Even if you complete and file your taxes accurately, there is still a possibility that the CRA may decide to audit your tax returns. It is wiser to seek guidance of an experienced tax accountant to offer a defence strategy for a possible CRA tax audit.

You may have vast theoretical knowledge about tax and affairs of the CRA, but many people have learnt that it is not an easy struggle to tangle with the tax people. Handling a CRA tax audit comes only through experience. The tact does not come through formal education; it comes by learning from battlefield experience on a first-hand basis and knowing all the tricks.

While making assessments on your taxes filed, a professional tax accountant would definitely be able to come to your rescue. A CRA tax audit is a scrutiny of taxpayers’ documents and records to establish the calculation of their taxes and check whether the returns have been accurately completed or if there is a potential to charge interest or penalties to the taxpayers.

A CRA tax audit is the way the government verifies the tax returns of Canadians to ensure that all taxes have been reported with accuracy and honesty. The CRA can also audit both GST and HST tax returns, personal income tax returns, excise taxes and the payroll documentation.

The consequence of anything going wrong on the tax returns would result in several penalties and that may include criminal prosecution. As per the CRA, an effective tax system of self-assessment could be realized through continuous inspection of individual and corporate tax returns. In the absence of a CRA tax audit, it feels that the tax system would be redundant and ineffective.

The one-on-one interaction with the CRA agent gives the opportunity for the taxpayers to get a personalized experience with the tax agency and it also creates a situation where the taxpayers need to deal with the tax agency on a subject that CRA agents have more experience and resources over taxpayers.

Experienced tax accountants are expert in their field and particularly in their working with the CRA while defending taxpayers from the tax agencies. In the case of a CRA tax audit, the tax accountants will work on behalf of the taxpayers to defend their tax returns to the CRA as they have access to the highest appeal levels. These experts will also be able to review the tax returns and the related documents of taxpayers for problem areas. They are adept at corresponding with the CRA on behalf of the taxpayers and also in scheduling and attending all CRA tax audit appointments.

The CRA can also issue a Notice of Reassessment if it feels that some taxpayers are not cleared to qualify for a credit or a deduction. The taxpayers can prepare a Notice of Objection through their accountants if they feel that the CRA has committed an error. This filing of the objection is the initial step in the process of getting a tax dispute resolved. The Notice of Objection has to be filed within a period of ninety days from the day the CRA mails its Notice of Assessment.

Individual and business taxpayers often do not file their tax returns on time or sometimes, they overstate their deductions or expenses to receive a higher refund. The tax amnesty program is the voluntary disclosure program which is designed to help these kinds of taxpayers to volunteer and come forward to pay their arrears taxes with penalties which may be reduced.

There are things that you need to know about tax amnesty:

What kind of taxes qualify for the tax amnesty program in Canada?

All personal or corporate taxes that have been evaded in Canada qualify under the tax amnesty and the Voluntary Disclosure Program. They include income tax on income which has not been declared before and can include income from even criminal activities. It will also include the Goods and Services Tax and the HST on income which was not declared before or which was collected and not remitted.

What are the principal benefits of applying for tax amnesty?

You may not be prosecuted. There may not be any penalties and interest may be reduced. Your case will be treated with confidentiality.

The tax amnesty program is to encourage people to make the right decision to pay their back taxes and file their returns in arrears. In such cases, the taxpayers may be required to sign an agreement where they will have to agree to file and pay all taxes in the future, on time.

Do you need to report your back taxes through tax professionals who handle tax amnesty?

It is not mandatory but it is highly recommended. Acting on your own could lead you into tough situations with the CRA who may deny your application for tax amnesty and inflict penalties on you.

What are the penalties involved when you file late tax returns?

Filing tax returns after their due date could attract a late filing penalty of up to 17% of the taxes which are unpaid. The penalty amount can incur further interest. For those taxpayers who repeat their late filing in the succeeding years, the penalty increases to up to 50%.

Do non-Canadian residents qualify for tax amnesty program?

