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Are You Being Audited by CRA?

How Far Back Can CRA Audit? What To Do If CRA Audits You? What Are The CRA Audit Triggers? When facing A Canada Revenue Agency audit there are ways to minimize the serious effects of a CRA Audit such as being charged with tax evasion or non-filer interest and penalties.

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Are You Being Audited by CRA?

 

Tax audits can be very scary. When you find out you are being audited by CRA, your first instinct may be to panic. In some ways, this makes sense. After all, a Canada Revenue Agency audit can be very intrusive and the consequences can be very serious. However, when a CRA audit occurs, it’s important not to react poorly or impulsively.

First of all, know that there are different types of audits. Some auditors will request information from you that you can simply mail or fax in. Others will be in person audits. How you should react will depend on the type of audit you are facing.

In some situations, the CRA audit team is likely looking to confirm information that you listed on your income tax returns. For instance, they may want copies of receipts, invoices, or proof of certain deductions.

In other CRA audit situations, the agency will request additional financial disclosure, while others will demand to come to your home or business to perform the audit. In these audits, the auditor will look for areas where you have made mistakes in your return preparation.

 

CRA Audit Time Limit (How Far Back Can CRA Audit)

 

A CRA audit is one of the most stress-inducing processes that taxpayers could have to go through. It is a difficult process that is made even more difficult by the fact that it is a process that many people are not familiar with. People often worry about CRA audits and, because they’re not sure of the actual process, these worries are compounded because of the fear of the unknown. Learning about the CRA audit process doesn’t mean you’ll be less likely to be audited, but it can leave you feeling calmer and less anxious about the process.

For instance, you may be wondering how far back can CRA audit. This is a valid concern as you might be living with worry thinking that the CRA can come at any time and audit your returns from many years ago. A lot of taxpayers have this worry.

As for how far back can CRA audit, for individuals, the CRA generally has three years after the date of your tax assessment to conduct an audit. This means if you receive your Notice of Assessment for your 2018 taxes in June 2019, the CRA can go back and audit this return until June 2022. However, there are situations where the CRA can audit even farther back. For instance, if the agency suspects fraud, then there is no CRA audit time limit. It can go back as far as it likes.

This is relevant because, in some situations, information that the CRA learns in a certain tax year can be used as a reason to suspect fraud. Then the agency is able to go back and conduct an audit of tax returns that were assessed more than three years ago.

For example, if the CRA conducts a review and finds a serious issue with your 2017 return, it may then assume that you could have committed fraud in prior years. This means that the agency can then potentially go back through several years of returns, including those that are much older than three years old. Therefore, if you’re wondering how far back can CRA audit, remember that they can look back quite far in certain situations.

The CRA generally selects taxpayers for audit both at random and if it believes there are inconsistencies or inaccuracies in income tax returns. Audits are intrusive, time-consuming, and often confusing and stressful. If you are being audited by the CRA or if a CRA auditor has contacted you to let you know that the agency is going to start the audit process, the first thing you’ll want to do is be calm. While it’s natural to be stressed about the audit process, if you panic you are more likely to make a mistake. It’s also important to have professionals on your side during the process. The team at Farber Tax Solutions has extensive CRA audit experience. We can review your situation, help you prepare for the audit, accompany you to audit meetings, and much more. Contact us today for more information.

 

CRA Audit Triggers

 

CRA audits can be unpredictable and a lot of taxpayers worry about the potential of an audit. What does it take to get audited by CRA? Technically anyone can be audited and tens of thousands of audits take place every year. However, there are several CRA audit triggers that could make you more likely to receive a call from the agency. In brief here are some likely CRA audit triggers:

  • claiming a large amount of business expenses
  • having a lot of home office deductions or unusual deductions

 

For instance, if you claim a large amount of business expenses, the CRA may be interested in finding out more. The same is true if you have a lot of home office deductions or unusual deductions.

From these examples, you might be able to tell that those who are the most likely to be audited are self-employed individuals. This is the case because tax returns for those who are self-employed are generally more complicated. Because there are more possibilities for deductions and expenses, there are more possible CRA audit triggers. There isn’t a simple statement like a T-4 that outlines your income, you don’t have taxes deducted at the source, and you are eligible to claim various expenses (such as home office expenses). This leaves more opportunity for error, undisclosed income, and unacceptable expense claims. For this reason, the CRA is more likely to audit you if you are self-employed.

