About Revenue

Audit Process

A. Adjustments

The Desk Audit section is responsible for reviewing and processing loss carry backs, taxpayers requests for amendments and federal (re)assessments. All loss carry back and taxpayer requests are reviewed for compliance with legislation and processed accordingly. At the Desk Audit level, contact may be initiated by requesting specific documents or supporting information. As the name suggests, this type of audit is conducted from the office, by auditors, rather than at the taxpayer's premises.

Once the information is received, the auditor will perform one of the following:

1. Review and accept the taxpayer information as provided and update the information on record accordingly.
2. Review the information and if it is not accepted, a proposed statement of adjustments will be mailed to the taxpayer, explaining the reasons for the proposed amount and giving the taxpayer an opportunity to provide further information. If the taxpayer is in agreement with the proposed changes to the tax liability, the auditor will update the information on record. If agreement cannot be reached, the auditor will notify the taxpayer.
3. If as a result of the audit, adjustments to the tax liability are needed, a formal "Notice of Reassessment" will be mailed to the taxpayer. A statement of adjustments will also be mailed, if the changes are different from the taxpayers' requests and/or adjustments are being initiated by auditors.
4. If the outstanding audit issues require an in-depth review, the file may be referred to the Extended Audit section or the Field Audit section, based on the complexity of the issues.

Ontario is notified by Canada Revenue Agency (CRA) of all completed federal assessments and reassessments that affect Ontario taxpayers. Auditors review the federal adjustment to determine if an adjustment is required to be made to the Provincial tax return. A statement of adjustments is prepared by the auditor for all adjustments and these are referred to as "Designated Assessments".

B. Extended Audits

Once a taxpayer has been selected for an extended audit, the auditor will perform an in-depth review of all the relevant income tax and capital tax issues. The auditor may then request additional information from the taxpayer to complete his/her review. Upon receipt of this information, the auditor would prepare a proposed statement of adjustments to be mailed to the taxpayer. The taxpayer will be provided with the opportunity to discuss the audit findings with the auditor. The taxpayer's response could be:

1. In agreement with the proposed changes to tax liability, at which time the auditor will update the information on record.
2. In disagreement with the proposal whereby additional information is provided; the auditor will review this information and provide his/her final response to the taxpayer and update the information on record accordingly.

If as a result of the audit, adjustments to the tax liability are needed, a formal "Notice of Reassessment" as well as a final "Statement of Adjustments" will be mailed to the taxpayer.

If the taxpayer disagrees with the reassessment, a Notice of Objection can be filed with the ministry's Tax Appeals Branch within 180 days of the date of the Notice of (Re) Assessment.