Most owner-managers assume every request from an auditor is binding. Usually it is, but not always, and the line moved sharply in December 2022. This guide sets out where that line sits today, so you can cooperate on what matters and hold firm where the law lets you.
Key Takeaways:
- Section 231.1 of the Income Tax Act (ITA) permits inspection of documents, examination of property, and entry to business premises. A dwelling-house needs your consent or a warrant.
- Since 15 December 2022, the CRA can compel you to attend and answer questions orally. The 2019 Cameco decision no longer shields you from an interview.
- You must self-assess, but you are not required to self-audit. Legal advice from a lawyer is privileged; your accountant’s working papers generally are not.
- A short deadline can be challenged, though the burden of proving it unworkable sits with you.
Information Gathering Powers the CRA Actually Has
Your starting point is section 231.1 of the Income Tax Act. It authorises an auditor to inspect, audit or examine any document belonging to you or another person, to examine property or processes relevant to your affairs, and to enter premises where you carry on business. These are broad powers, but each is tied to what is relevant to the audit. Paragraph 231.1(1)(e) then requires “all reasonable assistance.”
That phrase does a lot of work. When CRA auditors request information, it means unlocking the cabinet, exporting the ledger, and explaining where records live. It does not mean agreeing with the conclusions drawn.
Two tools sit alongside inspection. Section 231.2 supports a formal requirement for information, a binding written demand to provide information or documents rather than a casual email. With judicial authorisation, the Agency can also use it to seek information about unnamed persons during the audit of someone else, such as a platform’s sellers. Section 231.6 covers foreign-based information located outside Canada, and must allow at least 90 days. Because consequences differ, read the letterhead first. Our guide to CRA audit letters explains how to tell them apart.
Oral Interviews: What the CRA Can Compel Since 2022
This is where older advice goes wrong. In MNR v Cameco Corporation, 2019 FCA 67, the Federal Court of Appeal ruled that paragraph 231.1(1)(a) did not let the CRA force 25 employees into oral interviews during an income tax audit. The words “inspect,” “audit” and “examine” took their colour from one another, and none meant “interrogate.”
Parliament answered with legislation. The Fall Economic Statement Implementation Act, 2022 amended section 231.1 effective 15 December 2022, adding paragraph 231.1(1)(d). An authorised person may now require you, or anyone else, to attend at a designated place or by video conference and answer orally. It was the first major expansion of the Agency’s information gathering powers in a decade. Cameco is still good law on the old wording, but no longer lets you decline the meeting.
What survives is control over format. Ask for questions in advance, have your representative attend, and say “I do not know, I will confirm in writing” rather than guessing, because guessing under pressure creates admissions you spend months walking back. CRA policy on obtaining information for audit purposes shows how auditors are told to approach these requests while carrying out their audit.
What You Can Decline in a Request for Information
Three categories stay outside the reach of the CRA, however wide its powers to compel information run.
- Analysis you have not already done. In BP Canada Energy Company v Canada (National Revenue), 2017 FCA 61, the appeal court held that self-assessment does not oblige you to self-audit, and refused unrestricted access to tax accrual working papers.
- Solicitor-client privilege. Section 232 protects legal advice from your lawyer, but accountants’ work product usually is not privileged. In Canada (National Revenue) v Atlas Tube Canada ULC, the Federal Court ordered production of a draft due diligence report from an accounting firm.
- Opinions and characterisations. Hand over facts and documents. You need not label your own transaction, speculate about intent, or concede a legal conclusion.
Read the 2022 amendment and BP Canada together and you get the rule that matters most today: the CRA can now make you talk, but it still cannot make you build its file. The rules allow the CRA to see what exists; they do not require you to create what does not. The Canada Revenue Agency’s own Income Tax Audit Manual points auditors at documents and information first and treats analysis as the auditor’s job. Answer factual questions, then decline politely when one really asks you to do the auditor’s work.
| Can be compelled | Cannot be compelled |
| Books, records, ledgers, bank statements | Schedules and analyses that do not yet exist |
| Entry to business premises | Entry to your home without consent or a warrant |
| Oral answers to factual questions | Answers under oath or affirmation |
| Your accountant’s working papers | Legal advice covered by privilege |
| Records held by third parties | Your agreement with a legal conclusion |
Contesting an Unreasonable Information or Document Deadline
Every audit request must allow reasonable time to comply. Reasonable is undefined in the ITA, and CRA policy AD-20-01 sets standard response windows, commonly 30 days on smaller files.