The same is true for those who work in retail, the restaurant industry, or the construction industry. These are roles where a higher percentage of transactions are conducted in cash. Since this is the case, there is a greater likelihood of tax evasion. That means the CRA is more aggressive with auditing returns from taxpayers in these industries and industries like them.

The CRA is also more likely to audit your business if you report repeated losses. If you’re losing money each year, the CRA may assume you’re claiming a hobby as a business or it may want to investigate to see if you’re reporting your sales accurately. If your business loses money on a yearly basis, the agency may assume that you are not claiming your income correctly and are instead trying to avoid paying taxes.

You may also get audited if you are making significantly less money than others who live in your neighbourhood. If you make much less money than your neighbours, the CRA could wonder how you can afford your lifestyle. The agency often pays special attention to people who earn less money than others in the neighbourhood. If they think it doesn’t make sense that you can afford the home you have, you could be audited.

The CRA is also often interested in those who own offshore assets. If you own property or other assets abroad, the likelihood of a CRA audit is much greater.

Taxpayers who have received large wire transfers from other countries (transfers of $10,000 or more) are also more likely to be audited as the agency will want to know why you are receiving this money. Since 2015, all financial institutions are required to report international electronic funds transfers of more than $10,000 to the CRA. If you have received such transfers, the CRA may audit you.

 

What to Do if the CRA Wants to Audit

 

If you are contacted by the Canada Revenue Agency and told that they wish to audit you, it is important to respond correctly. You can’t hide from the CRA, especially once they have decided that they want to take a closer look at your situation. Not responding would be a bad idea, but so would responding incorrectly.

Normally CRA audits take place at your home, your place of business, or at the office of your representative. You should never agree to an audit when unrepresented, especially if you know that you don’t have all of your receipts and records, or if you know that you have used a bookkeeper that may have made mistakes. Even if you do not believe that you have done anything wrong, CRA auditors are specially trained to find issues with tax returns. The team at Farber Tax Solutions can represent you in an audit and request that the audit take place in our offices. Contact us today.

In some cases, the audit will take place in at a CRA office instead. However, there are several CRA office locations so there is a chance that you will be audited by someone who is located outside of your area. If this happens, you will be asked to bring any supporting documents with you to the audit or you will be asked to send copies of these documents to the auditor for them to use during the audit. Auditors are not able to receive documents by email as this method of delivery is not considered secure. If you wish to send documents online, the CRA will give you information on how to transmit them using the agency’s secure server.

The CRA is legally allowed to request to review your personal records as well as the personal and business records of other individuals or entities considered to be related to the tax return that is being audited. In addition, the CRA may ask to examine the records of your family members as well as interview anyone who does your accounting (such as employees who do the books for your business).

Having the right documents available and organized in a clear way can speed up the audit process. If you do not have your files or if the correct information is difficult to find, this can delay your audit. If you do not have certain records, you will need to find ways to confirm the amounts that you reported on your tax return. By law, you are required to keep accurate records and all records should be retained for at least six years.

Having professional support can help you get through a CRA audit. When the CRA (Canada Revenue Agency) finds one mistake they may assume there must be more and they will look. We are all human, so mistakes happen. It is vital to minimize the risk of a CRA auditor suspecting any potential issues. This is best done by working with a professional. Contact us today to find out how we can help.

Worried About A CRA Audit? Talk to a Ex-CRA tax dispute expert for free.

 

We can help  by:

 

  • 1| Offering a comprehensive solution that is focused on achieving the most favorable possible outcome for your tax issue;
  • 2| Communicating with the CRA on your behalf and navigate the entire CRA dispute process; and
  • 3| Offering a complete solution to your tax problems, including ex-CRA professionals in affiliation with tax lawyers from Farber Tax Law.

What Happens when CRA Audits You

 

In most cases, a CRA audit will take place at your home or business. If you are being represented by a professional during the process (such as if you contact Farber Tax Solutions to assist you) the audit may take place at the representative’s office. Farber Tax Solutions always works to have audits for our clients take place in our offices.

