximum of $25,000.
- Add a penalty under ITA 231.7(6) equal to 10% of aggregate tax payable for the years covered by a compliance order, applying only where that tax reaches $50,000.
- Replace ITA 231.8 so the reassessment clock stops during judicial review, during a compliance order application, and while a notice of non-compliance is outstanding.
Notably, the earlier proposal to compel answers under oath or affirmation has been dropped from the current bill. Treat commentary written before this spring with caution, because much of it describes a version that no longer exists. Where an audit turns into a criminal investigation, a tax lawyer rather than an accountant should take the first call, because privilege attaches differently. Our guide to responding to a CRA audit letter reflects the powers actually in force today, which is what audit responses should be built on.
How to Reduce Audit Risk in 2026 Before a Letter Arrives
None of this is about hiding. It is about being reconcilable when the data match happens. Proactive tax work costs far less than an audit request answered badly. A taxpayer who can reconcile the data rarely sees a full examination.
- Reconcile platform, exchange and slip data to your reported revenue before tax filing, not afterwards.
- Designate every principal residence disposition on the return, even where no tax results.
- Document the holding period and any life-event exception on residential property sold within a year.
- Verify supplier registration numbers before claiming input tax credits on large invoices.
- Test single-client corporations against the personal services business definition as part of annual corporate tax compliance.
- Meet T1135 and trust reporting tax obligations even when you believe nothing is owing.
- Keep source records for six years, because indirect reconstruction fills gaps unfavourably.
- Ask whoever provides your tax services to reconcile third-party data before the tax return is filed.
Across the files we represent, the pattern is consistent: the reviews that end quickly are the ones where the taxpayer can tie third-party data to their own records within a week of the date CRA requests them. The ones that escalate are the ones where the taxpayer cannot explain a deposit. For the mechanics of how the audit process unfolds, see our overview of the types of CRA audits.
Frequently Asked Questions
What is CRA targeting for audit in 2026?
Published priorities centre on aggressive GST/HST schemes including carousel fraud, real estate transactions, platform economy income, crypto assets, and higher-risk sectors generally. The Agency also continues its personal services business project and its work on international tax evasion through the J5 group, which targets transnational tax crimes.
Who is getting audited this year?
Volume falls disproportionately on property sellers, sales tax registrants claiming refunds, incorporated single-client contractors, gig and platform earners, and taxpayers with unreported foreign holdings. Wealthy individuals with complex personal tax structures remain a standing focus, as do businesses in cash-intensive trades. Any taxpayer whose third-party data does not match their return is in scope.
How far back can CRA reassess my return?
CRA can reassess a previous tax year within the normal reassessment period under ITA 152(3.1). That is three years from the original notice of assessment for individuals, Canadian-controlled private corporations and most trusts, and four years for other corporations. That limit disappears entirely where there has been misrepresentation attributable to neglect, carelessness or wilful default.
Does CRA know how many bank accounts I have?
Not automatically, but it can find out. Financial institutions report interest and investment income, third-party requirements compel banks to produce records, and international agreements share account information across more than 100 jurisdictions. Undisclosed accounts tend to surface during income verification work.
What raises red flags with the CRA?
Mismatches between third-party data and your return trigger most files. Unreported platform or slip income, outsized refund claims, a residential property sold inside a year, and repeated business losses are the classic warning signs. Very little triggers an audit at random any more.
What does a CRA examination actually involve?
Most begin as CRA correspondence rather than a visit. CRA conducts a desk review, asks for specific records, and escalates only where the answers do not reconcile. Audit procedures differ by programme, but the sequence is consistent: request, review, proposal letter, reassessment.
Are the new CRA compliance powers in force yet?
No. As of August 2026 the measures sit in Bill C-31, which passed second reading in June and remains at committee. Nothing in that package binds you until the bill receives Royal Assent, and the drafting has already changed twice since 2024.
The Bottom Line
Enforcement this year is data-led and publicly signposted, so the audit targets are knowable in advance rather than guessed at.
- Sales tax and real estate carry the heaviest published enforcement effort.
- Platform, crypto and trust reporting have moved information to the Agency ahead of your filing.
- Single-client corporations remain the most mispriced risk in owner-managed businesses.
- The expanded powers are pending legislation, so plan for them without treating them as current law.
Which of these applies to you depends on your structure, your sector and what third parties have already reported about your income, so a targeted review beats a general worry. If you are facing a CRA audit, our CRA representation team works on exactly these files, and you can arrange a review before a letter arrives rather than after.
