What is a net worth audit and why am I getting one?
It is an audit that does not start from your return. Instead the authority measures what you owned at the start of a period and what you owned at the end, adds what you spent, and treats the increase as income unless you can show it came from somewhere else. It is used where the records behind a return are thought to be incomplete, and it falls often on cross-border families, because their ordinary receipts — help from relatives, an inheritance abroad, transfers of their own savings — look exactly like money nobody can account for.
CRA says my deposits are income — how do I prove otherwise?
With a document for each receipt, matched to the deposit. The method puts the burden in an uncomfortable place: an amount in your account counts as income for the purposes of the reconstruction until its source is shown, so the work goes receipt by receipt rather than argument by argument. A gift needs the donor, the donor's own source, and the transfer record. A loan needs the agreement and the repayments. Your own money moved from abroad needs the account it left and evidence you held it already. Volume of evidence, not eloquence, is what moves these files.
Can the CRA estimate my income if I have no records?
That is precisely what this method exists for. Where books are absent or not believed, income is built from the change in assets and the level of spending rather than from records of earnings, and the result is an assessment you then have to displace. The useful response is not to dispute the method in the abstract but to rebuild the picture with better information: complete opening and closing asset schedules, spending that is actually evidenced, and a source for each receipt that was not income. An incomplete rebuttal leaves the estimate standing.
How do I prove money from my family overseas was a gift?
By documenting both ends of it. On this side, the deposit and the transfer record. On the other, who sent it, from which account, and where they had it — which usually means obtaining statements, sale documents or inheritance papers from a relative in another country, sometimes years after the event. A declaration of gift written now, describing a transfer made long ago, carries little weight on its own. Where the paperwork is genuinely thin, the honest position is to show what can be evidenced and state plainly what cannot.
Does a net worth audit cover more than one year?
It works over a period rather than a single year, because the whole method depends on comparing two points in time. That has a consequence worth understanding early: one unexplained receipt can affect the reconstruction for the entire period, and an asset whose cost you cannot evidence distorts both ends of it. It also means the schedules must be consistent across the period — the same assets, the same values, the same currency treatment — since a mismatch between the opening and closing positions manufactures income out of nothing.
Should I hand over all my bank statements?
Statements for the accounts in issue, organised, yes — that is the material the reconstruction is built from, and withholding it invites the estimate to be made without you. What deserves care is the framing: which accounts are in issue, which period, and what each set of documents is provided to show. An undifferentiated box of paper is read by somebody building a case for an unexplained increase, and every deposit in it that nobody has explained is a deposit counting against you until somebody does.
How does cross-border tax planning work?
It starts with facts rather than structures: which countries have a claim on you, what each one taxes, and where the two overlap. From there the decisions are about order and timing — which country taxes first, where relief is claimed, and whether a filing or a certificate has to be in place before money moves rather than after. Most of the value is in the sequencing, because relief claimed late is usually relief recovered slowly. See international tax planning.
How many days can I spend in a country before I become tax resident?
It depends on the country, and a day count is only ever the start. Many use a threshold in a tax year, some also look at averages across several years, and some have no day test at all and decide on where your home and life are. Two countries can both conclude you are resident, which is what the treaty tie-breaker exists to settle. Counting days without checking the tie-breaker is how people end up filing as resident nowhere. See the residency tie-breaker.
