Overview of CRA Tax audit
If you find yourself under tax audit or review by the CRA, don’t panic. The CRA isn’t always correct and an audit isn’t a death sentence. But there’s one warning: you need to ensure that your bookkeeping and accounting are up to date before CRA inspection begins.
Tax Review vs Tax Audit
A tax review is a request for additional information if the CRA finds errors in your tax return at the time of processing. The CRA may send you a Notice of Reassessment or call you asking for details about your business account.
A tax audit is a detailed examination of your books and records to determine if you have fulfilled your tax obligations. If the CRA is not satisfied with your response to a tax review, they can audit you up to four years after issuing a Notice of Assessment or at any time if they suspect fraud.
SAR Professional Corporation, Chartered Professional Accountant provides tax audit and defense, helping individuals and businesses deal with Notice of Reassessment and tax audits in an efficient and anxiety-free manner.
The Canadian tax system is based on the self-assessment principle that requires taxpayers to report and file their taxable income. To enforce tax laws, the CRA conducts audits to see the records and documents that serve as proof of the dollar amounts you reported in your returns.
When the CRA selects you for reassessment, you have two options: accept the reassessment and pay the owed amount or file an objection.
If you’re unable to pay the amount, interest charges will accrue every day until you make the payment in full. We can advise you on the right steps and help negotiate a payment plan with the CRA.
When you decide to challenge the CRA, make sure you not only have the supporting documentation but know what you’re in for. Negotiating with the CRA is difficult and can be stressful when you consider that you will be talking to professionals highly knowledgeable in tax laws.
At this point, our Chartered Professional Accountants can provide competent support, readying the necessary documentation and applying our deep understanding of tax laws to negotiate an agreement that works well for you and that the CRA finds acceptable.
Although audits of business accounts are quite rare, the odds of being audited increase in the following cases:
- Your business runs primarily on cash transactions
- You belong to an industry that raises audit red flags (retail, construction, wholesale/distribution, food service and manufacturing)
- Your business expenses are higher compared to others in your sector
- If the CRA suspects you have overreported home office expenses
- Your business is making recurring losses (every business makes losses – be sure to maintain updated and correct financial documents)
If there are huge discrepancies in your tax return, then CRA auditors will put you under audit. No matter what the agency’s reason to examine your financial accounts is, you can sail through the audit process with our experienced Chartered Professional Accountants by your side.
Payroll tax audit support
We review your payroll reports and check your financial records to determine if the amounts you’ve reported match those in the documents. The payroll auditing process typically involves an inspection of your ledgers, payroll deduction remittances to the CRA, sales invoices, and expense accounts. We assist in bringing all payroll records up-to-date and organizing them to make it easy for the auditor to find what they want.
GST audit support
In a GST audit, you will be asked to provide a number of supporting documents besides invoices and receipts. They include your general ledger, credit card receipts and a detailed listing of GST collected and input tax credits (ITCs) claimed, among others. After you submit the documents within the 30-day deadline, the CRA may request additional documents. With our GST tax filing and audit support, you can overcome non-compliance issues quickly and establish an efficient GST process.
Why choose sar professional corporation, cpa?
- We have tackled a number of audit scenarios and dealt with both simple and complex CRA issues. No matter what the scope of your audit, we can help you prepare for the process.
- Our effective CRA audit representation is far more cost-effective than the thousands of $$$$ in tax bill that the CRA may present you after putting your financial records under the microscope.
- We provide comprehensive support throughout the audit process and work towards ensuring the most favourable outcome for your situation.
