Quick Answer
The CRA audits e-commerce businesses by cross-referencing platform data (Amazon, Shopify, PayPal) with tax filings. Keep 6 years of records including all sales reports, purchase invoices, bank statements, and GST/HST working papers. Discrepancies between platform-reported revenue and your tax return are the most common audit trigger.
The CRA has made e-commerce compliance a growing priority. Expanded information-sharing agreements, digital platform reporting requirements, and algorithmic income matching mean that unreported or under-reported e-commerce income is increasingly flagged automatically.
What Triggers an E-Commerce Audit
- Large discrepancy between declared income and bank deposits
- Revenue reported by a platform (Amazon, PayPal, Stripe) doesn't match your T1/T2
- GST/HST not registered despite revenue over $30,000
- Very high expense ratios relative to revenue
- Income significantly below industry benchmarks for your sector
- Sharp revenue drop after previously reporting strong income
Records You Must Keep (6 Years)
- All platform sales reports (Amazon, Shopify, Etsy, etc.)
- Bank and credit card statements
- All supplier invoices and purchase receipts
- Shipping records and courier invoices
- GST/HST working files and filed returns
- Advertising spend reports
- Inventory counts and valuations at year-end
Platform Data-Sharing with the CRA
Under OECD DAC7 rules (effective 2024), Canadian digital platforms are required to collect and report seller income data to the CRA annually. The CRA receives your gross sales figures, number of transactions, and payment amounts directly from platforms. Your filed income must match.
CRA Audit Support for Online Sellers
If you've received a CRA letter or want to ensure your e-commerce books are audit-ready, MaxRefund provides professional CRA support and review.
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