It now takes a year on average for CRA to audit small businesses

Small and medium-sized businesses selected by the Canada Revenue Agency for audits are waiting longer to see those audits completed — something business groups say causes unnecessary stress for owners of small businesses across Canada.

Documents tabled in Parliament show it now takes the CRA almost a year on average to conduct an audit of a small business — an average that was rising even before the pandemic hit.

While it took the CRA an average of 171 days to carry out an audit of a small or medium-sized business between April 1, 2015 and March 31, 2016, it took an average of 348 days between April 1, 2021 and March 31, 2022. At the beginning of this year, it took CRA an average of 314 days to carry out such an audit.

Corinne Pohlmann, senior vice-president of national affairs for the Canadian Federation of Independent Business (CFIB), said her members were complaining of longer CRA audit timelines even before the pandemic.

"We had been seeing over the past several years an increase ... in the length of these audits and anecdotally, more complaints about how long it was taking," Pohlmann told CBC News.

"So that is a concern, to see that some of these audits are getting up to one year long, which is a long time to feel stressed about what's going to happen in that whole process."

The CRA said the pandemic remains one reason why audits are taking longer.

It said the number of small and medium-sized business audits dropped to 11,328 in 2020/2021 from 23,135 the year before because the staff who conduct those audits had been reassigned.

"Due to the COVID-19 pandemic, several programs were suspended," the CRA said in a recent answer to a question placed on the House of Commons order paper by NDP MP Daniel Blaikie.

"Employee workloads were shifted to essential services, such as the COVID-19 benefit programs and COVID-19 related call-centre activities. Audit activity continued throughout the pandemic but was limited to high-risk audits and exceptional circumstances."

In response to questions from CBC News, the CRA also said it suspended such audits in order to help businesses during the pandemic.

"The CRA made a deliberate pause of audits, lasting approximately six months in 2020/21, for small and medium-sized businesses in recognition of the hardships caused by the COVID-19 pandemic," wrote CRA spokesperson Nina Ioussoupova in an e-mail response.

She said operations did not return to pre-pandemic levels in 2021/22 but regular audit workloads have now resumed.

The CFIB said halting audits of small and medium-sized businesses during the pandemic was the right thing to do.