You hear all your friends sighing in relief because there taxes are done, but instead of being excited, your anxiety kicks up another notch…You’re anxious because you cannot do your taxes without records – that’s what your accountant told you. So the years of not filing are simply piling up. If this sounds like your current predicament, you are not alone.
No need to fear! There are solutions. The most important step is to file your returns as accurately as possible and, if possible, before the Canada Revenue Agency gets to you for HST and income tax.
Why now? Perhaps you are thinking that it has been so long that what does another year matter? Well, if CRA gets to you before you file, you will lose your ability to use the Voluntary Disclosure Program to save the interest and penalties and avoid criminal prosecution. We recommend that you see a company specializing in these programs as it is a “one shot deal” and if you mess up the filing you will not get a “do over” – the opportunity will be lost.
If you have only partial records, or even no records at all, you can use a system of estimating.
Some examples of tracking down missing documents for income and expenses:
- Get copies of all bank statements where you deposited your customers’ payments. Add up the credits and these are your sales.
- Ask your major customers to help you out by giving you a list of all payments they have made to you. This can replace the option above or provide a good quality of proof to CRA that your estimating is accurate.
- Credit card and store card statements – if you buy your supplies on the card, these are available online for most banks.
- As long as you did not pay in cash, you will be able to find the payments to suppliers, employees and subcontractors from the cancelled cheques and bank statements.
- Many industries have well established norms for the Gross Profit Margin and these can also be used as a percentage of your sales.
Every year that passes causes the penalties to increase substantially. Interest is compounded daily. Delaying is your worst enemy and thus should never be considered a viable option!
Find a good accountant who is experienced in estimating when it comes to these missing document circumstances. If you do not know one, simply call us for a referral.
Going forward, embrace technology: use your smartphone to photograph every expense receipt so if you lose them again you have them saved.
Afraid to file even though you know you should. Stop living in fear. Call Tax Solutions Canada today to get things straightened out: 1-888-868-1400