All residents who are non-Canadian but have a tax liability as a result of living in Canada previously or those who have Canadian source income may qualify for the tax amnesty program in Canada.

What happens in the case of not being able to produce all the records?

Absence of relevant records may not disqualify you from applying for tax amnesty and making a voluntary disclosure but you will have to establish your earnings to the best of your abilities.

What is the procedure for applying for tax amnesty?

An official written explanation has to be provided to make sure that confidentiality is maintained in the Voluntary Disclosure application with all relevant information of tax amounts which may not have been disclosed by you previously. If you seek professional help, there will be a representative who will be exclusively assigned to your case to maintain on your behalf the privileged ninety days to submit your information in detail or apply for extension period if required.

As per Section 238 of the Income Tax Act in Canada, if a person does not complete and file his or her annual tax return, that person will be found guilty of an offense of tax evasion in Canada and can look at a fine ranging from a thousand dollars to twenty-five thousand dollars. In addition to this penalty, a tax court judge may also sentence the offender to a year of incarceration.

Apart from tax evasion in Canada, an individual could be penalized for an offense if that person has misled the CRA with intentional false statements while evading taxes. The specific fine for this type of tax evasion is 50% of the total amount of taxes that have been evaded. There could also be a jail sentence for up to two years.

When you face charges of tax evasion in Canada from the CRA, it is imperative that you consult professional tax representatives to help you in preparing your stand. Many tax firms offer free consultations with a tax consultant to self employed individuals and small business owners. The experienced and knowledgeable consultants will help people who are guilty of tax evasion Canada to familiarize themselves with the Canadian Income Tax Act.

Every person who has assented to making false statements in a tax return or lied concerning the amounts that are taxable is guilty of tax evasion. It is better not to evade taxes in Canada as it is a very serious crime. Even if a person is behind in filing tax returns, it is better for that individual to come clean and resolve the tax issues.

Simply put, tax evasion in Canada is when you are not filing your tax returns regularly and not declaring your income in an attempt to hide it; you may also be claiming certain expenses or tax credits which you are not eligible or entitled to claim. The CRA takes a serious stand on all tax evaders in Canada and there is no sympathy shown to the offenders. It is their main function to collect the taxes and the interest and penalties that accrue with the unpaid taxes.

A few days back, the Financial Post reported that the CRA is aiming to cut auditors while acknowledging extreme difficulty in tracking and pulling together billions of dollars in the form of unreported income. Certain organisational inefficiency has been identified and planned cuts have been briefed concerning the number of tax auditors despite the assurance by the government in recent months that the tax enforcement and collection would not be affected by these cuts.

It is generally a case that criminal charges for tax evasion in Canada go together with a civil assessment or a reassessment of an individual’s taxes. It is a clear fact that the person has earned more income than he or she has attempted to declare. This very failure on the part of the individual is the actual basis of the charge of tax evasion Canada. As a result of this, penalties concerning gross negligence are imposed on that individual.

The Voluntary Disclosure Program Canada is governed by the Canada Revenue Agency (CRA). This program is compliant with the tax laws of Canada. You can go forward and rectify your tax issues through the Voluntary Disclosure Program Canada.

The disclosure is filed to rectify the incomplete or inaccurate information that may have been given previously to the CRA. The Voluntary Disclosure Program Canada includes all that information that you may have previously reported which you later deemed was incomplete or inaccurate.

All taxpayers in Canada can make a voluntary disclosure. You can be a business or a trust, an individual, resident, non-resident or an employer. You can authorize a representative to submit a voluntary Disclosure on your behalf.

Some of the typical information that is reported through the Voluntary Disclosure Program Canada may be source deductions which have not been reported or it may be personal and business earnings which may not have been reported from all sources that are within or outside of Canada. The Voluntary Disclosure Program may also include income tax returns which are filed late through the T1 and T2 forms. It may also include all those expenses that you were not eligible to claim including the GST or HST omissions.

Through, a voluntary and valid disclosure with the CRA, you would end up paying only those taxes that you owe along with the interest. Penalties could be avoided and so can be the possible prosecution through the information given under the Voluntary Disclosure Program in Canada.

