Many medical students and residents have asked me how to avoid these requests and demands. In fact, most individuals are never audited. A request for more information, however, is very common. Providing this information in a timely fashion usually terminates the matter, while failure to respond promptly may subject your return to closer scrutiny. The Agency may notice this additional income and start other verification procedures.
Nothing inspires the curiosity and tenacity of an auditor more than a mathematical error.
While others may prepare your tax return, you are responsible for its content. Before sending anything to the CCRA, thoroughly review the documents and check the numbers for accuracy. Tax auditors have often reversed this aggressive tax planning. Surprisingly, some residents have attempted to deduct these same expenses in subsequent years. Once an expense is disallowed, the CCRA will almost certainly look for this item in subsequent filings.