Questions to Ask Before Hiring CRA Audit Representation

Choosing who will represent you in a CRA audit is a consequential decision, and it is usually made under time pressure — often within days of receiving an audit letter or a proposal letter. The right questions, asked at the outset, help you understand exactly what you are buying, who will do the work, and how the engagement will be priced.

This guide is organized as a checklist. Use it when you speak with any prospective representative, whether a tax lawyer, an accountant, or a firm that offers both. The goal is not to find a single "correct" answer to every question, but to make sure you understand the trade-offs before you commit.

Before getting to the questions, one orienting point: a CRA audit is most flexible early. The audit stage, and especially the proposal-letter stage, is when the file can still be shaped before the auditor's conclusions harden into a reassessment. Decisions about representation are therefore time-sensitive, and the questions below are designed to be answered quickly, in a single consultation, so that you can act while the options are still open. For a fuller picture of how the stages work, see our guide to the CRA audit process, step by step.

1. Should I hire a lawyer or an accountant for this audit?

This is the threshold question, and the honest answer is: it depends on the file.

Many routine audits — straightforward expense disallowances, depreciation adjustments, capital-versus-current accounting questions — can be handled capably by an accountant, often the one who prepared the return. An accountant brings deep familiarity with the books and the numbers.

A tax lawyer is usually involved, on its own or alongside the accountant, when one or more of the following is in play:

• Gross negligence penalties under subsection 163(2) — 50% of the tax on the unreported amount. Defending them is a legal exercise as much as an accounting one.
• Allegations of unreported income, including indirect-income methods such as net worth or bank-deposit analysis. See our guide to net worth audits.
• Reassessments that could materially affect solvency.
• Capital-versus-income or shareholder-benefit disputes, which turn on intention, conduct, and legal characterization.
• Anything that hints at criminal exposure — fraud, evasion, or sham. Once a file is heading toward CRA's criminal investigations function, ordinary audit cooperation can become evidence in a criminal proceeding.
• Voluntary-disclosure considerations for issues the auditor has not yet identified, where timing and eligibility are delicate.

A good representative will tell you candidly whether your file genuinely needs a lawyer or whether an accountant is sufficient. Be cautious of anyone who insists on the most expensive option without explaining why.

2. Is my communication with you protected by solicitor-client privilege?

This is one of the most important — and most overlooked — questions. Communications between a client and a tax lawyer, made for the purpose of obtaining legal advice, are protected by solicitor-client privilege. Communications with an accountant generally are not, and an accountant's working papers can be compelled by the CRA.

In a file where there is meaningful exposure, or any possibility of penalties or criminal referral, privilege is a structural advantage. Where an accountant's analytical work is needed, a tax lawyer can in many cases retain the accountant under the lawyer's engagement so that the work is performed within the umbrella of privilege. Ask any prospective representative to explain exactly what, in your particular file, would be privileged and what would not.

Why does this matter so much in practice? During an audit, the CRA can compel documents and information using its statutory powers. If your candid analysis of a weak position lives in an accountant's working papers, the CRA may be able to obtain it. The same analysis prepared for the purpose of legal advice within a lawyer's retainer is generally protected. In files where the honest assessment of a position is unflattering — which is precisely the situation where good advice is most valuable — the difference between privileged and unprivileged work product can be significant. This is not a reason to hide anything from the CRA; it is a reason to make sure your most sensitive thinking is done in the right channel.

3. How will you charge — and can you offer a fixed fee?

Fee structures vary, and you are entitled to a clear answer before you sign anything.

• Hourly with a retainer. Audit defence is often billed hourly against an upfront retainer, with the retainer sized to the complexity of the file and the urgency of the deadlines. Ask for the hourly rates of everyone who will touch the file and for an estimate of the likely range.
• Fixed fee for a defined scope. Narrowly scoped work — a single proposal-letter response, for example — can sometimes be handled on a fixed-fee basis. If predictability matters to you, ask directly whether a fixed fee is available for the specific task at hand.

Whatever the structure, ask for it in writing. A written engagement letter that states the scope, the fee basis, and what is included avoids disputes later. Be wary of any representation that promises a particular outcome in exchange for a fee — outcomes in tax disputes depend on the facts and the law, and no one can responsibly promise a result.

4. Who will actually handle my file?

The person you meet at the consultation is not always the person who does the work. Ask directly:

• Who will be my primary point of contact?
• Which lawyer or professional will prepare the submissions to the CRA and deal with the auditor?
• If junior staff or paralegals are involved, who supervises the file and reviews the work product?