A disclosure to be valid has to meet certain conditions. Such as, it has to be a voluntary disclosure. It has to be made before you are notified of any compliance action that may be initiated by the CRA. The Voluntary Disclosure Program Canada has to include information which is more than a year overdue. The information has to be complete, supporting the disclosure submission. The Voluntary Disclosure Program Canada has to be submitted through Form RC199. It must involve penalties for Voluntary Disclosure Program to apply, etc.

You can receive the benefits of the Voluntary Disclosure Program Canada for the information provided by you and disclosed on the effective date of disclosure which is the date the CRA receives your form and stamps the acknowledgment.

Once the CRA receives your submission, it will keep you advised in writing of its decision either to accept or reject the disclosure. If you feel that the decision was not a fair one, you can ask for a second review of the file. If your original disclosure was rejected as you were not able to provide the requested information within the specified time frame, then the CRA will not accept your request even for a second review.

Through the Voluntary Disclosure Program Canada, you can even make a disclosure anonymously and this procedure is known as the “no-name” process. You have to identify yourself, however, in a period of three months.

There is no limit assigned as to the period the voluntary disclosure program Canada may request information for. If you have not been able to file for many years, then you are expected to bring all the tax years up to date.

If you file your income tax returns late, it can cost you a lot of money in Canada. The CRA will charge you tax penalties and interest Canada on the amount of tax which is unpaid if you owe them income taxes and file your returns late. It is better to file on time even if you are missing some information to avoid tax penalties and interest Canada. Changes can be filed to the income tax returns at a later date.

If you have an unpaid tax balance for the current year, daily interest is charged on a compound basis with effect from 1^st May next year. This will include all balances that you owe when the returns are reassessed. Additionally, interest will be charged on the penalties beginning with the day that your return falls due. The rate of tax penalties and interest Canada can change once in three months.

If there is any amount that is due from the previous years, compounded daily interest will be charged on those figures. The payments that are made by you are applied initially to the amounts that are owed from the previous years. Tax penalties and interest Canada may be cancelled or it can be waived in extraordinary circumstances or if financial hardship is proven.

Tax penalties and interest Canada for late filing will be 5% for the balance due for the current year and an additional 1% for the balance due for each month that your tax returns become late up to a maximum of one year with a maximum penalty of 17%. If there is a late filing penalty for the past three years, then the penalty is 10% with an additional 2% for each full month that your return is late. It is always better to avoid the penalty for late filing by filing your tax returns on time even if you are not able to pay the full amount of the tax balance on or before April 30.

In case of penalties, the requests that are related to the tax years ending in any of the ten calendar years before the period in which you request may be considered. To cite an example, a request made in 2026 has to relate to a penalty for the year 2016 or a later tax year.

There is a penalty involved if it is proved that intentionally or due to negligence you have made a false statement or an omission on your tax returns. The tax penalties and interest Canada in such cases will be equal to the greater of one hundred dollars or half of the understated tax or the overstated credits that are related to the false statements and omissions. However, this penalty could be waived if you make a voluntary disclosure about amounts which you failed to report or about any credits which you have overstated.

The theory of increased tax penalties and interest Canada is now fixed in the Income Tax Act. People just cannot forget the interest that could be levied if they fail to submit the correct amount of income tax installments.

Do you understand the process of garnishment? It is a legal procedure where a creditor may require a third party to turn over the bank accounts or the wages of the taxpayer. When you miss paying your taxes by CRA deadlines, you may face a CRA income garnishment. It allows CRA to seize your wages legally. It can also garnish all the money you have in your bank accounts or other assets that you may own until your tax owing is repaid in full.

A court order is not always required when it comes to an income garnishment. There are two distinct situations where a court order may not be required for income garnishment. The first situation is when a person assigns his or her wages to a credit union body. The second situation is when a person owes taxes which are unpaid to the CRA. In such cases, the CRA has the right to caution your employers directly and require the wages to be garnished.