The auditor may ask to see certain documents and other proof to back up the numbers and claims made in your tax return. It is often in your best interest to have these documents available and easily accessible for the auditor. Not only will this speed up the auditor process, but it will keep the auditor happy which can be important.

In some situations, the audit will take place at a CRA office instead. This office may be located in an area outside of your region. You will be expected to bring your documents with you to the audit or send them to the auditor in advance.

No matter where your audit takes place, the auditor may ask to make copies of your supporting documents or borrow them to complete the audit. If they borrow your documents, the auditor will provide a receipt stating what was borrowed. Auditors are supposed to return documents to you as soon as possible.

During the audit, the auditor will review your documents, records, and other relevant information. This can include your filed tax returns, your credit history, your bank and credit card statements, details on your property such as mortgage documents, as well as any adjustments made by your bookkeeper or accountant. The auditor may also request your business documents, if you operate a business. CRA auditors are also able to request documents of other individuals who are not being audited but who may be related to the return being audited. This can include spouses, common-law partners, business partners, etc.

If the auditor has any questions or issues about your situation, they will ask them during the audit. You are also able to raise any questions or concerns you may have. It is important to use care when discussing your tax situation with the CRA. You will want to be honest and straightforward, but it’s also important to understand the potential implications of any information that you provide. Working with a professional can help you prepare for the audit. Contact us today for more information on how we can assist before, during, and after the audit process.

At the conclusion of the audit, the auditor may find that the previous assessment is correct and nothing more should be done. The auditor may also find that your return should reassessed, which could mean changes to your refund or how much tax you owe. This information will be detailed in a final letter that is sent to you by the auditor.

If you disagree with the results of the audit, you can choose to discuss it with the auditor to attempt to resolve the situation. If this attempt is not successful, you have the right to appeal the reassessment. If you wish to formally object to an assessment or reassessment made by the CRA, or appeal a CRA decision, it’s critical that you work with a professional. Contact us to find out more.

 

How Many Audits Per Year by the CRA?

 

The CRA does not publish official numbers as to how many audits they conduct per year. However, based on information that the CRA has made public, the agency likely conducts tens of thousands of audits per year. This includes audits of both businesses and individuals. When it conducts audits, the CRA is looking for various potential issues of noncompliance, such as undeclared income, ineligible expense claims, real estate “flipping” situations, fraudulent activity, and more.

Of course, a major reason why many people want to know how many audits the CRA does in a year is because they want to know what their chances of being audited are. No one wants to be audited. At best, it is a lengthy and dull process that takes time out of your busy life and likely causes you stress and anxiety. The audit can even potentially mean that your tax return will be reassessed, and you will owe tax debt that you did not expect to owe. This can be a big issue as the CRA treats tax debts very seriously. If you are not able to pay the tax you owe right away, the agency will charge compound daily interest on the outstanding amount, starting on the day after the tax is due. The longer you go without being able to pay your taxes, the more you will owe.

Many people who find themselves in a situation where their audit is completed, and the auditor determines that their return must be reassessed, end up being surprised by what they owe and unprepared to pay when the receive their Notice of Reassessment.

The CRA has very strong collection powers that it uses to enforce compliance. If you owe taxes and do not pay what you owe, the agency can freeze your bank account, order your wages garnished, seize your assets, and more.

If you are concerned about an upcoming audit and what the result of the audit may be, if you have just gone through an audit and are unable to pay what you owe, or if you have almost any other tax issue, the team at Farber Tax Solutions can help. Our expert team is made up of skilled legal and ex-CRA professionals who not only have an in-depth understanding of Canadian tax law and CRA processes, but who also have experience in successfully communicating and negotiating with the CRA.

No matter what stage of the audit process you are in, we can assist. We can work with you to develop an audit strategy, help you submit the information requested by the CRA, accompany you to audit meetings, ensure a clear and fair audit process, review post audit proposals, and work to secure a more favourable outcome. If you wish to object to the result of the audit or appeal a CRA ruling, we’re there for you. If you’re looking to negotiate a fair payment plan, trust us to help with that as well. Don’t fight the CRA alone. Contact our team of experienced professionals today.

 

When Does CRA Notify you of an Audit?

 

Being told that your tax return is being audited can be a stressful situation. Audits are naturally worrying situations as you do not necessarily know what the CRA is looking for or why they have decided to audit your returns.

