Canada Revenue Agency Audits in Canada - What Can Happen?
The Canada Revenue Agency performs thousands of audits on Canadian taxpayers annually.
This can occur for a number of reasons:
- One of your customers or suppliers may have been audited, which triggered an audit on you.
- You declared a lot of expenses, more so that your industry should call for.
- Someone may have reported you to the CRA snitch line.
- You may have contributed to a charity or tax shelter that is being investigated.
There are so many things that can trigger a CRA audit and the CRA has a lot of power. Here is what to expect.
1. The CRA may ask you to complete financial disclosure statements to prove that your expenses far exceed your declared earnings.
2. The CRA may want to conduct the audit at your home or place of business to see how much office space you actually have and so that they can quickly demand your records onsite.
3. The CRA could contact or even audit your customers and/or suppliers to prove discrepancies within your returns.
You may think you have kept clean records so you will fare fine in a CRA audit. You may not have good records and are worried. No matter what "you think", you should not directly engage the CRA if you have received notice of an audit and seek a professional opinion.
The first thing you should do is gather your records and have a chartered accountant perform an independent review of your returns. I say independent because if the CRA suspects that you have erred in your returns, it may be because your previous accountant made the mistake.
An independent review will ensure complete transparency and that if there are mistakes, you are aware of them.
Seek a chartered accounting firm that specializes in CRA audits. A good accountant will arrange it so that the CRA audit takes place at their office and not at your home or business. The audit will also be supervised.
Finally, audits can be very stressful. Making the right decisions to prepare yourself for an impending CRA audit will enable you to face your CRA auditor with confidence and a plan.
For more information visit www.fightbacktoday.ca.