When does the case of a wage levy arise? A wage levy is almost like an income garnishment. This action can be enforced and initiated by the CRA against a person for back taxes. In the case of  income garnishment or a wage levy, the employer will receive the garnishment order notice. The employer is clearly required under the law to keep back the amount which has been specified in the garnishment order from the wages of the taxpayer.

In Ontario, the maximum amount of your wages that can fall under income garnishment is half of your gross monthly salary as per the Ontario Wages Act. Under this Wages Act, the social assistance, employment insurance and the pension payments cannot be touched under garnishment. This just cannot happen even if the funds are deposited into a specified account at particular financial institutions.

To handle a CRA income garnishment, you need professional help from a tax representative in order to stop a wage levy or a garnishment. You will be protected if you have an owing solution that is legally binding and which comes under the protection of the tax courts. People have two options to annul a CRA income garnishment so that all future activity pertaining to collections may be prohibited. The first option for an income garnishment to be revoked is to declare bankruptcy. The second alternative  is to go the route of the consumer proposal. In this case, all the assets that you have are confined for repayment in order to reduce the amount you owe over a period not exceeding five years.

Some professional tax consultants negotiate with the CRA on your behalf and come up with a payment plan that may be fair to both sides and one which is within your payment capacity. A payment plan can be worked out with low monthly payments to avoid a CRA income garnishment.

Handling a CRA tax dispute and appeal process can be a stressful task for many small business owners and individuals in Canada. Understanding the Canadian tax appeal process can help you with your rights in your disputes with the CRA. The tax system in Canada is a self reporting one. The objective of the annual tax return is to report the amount of tax you owe to the CRA accurately every year. CRA will agree or dispute after processing your tax returns. All disputes will be notified to the taxpayer through a Notice of Assessment which is sent a few weeks after the filing of the tax returns.

CRA may ask for more information and audit the taxpayer concerning the tax obligations. Post audit, the CRA may agree or disagree with your justifications. In the case of disagreement, the CRA auditor will issue a Proposal Letter outlining the position of the CRA. If the taxpayer disputes the amount in the Notice of Reassessment, then he or she can ‘object’ through a Canadian tax appeal to the Agency Appeals division of the CRA.

An Appeals Officer from the CRA Appeals Division will be assigned to your case. The Appeals Officer could vacate or cancel the reassessment after hearing you out or may confirm by keeping it intact or varying it. You may wish to go through with a Canadian tax appeal after the decision of the Appeals Officer by approaching the Tax Court of Canada.

The Canadian tax appeal program is responsible for offering a consistent and timely process of review. It has been set up to offer taxpayers with an impartial review process of their tax situation. However, a considerable increase in tax planning on an aggressive basis has had an impact on the ability of the CRA to resolve the tax disputes in a timely fashion.

The Canadian tax appeal process involves decisions from the CRA which may be categorized into thirteen different types by the Appeals Branch. The delays in the Canadian tax appeal process may be attributed to an increase in the contested decisions and their volume over the past six years.

If the taxpayer feels that the Tax Court of Canada has still made an error in the judgment, he or she has a limited right in the Canadian tax appeal process to approach the Federal Court of Appeal within a month of the decision pronounced by the Tax Court judge. Dissatisfied taxpayers can even apply to the Supreme Court of Canada for further appeal. It may be rather expensive and more complex than what a taxpayer thinks.

It is always safer to seek professional help when planning a Canadian?tax appeal in Toronto to make matters simpler for yourself. The Canadian tax appeal system has been devised to offer an elementary framework of the entire process but it also involves stringent deadlines and has a few pitfalls. It is wiser on the part of a taxpayer to consult a tax accountant or a tax representative at their earliest convenience when facing a tax dispute with the CRA.

In Toronto, all kinds of taxpayers will be able to benefit through the expertise of a tax accountant Toronto when they hire him or her. There are certain things that you could get to know before you hire a tax accountant Toronto so that you are protected and also find the right professional in the bargain.