If the CRA decides to conduct an audit into your tax returns, the first step of the audit process is that you will be contacted by mail or phone (or both) by a CRA auditor. They will let you know that an audit process has started and will inform you of the date, time, and location of the audit. The audit could take place in your home, your place of business, the office of your representative, or a CRA office.

If the audit is taking place outside of a CRA office, the auditor will present identification when they arrive and then start the audit. It is important that you have all relevant documentation on hand, no matter where the audit is taking place. If it is occurring at a CRA office, you may be requested to send documents to the auditor in advance. The auditor may want to make copies of some of your documents or borrow them to use them during the audit process. If they do borrow any of your paperwork, you will be provided with a receipt and the auditor will return the files when they are done with them.

The records that an auditor may wish to review include:

  • Filed tax returns
  • Your credit history
  • Details about your property, such as your mortgage documents
  • Business records (such as invoices, journals, receipts, contracts, ledgers, bank statements, rental records, and many other documents)
  • Your bank statements and credit card statements
  • Information on adjustments that your accountant or bookkeeper made for tax purposes
  • Business or personal records of spouses, common-law partners, other family members, business partners, beneficiaries, trustees, etc. who may be related to the return
  • Other records, books, documents, and information considered relative to the tax return being audited

Once the auditor has reviewed all documents, they will send you a final letter explaining the result of the audit. One of the following results could occur:

  • No adjustments will be made to your assessment.
    • In this situation, the CRA will essentially be saying that they didn’t find any issues or differences between the tax return you filed and the documents that you provided to the auditor
  • An adjustment could be made that resulted in a reassessment and more tax owing
    • In this case, the auditor will provide you with an estimate of the additional amount owing prior to the notice of reassessment being provided. This allows you to pay all or part of what you owe right away, which can help you avoid interest charges.
  • An adjustment could be made that resulted in a reassessment and less tax is owing
    • If the audit determines that you owe less tax than you paid, you will be entitled to a refund.

If you disagree with the results of the audit, you are able to appeal it. The experienced team at Farber Tax Solutions can help you with the appeals process, represent you in court as needed, and give you the best chance of success. Contact us today to find out how we can help.

Are you being audited by the CRA? Talk to a Ex-CRA tax dispute expert for free.

What Types of Businesses Are Most Likely to Be Audited?

 

Technically any individual or business can be audited. The CRA states that it conducts audits to ensure that taxpayers are meeting their tax obligations and to maintain public confidence in the tax system. According to the CRA, it chooses files for an audit based on a risk assessment. This assessment looks at many factors, such as whether there are indications of non-compliance or the likelihood of errors in a return. It uses a comparison of similar tax files to help determine when an audit is more likely to be necessary.

This means that there are some industries and types of businesses that are more likely to be audited than others. Generally, the CRA conducts more audits in business types and industries where it believes there is a greater likelihood of errors or potential tax evasion.

Taxpayers who are self-employed are much more likely to be audited than those who work for an employer. The main reason for this is that these taxpayers do not receive a T-4 slip and they do not have taxes withheld at the source. Self-employed individuals are responsible for keeping accurate records and correctly reporting their own income. They are also able to claim certain deductions (such as home office expenses) that other taxpayers may not be able to claim. This situation results in a greater likelihood for errors or the possibility of purposeful tax evasion. Since this is true, self-employed individuals are more likely to be audited.

Companies that conduct a lot of business in cash are also more likely to be audited. This is because with credit, debit, cheque, or internet-based transactions, there is a more detailed paper trail than in situations where a business operates primarily on cash. This leads to a greater likelihood that income has not being correctly reported and a possibility that some cash sales are not being declared. Industries such as restaurants, construction industries, and other such businesses that tend to have a higher number of cash transactions are often audited for this reason.

The CRA also conducts analysis to compare business with others in the same industry. If your business claims higher expenses or a lower percentage of cash sales than other similar industries, the CRA may consider this a red flag and want to audit your business.

Companies that clam repeated losses are also likely to be audited. The CRA will want to proof that the business is claiming all of its income and that the business had a “reasonable expectation of profit” if it claimed a number of expenses and repeatedly claimed a loss. This is to avoid taxpayers who may be claiming that their hobby is actually a business so they can claim certain expenses.