Do not assume a tight window is automatically invalid. In the Ghermezian litigation, the court held that the recipient carries the burden of proof, and that showing a period was objectively short is not enough. You must also show compliance was not reasonably possible for you.
So build that record while the clock runs. Reply in writing before the deadline expires, confirm what you can produce now, explain why the rest takes longer, and propose a specific date. A CRA official who sees a documented partial delivery will usually extend audit timelines rather than escalate, because both sides want to complete an audit, not litigate it.
Example. A Mississauga contractor gets 30 days for six years of subcontractor invoices. Roughly 4,000 documents sit in storage, and the bookkeeper who filed them left 18 months ago. Two boxes take a week; all eleven take ten weeks. Delivering two boxes on day 12, with a written request for day 75 on the rest, beats a late scramble.
Compliance Order and Notice of Non-Compliance Risk
Refusal carries consequences. If you do not provide information the law requires, the CRA can go to Federal Court to seek a compliance order under section 231.7, and breaching one exposes you to contempt.
The penalty landscape is tightening too. The proposed expansion of CRA audit powers in Bill C-31, which received first reading on 6 May 2026, would allow the CRA to issue a notice of non-compliance carrying $50 for every day it stays outstanding, to a maximum of $25,000, plus a penalty equal to 10% of the tax payable for each year a compliance order covers. The reassessment clock would also stop while a notice sits open. Helpfully, an earlier proposal to compel answers under oath was dropped from the legislation. As of August 2026 these new CRA audit powers have not received royal assent.
Example. Say a notice stays open 90 days on years carrying $180,000 of tax payable. The daily charge reaches $4,500, and the compliance order penalty adds $18,000. That is $22,500 before a dollar of the tax dispute is decided. A gross negligence penalty can stack on top where a false statement is alleged.
When a Tax Audit Turns Into an Investigation
One point calls for stopping entirely. In R v Jarvis, 2002 SCC 73, the Supreme Court set the predominant purpose test. Once that purpose becomes determining penal liability under section 239 rather than a bona fide audit of tax owing, Charter protections engage and CRA compulsion powers can no longer build the criminal case.
Watch the signals. Questions shift from what happened to what you knew and when. Your auditor becomes less forthcoming, a second officer joins calls, or the file moves to the Criminal Investigations Program. Routine audit and compliance activities can continue on the civil side, but a criminal file must be built with warrants, not audit powers.
In our CRA representation practice, the pattern we see most often is not stubborn refusal. It is over-explaining. A taxpayer under audit volunteers context nobody requested, and that context becomes the assumption set in the reassessment. Once assumptions are on paper, the onus flips. Bringing in professional representation costs least at the information request stage of an audit, long before a notice of assessment arrives. Knowing which review type you face tells you how much scrutiny to expect.
Frequently Asked Questions
What are the new audit powers of the CRA?
The key change took effect on 15 December 2022, when paragraph 231.1(1)(d) began allowing Canada Revenue Agency auditors to require you to attend in person or by video conference and answer orally. Bill C-31 would add a notice of non-compliance and a daily penalty, but these expanded audit powers are not yet law.
Can the CRA demand information or testimony under oath?
No. Oral answers can be compelled, but not under oath or affirmation. A 2024 proposal for a new section 231.41 would have permitted that, and it was dropped.
What is the CRA 3 year rule, and how far back can a review go?
The normal reassessment period generally runs three years from your original assessment as an individual. It opens where misrepresentation attributable to neglect, carelessness, wilful default, or fraud is alleged, and no limit applies to fraud.
What are my rights during an audit?
You may be represented by a person of your choice, receive an explanation of what is being examined, and keep privileged legal advice protected. You can also decline to prepare analyses that do not exist.
Do I need a representative at an interview?
Not legally, though attending alone is rarely wise once questions move past confirming documents. A representative can take a question in writing, verify it against your records, and answer accurately rather than from memory.
The Bottom Line
- Cooperate fully on documents and factual questions. There the law is clearest, and refusal helps least.
- Decline analysis, opinions, and privileged legal advice in writing, never by going quiet.
- Answer every deadline before it expires, even when the answer is a reasoned request for more time.
- Treat any shift toward questions about knowledge and intent as the moment to pause.
Strategy turns on the facts of your file, and the right pushback in one case is wrong in another. Before you reply to an auditor, speak with a CPA who has handled files like yours.
