People here audit and get scared. When there really is no reason to be unless you made fraudulent claims on your tax return, or GST return. Everyone at Revenue Canada that we have dealt with has been reasonable. Talking to them in a calm voice goes a long way. The last thing you want them to do is a full scale audit. Not only does this take a lot of time which costs money, they usually fine something. In which case chances will be higher you will be audited again on your next return.
In most cases the CRA Auditor will ask for a few basic items to back up what you have claimed. You can then, depending on the audit fax, or mail in the necessary paper work to back up your claims. Sometimes they will come directly to your home or business. The Auditor will review what you sent in, at which point they may ask for more to back up your claim, have more questions and ask for more paperwork. or allow or disallow some items. By law you have to keep records for at least 6 years. But it is not uncommon to keep back up records for 10 years, as that is how far back you are allowed to go to file tax returns and do adjustments on tax returns. Something else you can also do is keep digital copies of all your receipts. The government does accept these in an audit, and to save space and or paper you may want to keep digital copies only.
The CRA selects businesses or personal returns to audit based on risk assessment of the business or individual. Some are randomly selected for audits. For more information the CRA website has a lot of information to look up. For business audits go to: http://www.cra-arc.gc.ca/tx/bsnss/tpcs/lf-vnts/dt/menu-eng.html , for personal audits take a look at this link: http://www.cra-arc.gc.ca/E/pub/tg/rc4188/rc4188-e.html
If at the end of the audit, and you personally owe money for which there could be penalties and interest, it is always best to pay right away. If you are under financial hardship you can fill out form RC4288 and mail it in. It will take several weeks or months for the CRA to make a final decision. They may ask for more information before they make a decision. But just in case the decision is not in your favour then it is best to have paid it earlier rather than later.