In fact, any business that claims a large number of expenses (especially if these expenses are more than related businesses in the same industry claim) could be more likely to be audited.

As for how far back can CRA audit, remember that the agency can audit personal returns for three years after the date on the Notice of Assessment, but that the agency can look back even further if it suspects fraud.

 

How Far Back Can CRA Audit a Corporation?

 

Many people wonder how far back can CRA audit. This is a fair point to wonder about as it can provide great peace of mind to know that the CRA can only look back at so many years of returns when it comes to audits. However, unfortunately, the reality is slightly more complicated than that.

When it comes to auditing Canadian-controlled private corporations (CCPCs), there is usually a three-year limit from the time the Notice of Assessment has been issued during which the CRA can conduct an audit under normal circumstances. This means if your 2015 taxes are filed in April of 2016, and you receive your Notice of Assessment in June 2016, the CRA can audit your 2015 tax return until June 2019 (three years from the date on the Notice of Assessment). However, for GST/HST purposes, the CRA can audit those returns for up to four years from the particular tax year.

However, if the CRA suspects that fraud took place, it can extend the audit period indefinitely. For example, consider the 2015 tax return mentioned above. The regular timeframe to audit this return would end in June 2019, but if the CRA found something in the company’s 2018 tax return that raises suspicion, it can now go back several more years to audit returns.

If the CRA decides to conduct a business audit on your return, the auditor will usually contact you by phone and send a letter confirming the details (such as the date, time, and location of the audit). Most business audits occur at the place of business. When the CRA auditor arrives, they will need a place to work where they can conduct the audit. Most companies provide the auditor with a desk or an office where they will not be disturbed. If the auditor has any questions during the audit, they will mention them as they arise.

The auditor will likely need to review several different documents over the course of the audit. This can include invoices, journals, ledgers, receipts, bank statements, contracts, and other business records. They may also request personal records from the business owner as well as personal and business records from various individuals related to the business owner (such as spouses, family members, business partners, etc.)

The auditor may also ask to speak with accountants, bookkeepers, or employees who may have information on the records and details reported in the tax return.

In some cases, the auditor will request that electronic documents be sent to the auditor in advance of the audit. If records are not available electronically, the auditor will review them in your office. They may ask to borrow certain documents for further review and will provide you with a receipt for anything they borrow.

Once the audit is complete, the auditor will send a written summary. If you disagree with the results of the auditor, you can contact them to discuss the issue. If this is not successful, you can file a formal objection. The team at Farber can assist you in the process, giving you the best chance of success. Contact us today.

 

CRA Marital Status Audit

 

No one wants to be audited by the CRA for any reason. This is a stressful process that, even if it does not discover any issues, causes anxiety and worry. Not only are audits intrusive, but they take time as well. One audit that people seem to find especially bothersome is what is commonly called a “CRA marital status audit.” Simply put, this is a situation where the CRA wishes to know more about your marital status.

Such an audit can occur for various reasons. One potential issue can be if the CRA believes you are living in a long-term conjugal relationship with someone but have filed your return as single. There are potential benefits for two partners to claim that they are both single, such as receiving GST/HST credits or other benefits that they would otherwise not be eligible to receive. According to the CRA, if two people live in a conjugal relationship for 12 consecutive months, they are said to be in a common-law relationship. If two people who live together have a child, they are considered to be common-law partners as soon as they move in together. The same is true in a situation where a person you are living with has custody or control over your child. This is considered a common-law relationship. Both opposite sex and same sex couples are treated the same way when it comes to relationship status.

You may also be contacted for a CRA marital status audit if you have frequently changed your marital status or if there are inconsistences between you and other individuals who live at your address when it comes to reporting the nature of your relationship.

Taxpayers are expected to report changes in their marital status to the CRA. For instance, if you get married, you have until the end of the following month to report this change to the agency. Married in September? You have to report this marriage to the CRA by the end of October. Note that informing the CRA of your marital status change does not necessarily change your status with other government organizations or branches. They may have to be contacted separately.

If you are legally married or considered common-law, but do not notify the CRA, your benefits may be duplicated. If this happens, the CRA will notify you and require that any funds that should not have been paid be repaid to the CRA. The agency will charge interest dating back to when the omission took place.

