Types of Audits
Our firm can handle your CRA audit on your behalf. As long as we have a signed authorization form T1013 we are you in the eyes of the CRA. Taxpayers need us to handle the audit for them for a variety of reasons.
There are several types of CRA audits that can occur. Each one requires us to prepare differently and deal with the auditors.
Personal Tax Audit
Some personal tax audits are restricted in scope and focus on a single item such as verifying donation or medical receipts. If the CRA is not satisfied with the documentation provided, then the audit may turn in to an unrestricted scope audit which is an audit of the entire tax return.
Another common audit technique that is very serious in nature is the net worth assessment. This is when the CRA will use changes in your assets and liabilities to determine your income. These are very serious assessments and should not be taken lightly. These are commonly done when a taxpayer is unable to provide supporting documentation requested by CRA.
For these audits, we need to verify the income and input tax credits claimed. This often means making sure that the books and records provided to the auditor support the figures reported on the GST/HST return. When a taxpayer has sufficient documentation and has filed correct returns, it is possible for these audits to be resolved quickly. If books and records are lacking or non-existent then the audit will be more complicated as we have to do more work to justify the figures on the return to the auditor. A taxpayer that goes through a corporate tax audit and is found to owe money to the CRA, is highly likely to have a GST/HST audit that follows.
If a taxpayer does not make monthly source deduction payments to the CRA, it is simply a matter of time before a payroll audit occurs. These audits typically do not last nearly as long as other types of audits. They involve an auditor reviewing bank statements and comparing shareholder withdrawals with source deduction payments. We deal with the auditor to explain transaction in question and ensure fair and correct audit results.
A corporate tax audit is the scariest audit of all as no one knows where the auditor will take issue. Because we do not often know at the onset where the auditor will focus, we have to prepare for everything. These types of audits can take many months to prepare for and many months for the auditor to complete his or her work. The auditor will have countless questions regarding income, credit card expenses, any item at all; and will often ask for more documentation as the audit progresses. It can be extremely time-consuming and burdensome for a taxpayer to have enough hours in the day to deal with the documentation alone, let alone deal with the tax arguments being made by the auditor.
8 Reasons To Have us Represent You In An Audit:
1. We Are You
If you don’t want to respond to letters or phone calls from CRA, having us as a representative means that you don’t have to. A signed authorization form means that we are you in the eyes of the CRA and all communication can go through us. Simply let us know when you receive any letters or phone calls so we can respond to them in a timely manner.
2. We Know Your Rights
If you attempt an audit without representation you will likely not know when the auditor is over-stepping their bounds. It will cost you more money not to have someone watching out for you. Going in to an audit without representative is like going to court without a lawyer.
3. We Know the Income Tax Act
There have been many auditors that disallow expenses that are actually allowable. If you represent yourself, you will likely assume that the auditor is always correct and may miss out on thousands of dollars of expenses.
4. We know how to speak their language
We can have a meaningful dialogue with the auditors about input tax credits, shareholder loans and source deductions, armed with the knowledge to fight for you. You don’t try to be your own own dentist, car mechanic, etc; you know when there is a value to be had in hiring someone who knows what they are doing.
5. We Can do the Nagging for You
When it comes to dealing with CRA, sometimes you simply don’t have the time to spend hours on hold and getting transferred between departments. Or, you don’t know what questions to ask or where to call to get the answers you are looking for. Let us deal with these problems for you. We are on the phone with CRA many times a day and can deal with these phone calls on your behalf.
6. We are Not Emotionally Involved in Your Tax Problems
It can be very easy to lose your temper with a CRA officer that is not being fair to you or has harmed you with their collections activities. We come from a place of empathy and understanding. We know what you are going through and can communicate with the CRA on your behalf and leave the emotions out of it.
7. We Can Make Requests for You
There are countless faxes, adjustments and letters that we send out to transfer instalment payments, request refunds, adjust returns, etc. Because we deal with the CRA so frequently, these are tasks we can do on your behalf so you can spend your time on your family or business.
8. We Know What to Say (and What Not to Say)
Taxpayers who are nervous or emotional often provide too much information to CRA that can be detrimental to their case. Our role is to be the filter and only provide the necessary information without giving too much away that can result in negative consequences.