The CRA audits more and more honest Canadian taxpayers every year, looking for ways to squeeze extra cash from your pocket.

When the CRA audits your tax return, your best bet is to use a Qualified Tax Professional to defend yourself.

Unfortunately, that can get kind of expensive, kind of quickly. The best way to be able to afford those specialized service is with Tax Audit Protection.

In Canada, there are a few ways you can get Tax Audit Protection. We compare two popular choices: 1) Turbotax Audit Defence and 2) Tax Investigation Insurance.The solution that we (PFP Inc.) offer is Tax Investigation Insurance – an insurance product that pays the professional fees that you incur when defending an audit. You can watch a short (1 minute, 35 second) video about Tax Investigation Insurance here.

Our main competitor is TurboTax Audit Defence.

Turbotax Audit Defence
Turbotax Audit Defence from

On the surface they seem the same. The purpose is the same – to protect you from the cost of an audit – but if you peek under the hood you’ll see some differences that could make or break your decision.

We break it down here to make sure you get protection that is right for you and your tax situation. 

(No time to read the point by point breakdown? Skip to the end. )
The information provided below about TurboTax Audit Defence from was obtained from the website and was publicly available there as of March 10, 2015.

[wt_h2 heading_style=”wt_heading_4″ align=”center”]What Kinds of ‘Audits’ are Covered?[/wt_h2]

First, lets talk about what we really mean when we talk about an audit. Usually we use the word ‘audit’ to talk about any kind of tax investigation. Just like we call any tissue a Kleenex, or any bandage a Band-Aid. To be crystal clear about your tax audit protection, let’s dive into what is actually covered by each product.

Audit Defence

Audit Defence covers “any communication, including telephone calls, initiated by the CRA or Provincial income tax agency that wishes to audit, examine, review, investigate or verify any item or items on the CRA income tax forms and Provincial equivalent listed on the membership certificate.”

They will cover preparing and negotiating pre-litigation appeals prior to trial in the Tax Court of Canada.

Tax Investigation Insurance

Tax Investigation Insurance covers any tax review, tax appeal, tax desk audit or tax field audit by the CRA or the provincial tax authority.

In other words…

As far as coverage goes, the products are more or less tit for tat. Tax Investigation Insurance comes out slightly ahead because it covers the whole appeal process including litigation ; Audit Defence only covers the preparation and negotiation prior to trial.

[wt_h2 heading_style=”wt_heading_4″ align=”center”]Your Tax History[/wt_h2]

A lot of people mistakenly believe that once you get your notice of assessment, you’re in the clear.

That would be swell, but it isn’t true at all. A tax audit or review can be initiated for any tax year (usually up to 7 years prior, but occasionally more) at any time of year.

On top of that, if the CRA finds an error in one return, they will extend their investigation to other years. To maximize your protection you should look for coverage for your complete tax history.

Audit Defence

With Audit Defence, you have to pay for each tax year individually. Our understanding is that once the tax year has been purchased, it will always be covered. If you do want to cover all tax years (like we recommend), you’re looking to multiply the sticker price by seven.

Tax Investigation Insurance

With Tax Investigation Insurance your policy covers any tax investigation that is initiated while your policy is in effect. Your complete tax history is always covered as long as you’re insured. If you cancel your policy, your coverage stops. You will pay the same policy amount every year, unless your insurability changes.

 So, what’s the best option?

Again, Tax Investigation Insurance comes out on top. Your entire tax history is automatically covered, right from the start, for one fee.

[wt_h2 heading_style=”wt_heading_4″ align=”center”]What Services Do You Get For Your Money?[/wt_h2]

The more defence work you can delegate to your representative, the better. With someone else handling the details, you have more time to focus on the important things in life.

Audit Defence

With Audit Defence, “You’ll never face the CRA alone!”. will represent you in all communications and meetings with the CRA or your provincial tax authority.

In practical terms that means that you’ll have to dig through your records and find the documentation the CRA is asking for. Then your representative will review the records, make sure you’re on the right track, and then send them along to the CRA.

If your investigation results in you owing taxes, they also provide two hours of collection assistance. If you want to appeal a decision, they can help you prepare your appeal. That’s as far as they go though; you’ll have to find legal counsel on your own.

 Tax Investigation Insurance

Your entire defence (and everything that goes along with it) is covered – start to finish.

