Have you received a letter from the CRA indicating that your tax returns have been selected for an audit? Are you unsure how to handle this stressful situation? Are you experiencing sleepless nights because of this tax audit letter? Worry no more, we are one of the best audit service providers in Canada, and we can help you!
How does CRA Choose Taxpayers to Audit
There are four ways that the CRA decides who they will audit:
- Computer-Generated Lists, where the computer system selects financial information of tax payers who work in a similar field and does a comparison of the files producing a list of returns that may need auditing. Most files that are audited are chosen in this way due to the high standard of compliance within tax rules and regulations in Canada.
- Audit Projects: where the CRA tests the compliance of a particular type of business, if the CRA notices a particularly significant non-compliance in the selected group, then an audit of local, regional or national tax payers in that group may be done.
- Leads: This includes information that has been produced through sources outside of the CRA and information that the CRA has gathered from other audits.
- Secondary Files: if the CRA is doing an audit on a particular client/file, other clients associated are sometimes also audited making it easier to go through all the related files at the same time.
How the CRA Audit is Done
Once a file has been selected by the CRA, an auditor reviews the relevant records either at a CRA office (office audit) or at the workplace of the relevant tax payer, this is known as a field audit. The following documents will be examined during an audit process:
- Information on file with the CRA, including the returns that have been selected for the audit (this could be more than one years’ returns), financial statements, audit reports from any previous audits conducted by the CRA as well as any other information that the CRA has on file.
- Any business records such as ledgers, journals, expense account details, sales and purchase invoices and bank / financial records or statements.
The auditor contacts the tax payer and will either ask that the relevant records be sent to the CRA or will set up an appointment to start the audit at the client’s office.
If the audit is going to be done at the tax payer’s place of business, the auditor will want to be able to speak to relevant employees, especially those involved with accounts and may also want to inspect the premises to get a better feel for the business and how it works.
The Audit Outcome
Once the audit is complete, the CRA Auditor may propose that certain adjustments be made to the return(s) submitted, these will be discussed with the tax payer. All proposals are be made in writing by the CRA Auditor and a limited time period is given for the tax payer to respond.
The tax payer may need to provide additional information to the CRA and the auditor will consider the information, possibly issuing a new proposal in light of the new submissions.
If there are changes needed as a result of the audit, the auditor will issue a notice of reassessment.
How to confront a CRA audit
Confronting a CRA audit is undoubtedly a daunting task. A tax audit often leaves tax payers overwhelmed with feelings of anxiety and fear which make it difficult for them to function well. While the CRA allows you to represent yourself in a CRA audit, it is in your best interest to hire a professional.
Why choose professionals instead of yourself
Professionals do not just submit the requested information without doing a thorough internal examination to avoid any unnecessary exposure of the client file to the CRA.
Professionals understand the reasons and the intention of every tax audit and are thus able to prepare accordingly.
Tax audits involve subjective factors and therefore do require tax expertise to negotiate a better outcome. It is not just a simple document submission excise.
Audits take a long time to complete. Typical audits can range from a few weeks to several months and require ongoing communication with the CRA. It may become too time consuming or simply inconvenient for you.
There is far too much uncertainty and complexity to a tax audit. Without professional help, you will very likely find yourself stuck, confused and helpless.
Doing an audit without professional tax representation means an uneven playground and automatically puts you at a disadvantage.
Seek professional help before contacting the CRA auditor!
The notice from the CRA might ask you to call them immediately upon receiving the letter. However, it is crucial that you resist the urge to contact the CRA auditor yourself! It is important as what you say may harm you.
In addition, you might not know the answers to the complex questions posed by the CRA auditor. Sometimes the CRA auditor asks for details of your tax returns which you may not even remember. Not knowing the nuances of tax law can lead to huge penalties and consequences that are beyond repair. Hiring a tax professional will help you avoid the risk.
Tax SOS can make a huge positive difference to your tax audit
Would you consider going to trial without a lawyer? It’s the same for a tax audit. Competent tax professionals such as Tax SOS can make a huge difference on the outcome of your audit. Tax SOS will help you to defend the audit, which is better than to wait for the prospect to appeal it. We can save you time and money!
Make a better choice this time
If your accountant did not warn you that you can be audited in the near future, then you need to find a better qualified professional to handle your tax audit defense. Unless you are one hundred percent confident in your tax knowledge, you should not try to handle a CRA audit on your own. Tax SOS is here to offer outstanding tax help. By seeking tax audit representation from Tax SOS, you can ensure that you have reduced tax penalties and an improved tax situation. Just see for yourself what other happy clients are saying about us in these Testimonials.
Tax SOS Can Help You
Dealing with the CRA auditor is important and will go faster and more smoothly if you have the help of experienced tax professionals like us. We can do the necessary dealing with the CRA on your behalf.
If you are looking for tax consultants that can help you with your audit problems, call Tax SOS at (877) 982-9767 or (416)623-9234 or complete the Contact Form to get a free confidential consultation!