What Can You Do to Prepare for a CRA Tax Audit?
The words “CRA Tax Audit” send shivers down many people’s spines. And, in most cases, there’s good reason. CRA audits are often intrusive, time-consuming, confusing and, depending on the outcome of the audit, costly.
Individuals can be selected at random for an audit, but the Canada Revenue Agency often conducts targeted audits when it believes that there are inconsistencies in tax returns or it feels that information may not have been provided accurately. Self-employed individuals and those who run businesses tend to be more likely to be audited, but it can happen to anyone.
So, what can you do if you are facing a CRA tax audit? Here are some tips:
- Get organized
- This is one of the most important tips. It is crucial that you find and organize all relevant information and documents. You don’t just want to hand an auditor a box full of miscellaneous paperwork. Not only will this likely annoy the auditor (and you don’t want an annoyed auditor looking at your taxes) but it will make the audit take longer and it could give the CRA more information than it actually needs. You don’t want to overcomplicate your situation.
- If you’re missing any information or documents, track them down and have them available in time for the audit.
- Be honest
- Don’t spend time coming up with elaborate stories or explanations for your tax situation. The CRA auditor will likely see through them and all you’ll be doing is dragging the process out.
- Take the time to understand your own tax situation. Review your documents and your tax returns and be ready to answer questions clearly and honestly.
- Get help
- If the CRA has contacted you requesting an audit, you’ll need to make sure that you’re prepared. CRA officials are typically very difficult to deal with and often purposely make situations confusing or stressful. One of the best possible ways to prepare is to contact the ex-CRA professionals at Tax Solutions Canada.
- We can help you prepare for your CRA audit by teaching you about the process and assisting with paperwork and other issues.
Once the audit has been concluded, you will receive an assessment from the CRA. This will indicate the proposed adjustments made by the CRA. If there is additional tax debt owning, or interest or penalties charged, these will be indicated on the assessment.
Remember that you always have the right to appeal a CRA assessment. When you appeal, you will need to make sure that you have concrete reasoning for why you disagree with the CRA assessment. If you are looking to appeal a CRA assessment, you’ll want to make sure that you do so sooner rather than later. You’ll also want to be properly prepared. We can help. Contact us today to speak with our team of professionals.