The coverage amounts can be applied to professional fees incurred from defending a tax review, desk audit or field audit.

If you want to appeal a decision, your chosen representative will prepare your appeal and see it through the entire process with you. If they recommend you find a lawyer to improve your chances, the legal fees are covered too.

Ok, so…

Tax Investigation Insurance wins this category too.

The biggest benefit is that you don’t have to dig through your records to find what the CRA is asking for.

Your accountant already has all of your records and can take care of all of the back and forth, without bothering you with the details. In the case that you end up appealing a decision in court, the coverage offered by Tax Investigation Insurance offers a clear advantage.

Just one caveat: If you did your own taxes, you will still have to dig out your records and give them to your accountant. Once they have all of your records, they can take it from there.

[wt_h2 heading_style=”wt_heading_4″ align=”center”]Your Knight in Shining Armour (Defence Representative)[/wt_h2]

In the ideal scenario, your defence representative is a qualified professional – someone you trust and who knows your tax situation inside and out.

Audit Defence provides you with a representative, whom they assign to your case based on their area of experience.

Although it isn’t clear what professional designations their representatives might have, they say their reps have more experience dealing with tax audits than most tax prepares.

On the downside they don’t have any pre-existing knowledge of your specific situation.

Tax Investigation Insurance

We give you the option of choosing your own representative – usually your accountant who you already trust and has a deep understanding of your taxes.

With Tax Investigation Insurance you can be sure that your representative is qualified and up to speed on your case details. If your rep needs a tax expert to handle a more complex case they are free to consult with a tax expert to get you the best possible outcome.


You guessed it, Tax Investigation Insurance takes this round too.

The advantage of having your own accountant defend you (with the option of consulting tax experts when needed) far outweighs any tax expertise that reps may have.

[wt_h2 heading_style=”wt_heading_4″ align=”center”]Exclusions and Limitations[/wt_h2]

Otherwise known as the “fine print”. These details can make or break whether or not protection will work for you in your situation. Here is the list of exclusions:

Audit Defence

Tax Investigation Insurance

Tax Investigation Insurance offers up to $50,000 of coverage for your defence – that’s the only limiting factor on your accountant’s time.

A pretty pattern is emerging, can you see it? Tax Investigation wins this round too.

In fact, the limitations placed on TurboTax Audit Defence call into question whether the protection is worth purchasing at all.

Most worrying is the exclusions of a “detailed financial audit” – this is exactly when you would need the protection the most. That is where Tax Investigation Insurance shines. When the stakes are higher, we offer more protection, not less.

[wt_h2 heading_style=”wt_heading_4″ align=”center”]Ok, but which is better?[/wt_h2]

If your tax situation is pretty ordinary:

You don’t have any eyebrow raising deductions or outliers so there is a good chance that any investigation from the CRA will be simple requests for information.

You might be asked to send receipts or other documentation to validate your deductions.

If you are comfortable doing your taxes yourself (or with the help of an online app like Turbotax) you are also probably comfortable enough to send the CRA anything they request.

If you do your own taxes but quiver at the thought of facing the CRA alone, TurboTax Audit Defence is the perfect fit for you (here’s a link, go buy it now).

If your tax situation is complex in any way:

For example, if you have multiple business incomes or unusual deductions or expenses, requests from CRA will also be more complex (avoid those and other red flags if you can).

If you use an accountant (and we recommend that you do) they are hands down the best person to correspond with the CRA.

Unfortunately, if you are actually subject to the biggest and baddest kind of audit – a tax field audit – Turbotax Audit Defence won’t help you at all.

At the one time when you really need expert representation, you won’t get it.

On the other hand, if you have Tax Investigation Insurance, your chosen representative will be with you every step of the way, from any minor review to a tax field audit and even through an appeal.

What’s more, that representative can consult any other professionals he or she feels would give you a better chance of winning.

The Clear Winner: Tax Investigation Insurance

An important note: Even though there are more differences than similarities between Tax Investigation Insurance and Turbotax Audit Defence. we both agree on one thing:

You should not represent yourself in a tax investigation.

The tax law in Canada is sophisticated and well beyond the scope of the average taxpayer. A good accountant or other tax professional can help you present your case in the strongest possible way to close the audit or review with the best possible outcome.

I know your next question – you can get your Tax Investigation Insurance quote online. Getting a quote is so fast you will hardly believe it’s an insurance quote form.