You have to be focused on what exactly you need your tax accountant Toronto to accomplish on your behalf. The principal reasons why you will benefit through the expertise offered by a tax accountant Toronto are:

• It is quite stressful and time consuming to prepare your own tax returns and file them.
• You can ensure that your tax returns would be accurately compiled.
• You will be able to get special tips and advice from a tax accountant Toronto.
• Your ultimate aim is to pay as little tax as you possibly can, and to this end, you will need meticulous planning and advice from a tax accountant Toronto.
• A tax accountant Toronto will help you face your tax problems by filing your taxes in arrears, paying off your tax or handling a CRA tax audit.

You can begin your search for an experienced tax accountant Toronto by looking for one who is a specialist in the areas that you require help in. How do you look around? You can get referrals from your family, friends or business colleagues. A person who is in a similar tax situation to yours will be able to give right referrals for a tax accountant Toronto.

Local and independent tax firms specialize in the tax requirements of an individual and small business corporations in their neighborhood. One tax accountant Toronto may be more experienced than the other. Specialized accountants will tend to focus on a particular area like tax audits, business consulting or tax accounting. They are proficient at accounting work which is of a complex nature.

The tax scene is in a state of constant change and is subject to federal regulations. Before you hire a tax accountant Toronto, you may check for their reputation and client review. You have to find out the area of specialization and how long that tax accountant Toronto has been in the tax business. You have to be confident that the tax accountant Toronto has the necessary experience and the knowledge to handle your specific tax situation. You have to be clear on whether your work is outsourced to someone else. You have to understand the process of review and whatever goes on behind the preparation of filing your tax returns.

A tax accountant Toronto may come from a varied background and may have different attitudes about the tax systems in Canada. The ultimate aim of a tax accountant Toronto should be to minimize the taxes that are paid by his or her clients, besides coming to grips with the complexities of the tax codes.

Once registered as corporation, all Canadian businesses except registered charity are required to file corporation income taxes regardless of the status of the business operation. As all corporations are distinct legal entities, they have to complete and file a T2 Canadian Corporation Income Tax return every year.

There are two types of returns forms to choose from: Simplified or corporation income tax short form T2 short form or regular corporation tax form or regular T2.

Simplified Corporation Income Tax applies to all corporations with a T2 Short Return Form if they are a Canadian controlled private corporation through the tax period. The corporation could have made no income or had a loss for the purpose of income tax reporting. The corporation also needs to operate only in one jurisdiction, such as one single province. The corporation cannot claim any refundable tax credits excluding the refund of overpaid instalments. For a T2 Short Return Form, it is also mandatory that the corporation does not deal with taxable dividends transaction during the tax year. In absence of all these conditions, a corporation has to file a regular T2 Canadian Corporation Income Tax Return.

Since the corporation income tax is much more complex than the T1 Personal Income Tax Return, it is recommended that the Corporation Income Tax filings be prepared by experienced and professional tax preparers as completion of a T2 Corporation Income Tax Toronto form will require usage of the General Index of Financial Information (GIFI).

Canadian Corporation Income Tax has to be filed within half a year of the end of the fiscal year. If the year-end date for filing taxes is December 31, it has to be filed before June 30 of the following year.

Canadian Corporation Income Tax can be filed electronically through an e-file and this applies to even non-resident corporations. If a corporation has any balance outstanding due on its corporate income tax account, that balance has to be paid within a period of two months after the tax year end.

For Canadian corporations who want to claim the small business deductions when filing Canadian corporation income tax, the net tax rate with effect from January 2012 has been 15%. The corporation is a preferred business structure form in Canadian business world. This is because of the limited liability protection the corporation offers as against a sole proprietorship entity. Canadian corporations are taxed slightly differently than the other business categories when filing Canadian corporation income tax.

The important tax change when considering Canadian corporation income tax is that the corporation is a legal entity within its own rights and is taxed separately from individual proprietorship. There are different kinds of corporations in Canada. The type will determine whether or not a corporation can claim certain deductions and rates.