Having the CRA investigate your personal life isn’t just invasive and time-consuming, but it can also be costly. If the agency conducts a marital status audit and determines that you did not properly report the status of your relationship, you could be responsible for paying back benefits that you received and potentially facing other tax implications.

If the CRA is investigating your situation, contact us today. Our team of experienced legal and ex-CRA professionals know how to communicate and negotiate with the CRA. We have years of experience at successfully resolving tax issues and work with clients in various situations to get favourable results.

Worried About A CRA Audit? Talk to a Ex-CRA tax dispute expert for free.

 

We can help  by:

 

  • 1| Offering a comprehensive solution that is focused on achieving the most favorable possible outcome for your tax issue;
  • 2| Communicating with the CRA on your behalf and navigate the entire CRA dispute process; and
  • 3| Offering a complete solution to your tax problems, including ex-CRA professionals in affiliation with tax lawyers from Farber Tax Law.

How Does CRA Audit Rental Income?

 

The CRA expects taxpayers to report all of their income sources. If you own a property that you are renting out to generate income, it is important that you report this money as rental income.

An exception to this can be a situation where you are renting a property at lower-than-market rates to a relative. In this situation, you are not operating a profitable rental and not generating any income. However, you cannot claim related expenses in this situation. If you were to claim this property as a rental, claim the related expenses, and then claim to be operating at a loss each year, the CRA may become suspicious of your situation. While rental properties being operated for profit can certainly experience losses, if you claim a loss repeatedly, the CRA will want more information. You are not legally able to write off losses on your rental property if you are not attempting to generate income.

Another situation where the CRA may want a closer look at your numbers (and where the agency may conduct an audit) is if you are disclosing rental income while also claiming expenses that the CRA considers unreasonable. Landlords who own rental properties are able to deduct reasonable expenses against their rental income. These expenses could include the costs of advertising the rental property, insurance costs, mortgage interest, costs associated with regular repairs and maintenance, management costs associated with the property (such as legal and accounting fees), and a percentage of your utility bill if you are renting out a portion of your home.

If you are claiming expenses for your rental property than the CRA deems unreasonable, you could find yourself the subject of a CRA audit.

If the CRA conducts an audit and determines that you have not properly declared rental income, or if the agency believes that you have claimed more expenses that it considers reasonable, it could reassess your return which would likely result in your owing tax. This tax owing would be subject to compound daily interest charges dating back to when the income should have been reported correctly. Depending on the amount you owe and the timeframe, this could be a very large amount.

The CRA can even potentially charge penalties if it believes you purposely avoided disclosing your income. If you earn income of $500 or more for a tax year but do not report it, it is considered a failure to report income. Doing this repeatedly can result in a significant penalty. Knowingly making a false statement or omission can also result in a serious penalty.

If you did not properly disclose rental income on your taxes, the CRA may consider waiving penalties if you voluntarily provide this information to the agency through the Voluntary Disclosure Program (VDP). However, this must be done before the CRA contacts you about your taxes. If the CRA has requested an audit, the VDP is no longer an option to you.

In either of these situations, the team at Farber Tax Solutions can help. Please contact us today to find out what our team can do for you.

 

CRA Audit No Receipts

 

The CRA needs to see specific documents when it is conducting an audit. Auditors are looking to verify the claims that you made in regard to your income, your charitable donations, your business expenses, and various other numbers that you listed on your tax return. If the auditor is not able to compare the numbers you stated on your return with documentation (such as invoices, receipts, and other paperwork) because you do not have these documents, the auditor is likely to determine that your numbers are not accurate. This could result in your tax return being reassessed and you could potentially end up owing money to the CRA.

At the very least, the auditor will not be happy if you do not have the appropriate receipts. That’s because completing an audit when the taxpayer being audited doesn’t have the needed records is more difficult. If your auditor is unhappy or is having difficulty with the audit, there is a chance that they will not give you a favourable audit. Having good records and co-operating with the auditor will reduce the length of time required to complete the audit. This not only means that it will be easier for the auditor, but it will also be easier for you. No one wants to deal with the stress and anxiety of being audited for longer than they absolutely need to.