There is nothing wrong with a team approach — it is often more cost-effective to have appropriately senior and junior people working together. But you should know who is accountable for your file and who will be on the phone with the auditor when it matters.

It is also fair to ask about continuity. Audits can run for many months, and a file that is passed from hand to hand loses context each time. Ask whether the person who starts your file will stay with it, and what happens if your primary contact is unavailable when a deadline falls. A clear answer here is a good sign that the firm manages its files deliberately rather than reactively.

5. How quickly will you respond — and can you meet my deadlines?

CRA audits run on deadlines. Audit-query responses are usually due within 30 days; a proposal letter typically allows 30 days to respond; objection deadlines after a reassessment are strict (the later of 90 days or one year for individuals; 90 days for corporations). A representative who cannot turn the file around within these windows is of limited use no matter how capable.

Ask about expected response times — how quickly your calls and emails will be returned, and whether the firm has the capacity to meet the CRA deadlines currently facing your file. If you are already close to a deadline, say so, and ask plainly whether the firm can take the file on that timeline.

6. What is your experience with files like mine?

Tax disputes vary widely. An audit of a small business with a single disputed expense category is a different matter from a multi-year net-worth reassessment with gross negligence penalties or a GST/HST file involving director liability. Ask whether the representative has handled files comparable to yours, and what the process looked like — not as a promise of a particular result, but to understand whether the experience fits the problem.

7. How will you keep me informed?

You should understand how and how often you will hear about your file — copies of correspondence sent to and received from the CRA, updates before and after key deadlines, and a clear explanation of each strategic decision. A file where the client is kept informed is a file where the client can make good decisions.

8. Will you coordinate with my accountant?

Many audit files are best handled by a lawyer and an accountant working together: the accountant brings intimate knowledge of the books and the numbers, and the lawyer brings the legal framing, the privilege umbrella, and the dispute strategy. Ask how the prospective representative will work with the professional who prepared the returns, who will take the lead, and how duplication of effort will be avoided. A representative who dismisses your existing accountant out of hand, or who insists on doing everything in-house without a clear reason, deserves a follow-up question.

9. What documents will you need from me, and how should I prepare?

A focused representative can tell you, early on, what the file is likely to require: the audit correspondence to date, returns for the years under review, financial statements and ledgers, bank statements, source documents, and a timeline of the events that explain the issues. Understanding this up front lets you start assembling the record immediately, which matters when deadlines are short. It is also a useful signal: a representative who can quickly describe what the file needs has likely handled comparable matters before.

10. What are the likely next steps, and what could go wrong?

A candid representative will map out the realistic path: the stages your file is likely to pass through, the decisions you will face, and the risks at each step — including the possibility that the matter proceeds to a reassessment, an objection, or the Tax Court of Canada. Beware of anyone who describes only the good outcome. Understanding the downside is part of making an informed choice. For context on where a file can go after the audit, see our pages on tax disputes and objections and the Tax Court of Canada.

A quick checklist to take into the consultation

If it helps, bring this short list with you and make sure each item is addressed before you decide:

• Does my file genuinely need a lawyer, an accountant, or both?
• What, specifically, would be protected by solicitor-client privilege?
• How will I be charged, and is a fixed fee available for the immediate task?
• Who is the named person responsible for my file, and who deals with the auditor?
• Can you meet the CRA deadlines currently facing me, and how fast will you respond?
• Have you handled files like mine, and what did the process look like?
• How will you keep me informed, and will you work with my accountant?
• What are the realistic next steps — and what could go wrong?

A representative who answers these clearly and candidly is giving you the information you need. Vague answers, pressure to decide immediately without explanation, or a promise that a particular outcome is assured are all signals to pause.

Warning signs to watch for

Finally, a few things should give any taxpayer pause regardless of how the rest of the conversation goes. Be cautious of a representative who promises a specific outcome — no one can responsibly promise a result in a tax dispute, because the result depends on the facts and the law. Be cautious of fee arrangements that are not put in writing, of an inability to name who will actually do the work, and of pressure to sign immediately without time to consider. Confidence about process is reassuring; certainty about an outcome that has not yet been litigated is not.

Putting the checklist to work

You do not need to interrogate a prospective representative. A good consultation will cover most of these questions naturally, and the representative should welcome the rest. What you are listening for is candour: a clear explanation of whether you need a lawyer or an accountant, a straight answer on privilege and fees, a named person responsible for your file, and realistic expectations about timing and outcomes.

Barrett Tax Law offers consultations for taxpayers facing CRA audits and reassessments, and addresses each of these questions directly as part of that conversation. For more on how an audit unfolds, see our guide to the CRA audit process, step by step, and our page on audit representation.