6 worked Audit Working-Paper Preparation case studies — the position a client typically comes to us with, what we do, and what it is worth. Each is an illustrative example built on the rules that apply to audit working-paper preparation work, not a specific client's file.
Case Study 1 · Sale and succession
$695,000 Sheltered By The Lifetime Capital Gains Exemption — Assessed Shareholder, Winnipeg
Client: A shareholder assessed on a taxable benefit · Where: Winnipeg, Manitoba · Engagement: 8 weeks, fixed fee
Gain sheltered$695,000
ClosingOn schedule
Share qualificationMet
The situation — A shareholder assessed on a taxable benefit, Winnipeg, Manitoba
A shareholder assessed on a taxable benefit in Winnipeg, Manitoba had an offer on the table and 28 months to close. The shares did not qualify for the capital gains exemption. A shareholder loan balance that would have been picked up as income on closing was part of the reason.
What we did for A shareholder assessed on a taxable benefit, Winnipeg, Manitoba
We purified the corporation so the shares met the qualifying tests. We answered each query in writing with an indexed document package, so the file showed exactly what the auditor had received and on what date. All of it was done well ahead of the closing date.
The result — A shareholder assessed on a taxable benefit, Winnipeg, Manitoba
The sale closed on schedule with $695,000 sheltered by the lifetime capital gains exemption across the shareholders.
Case Study 2 · Cash and remittance control
Instalments Rebased, $69,000 Of Cash Returned To The Business — Taxpayer Facing Collections, Kitchener
Client: A taxpayer with frozen bank accounts · Where: Kitchener, Ontario · Engagement: 10 weeks, fixed fee
Cash returned$69,000
Instalment basisCurrent year
ReviewedQuarterly
The situation — A taxpayer with frozen bank accounts, Kitchener, Ontario
A taxpayer with frozen bank accounts in Kitchener, Ontario was paying instalments calculated on a prior year. That year no longer reflected the business. A proposal letter with a 30-day response window and no supporting records assembled was tying up $69,000 of cash.
What we did for A taxpayer with frozen bank accounts, Kitchener, Ontario
We rebased the instalments on the current-year estimate rather than the prior-year default. Alongside that, we traced each unexplained deposit to its source — loans, transfers between accounts, an insurance settlement — and reduced the net-worth assessment accordingly.
The result — A taxpayer with frozen bank accounts, Kitchener, Ontario
$69,000 of cash stayed in the business, the penalty cycle ended, and the instalment position is reviewed each quarter against actual results.
Case Study 3 · Backlog brought current
$130,000 Of Arbitrary Assessments Vacated After 5 Years — Long-Term Non-Filer, Toronto
Client: A taxpayer with eight years of unfiled returns · Where: Toronto, Ontario · Engagement: 9 weeks, fixed fee
Arbitrary tax vacated$130,000
Years brought current5
Account statusCurrent
The situation — A taxpayer with eight years of unfiled returns, Toronto, Ontario
5 years of unfiled returns had turned into notional assessments at a taxpayer with eight years of unfiled returns in Toronto, Ontario. Underneath lay a waiver signed at the counter that kept an otherwise closed year open with no end date. Collections had already started.
What we did for A taxpayer with eight years of unfiled returns, Toronto, Ontario
We assembled the contemporaneous records, filed a structured response to each proposed adjustment with the supporting documents indexed, and had the proposal withdrawn. We then filed every outstanding year in chronological order so the CRA could vacate the notional assessments cleanly.
The result — A taxpayer with eight years of unfiled returns, Toronto, Ontario
All 5 years were accepted as filed. $130,000 of arbitrarily assessed tax was vacated, collections action stopped, and the account is current for the first time in 5 years.
Case Study 4 · Planning that cut the bill
$32,000 Saved By Correcting What Prior Filings Had Missed — Voluntary Disclosure Applicant, Halifax
Client: A business owner considering a voluntary disclosure · Where: Halifax, Nova Scotia · Engagement: 7 weeks, fixed fee
Saving identified$32,000
RecurringYes
Positions documentedAll
The situation — A business owner considering a voluntary disclosure, Halifax, Nova Scotia
A business owner considering a voluntary disclosure in Halifax, Nova Scotia asked for a second opinion on audit working-paper preparation. That followed three years of rising tax. The review found six years of unfiled corporate and personal returns and an active collections file.
What we did for A business owner considering a voluntary disclosure, Halifax, Nova Scotia
We built the comparison first: current structure against two alternatives. Then we filed the Tax Court appeal inside the window and resolved the remaining adjustments before a hearing date was needed.
The result — A business owner considering a voluntary disclosure, Halifax, Nova Scotia
First-year saving of $32,000, with the same benefit recurring. Every position taken is documented and supported in the file.
Case Study 5 · Structure rebuilt
Reorganisation Completed Tax-Deferred, $20,500 Saved Each Year — Employer Under Payroll Review, Windsor
Client: A company facing a payroll trust examination · Where: Windsor, Ontario · Engagement: 11 weeks, fixed fee
Annual saving$20,500
Tax on reorganisationDeferred
Elections filedOn time
The situation — A company facing a payroll trust examination, Windsor, Ontario
A company facing a payroll trust examination in Windsor, Ontario had outgrown the structure it started with. An audit conducted over the phone, with nothing on file showing what had been provided or when was the immediate problem. The longer-term one was that the structure blocked the next step.
What we did for A company facing a payroll trust examination, Windsor, Ontario
We mapped the current structure and modelled the target. Then we kept the waiver narrowed to the issue actually under review and let the remaining years close on the normal reassessment period. The tax-deferred elections were filed on time and the supporting valuations documented.
The result — A company facing a payroll trust examination, Windsor, Ontario
The reorganisation completed without triggering tax, and the new structure saves approximately $20,500 a year while removing the exposure the old one carried.
Case Study 6 · Scaling without breaking
Growth Handled Without A Missed Filing, $56,000 Freed — Contractor Facing Reassessment, Mississauga
Client: A contractor facing a proposed reassessment · Where: Mississauga, Ontario · Engagement: 7 weeks, fixed fee
Cash freed$56,000
Compliance failuresNone
ReportingMonthly
The situation — A contractor facing a proposed reassessment, Mississauga, Ontario
A contractor facing a proposed reassessment in Mississauga, Ontario was opening in a second province. That meant different filing obligations and a different payroll regime. A net-worth assessment built on unexplained deposits that were actually loan proceeds already sat in the file.
What we did for A contractor facing a proposed reassessment, Mississauga, Ontario
We filed the disclosure through the Voluntary Disclosures Program before contact, which removed the gross-negligence penalty entirely. We then put monthly reporting in place. That let the owner see the cash effect of growth while there was still time to act on it.
The result — A contractor facing a proposed reassessment, Mississauga, Ontario
Growth was absorbed without a compliance failure. $56,000 of cash was released, and the monthly reporting now flags a problem while it is still small.
Reviewed by Udit Gupta, Founder and Tax Accountant for the 2025 tax year. These case studies are illustrative worked examples composed from the CRA rules that apply to this type of work, not specific client files; figures are representative and outcomes depend on your own facts.