If you do not have receipts and other records, you could try to get copies of from those who supplied them. For instance, you may be able to get records of sale from suppliers, invoices from clients, charitable donation slips from the charities themselves, and copies of cheques and statements from your financial institution. If you are about to go into a CRA audit no receipts present, take the time to instead look into ways to get copies of the documents the auditor may need. If you are able to get what’s requested, the audit will be much easier on everyone.

If you’re not able to get the records, the CRA suggests that you discuss this situation with the auditor or their team leader. They may be able to work with you to come up with ways to confirm your numbers.

However, it’s also a good idea to work with a trusted professional throughout all stages of the audit, especially if you don’t have the documents needed to back up the numbers in your return. The CRA likes to see firm proof or else they will not believe what you submitted in your tax return. Do not take the risk of heading into an audit unprepared. CRA auditors are very skilled and they search for potential issues such as a taxpayer not having proof to confirm the numbers in their return. To an auditor, if you don’t have a way to prove what you say is correct, there is a good chance that you are not being honest. While this may not be reality, this is often how auditors see it. Speak with the team at Farber before the audit. We can review your situation, come up with a strategy for the audit, and appear with you before the auditor. Let us level the playing field between you and the CRA. Contact us today.

 

CRA Payroll Audit

 

The CRA conducts audits for various reasons. In some cases, it does so when it suspects a possible issue, in other cases it chooses to audit individuals or businesses based on the industry they work in, and in other cases the CRA chooses taxpayers at random. However, when the CRA decides to conduct an audit, it can look into various aspects of a business. One of these aspects is a CRA payroll audit.

In these audits, the CRA will want to examine business records relating to company payroll, such as bank accounts, ledgers, journals, sales invoices, expense accounts, payroll deduction remittances, and other related documents.

It is important to be prepared during such audits. You should make every attempt to have your related business records available for the auditor. If the CRA requests a document that you are not able to produce, this can slow down the audit and can even potentially result in your claims being questioned due to lack of proof.

Most CRA business audits take place at the taxpayer’s place of business. The auditor will need a place to work in your office where they will not be disturbed. They will ask that you have certain documents available for them to review during the audit. In some cases, the auditor may request copies of the documents to complete the audit later, or they may borrow certain documents until the process is complete. The auditor may also wish to speak with staff members who may have insight and information into your company’s payroll, such as accountants and bookkeepers.

The audit could also take place at the CRA’s offices. If this is the case, the auditor will request that you send certain documents in advance of the audit or they may ask you to bring them with you when you come in for the audit.

Once the auditor has completed the process, they will write to you to give you their results. The auditor may find that the initial tax assessment was correct. In this situation, there is nothing more to be done at this point and the audit is complete. The auditor may also find that your tax returns should be reassessed by the CRA. Once the reassessment is complete, you may owe additional taxes. If you disagree with this reassessment, you can formally object to it. The team at Farber Tax Solutions can help. We have years of experience in communicating and negotiating with the CRA and can assist you at every stage of the audit process. If you wish to file a Notice of Objection following a CRA payroll audit or Notice of Reassessment, we can help complete the notice in a manner that will give you the best chance of success. If you wish to appeal a CRA decision in the Tax Court of Canada, we can help you prepare your case, structure your arguments, and represent you in court.

For more information on how Farber Tax Solutions can help, please do not hesitate to contact us today. Our team of ex-CRA professionals and legal experts is here to help.

 

Trust our Team to Help with a Canada Revenue Agency Audit

 

At Farber, our tax audit solutions team has the experience and knowledge needed to even the playing field and resolve your tax problem. Our dedicated team is made up for ex-CRA and legal professionals. We understand CRA audits and what it takes to successfully navigate one. When you meet with us, we perform a complete review of your file and provide you with representation through all stages of your audit. We always aim to hold audits in our office and do our best to make the process a smooth one.

If you think, know, or feel that you are at risk of being audited, click here to contact us to find out what you can do.

Farber Tax Solutions can help you successfully deal with CRA problems. We utilize the experience of our tax experts to:

  • 1| Offer a comprehensive solution that is focused on achieving the most favorable possible outcome for your tax issue;
  • 2| Communicate with the CRA on your behalf and navigate the entire CRA dispute process; and
  • 3| Offer a complete solution to your tax problems, including ex-CRA professionals in affiliation with tax lawyers from Farber Tax Law.