CRA indicates that auditors will ask for the accounting firm’s working papers where there is an absence of direct information and a high risk issue

Points made by Gord Parr, Director, Large Business Audit Division, International and Large Business Directorate, Compliance Programs Branch include:

• Effective April 1, 2016, the Compliance Programs Branch will be split into two branches: one dealing with international aggressive tax planning, large business audits, criminal investigations and the off-shore program; and the other with small-medium enterprise income tax, GST/HST programs, and SR&ED.
• CRA generally will disclose to taxpayers which of the three risk categories they fall into and what are the overall risk factors on the file.
• In order to facilitate an integrated approach to large business compliance, senior auditors from domestic, international and ATP will be put into integrated teams reporting to a large file case-manager.
• Large case managers now will be rotated every four, rather than every six, years.
• Under CRA’s “audit currency” policy, when it starts an audit it generally will look only at the most recent taxation year that has been assessed and the immediately preceding year. However, “if there are recurring issues, if the taxpayer is considered high risk, if the taxpayer has been less than transparent and cooperative with the CRA, then we will consider going back into earlier years to address those high-risk issues.”
• As announced at the 2015 Annual CTF conference, if information that was requested by Audit is not provided until the Appeals stage, there is a mandatory referral of the file back to Audit.
• Respecting BP Canada:

[A]uditors should attempt to collect the information from the most direct source, and in the least intrusive manner. So if the source documentation is available in the taxpayer's books and records, and there's open and transparent disclosure of the uncertain tax positions, there's a level of cooperation and mutual trust, and the CRA is getting the information it needs to determine whether taxable income is understated or the tax balance is overstated…then generally we wouldn't request access to the taxpayer's or the accountants' working papers. But, where we can't get that direct information, in those situations where there is a high risk issue we will request that information. The request has to be relevant to the outstanding issues… .

• BEPS has not yet had any effect on CRA’s transfer-pricing policies.
• Very few competent authority files end up in binding arbitration.

Neal Armstrong. 23 February 2016 Toronto Centre Tax Professionals Seminar.