CRA audits – we all know they exist, but only those unlucky enough to have lived through them know the extent to which they can throw a wrench into your normal routine – or cost you an arm and a leg. While many Canadians will never have to suffer the intrusion, there are a significant number who do – and sometimes there is nothing you can do but sit back and let the ransacking begin.
While many individuals are chosen for CRA audits at random, others are targeted specifically because of things provided (or not provided) in a tax return. Want to know more about what triggers an audit? Read this great article from the Toronto Star – it may be a few years old, but everything contained within still holds true – and it can may just help you avoid an audit in the future: https://www.thestar.com/business/personal_finance/spending_saving/2013/05/19/7_triggers_that_may_lead_to_a_tax_audit.html.
Ok, that’s great information if you are not already facing the dreaded CRA audit. If you are, however, don’t stress, we’ve got some advice to help you survive the process.
The best advice we can offer is to keep or find all accurate, detailed records. When CRA auditors want to see your records, the clearer and more comprehensive those records are, the better off you’ll be. Keep copies of all personal bank, investment, RRSP, and credit card statements for you and your family members together with your business records. This will make things much easier if the auditor requests them – having to piece things together afterwards without them can be a nightmare.
The next step is to call a tax professional. CRA audits can be intimidating, and having someone at your side who knows the ins and outs can make all the difference. This individual can protect you from aggressive auditing tactics meant to scare you, as well as helping you compile all of the information required to make the process as smooth as possible. Make sure that you request enough time to get records together. Your tax professional can better guide you on how long you will need.
Only provide the information the CRA auditor asks for – nothing more, nothing less. While dealing with the auditor, be honest, and answer all questions posed to you, but don’t try to be helpful by providing any additional information. Doing so can complicate things or highlight things that the auditor isn’t focussed on.
Finally, once the audit is complete the CRA will send you a proposed statement of adjustments, usually within 30 days and prior to issuing a notice of reassessment detailing any additional taxes and interest owing, plus penalties. Once you receive it, don’t be afraid to appeal it. Speak to your tax professional about objecting and they can walk you through the formal process.
CRA audits can be nerve-wracking, and often individuals don’t know what to do once informed of one. Tax Solutions Canada can help. Get rid of the stress and survive the audit unscathed. Call us today at 1-888-868-1400.