Operating a small business or start-up comes with a lot of stress.  One of the things you don't want to hear is “tax audit” but it still can happen.  For some reason, the CRA has chosen you either because of some red flag like late filing or just random happenstance.  If it does happen to you, here are some points to consider.

 Don't ignore the notice.  Deal with it immediately by contacting your preferred Capex CPA Tax consultant.
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 If you speak with a CRA agent, be polite and answer all questions but be as concise as possible.  If you start fumbling, the agent may become impatient and it is likely that you will provide some piece of information that the agent will target and extend the audit further.  In fact, it is best if you have your accountant deal with the CRA directly.  Tax professionals are able to help the agent with the information they need without extraneous details.

 Produce Your Records

 Make sure they are accurate and up to date.  In fact, the best policy is to keep them organized throughout the year.  If you find it a struggle, hiring a skilled bookkeeper may be well worth the money.

 If you were wondering, here is the general process for a CRA audit.

 •        You will receive notice from a CRA auditor by mail, phone, or both.  This notification will include the time span that the audit will cover and the documentation you will need to produce.

•        After you submit the documentation electronically, the auditor will begin the review.

•        The auditor will prepare and send you a letter notifying you of the proposed adjustments the auditor recommends.  You will have 30 days to offer a rebuttal. 

•        After that time, a final letter will be issued that will order:

•        No adjustment

•        Adjustment with the amount of additional tax to be paid. 

•        Adjustment with the amount of refund you are owed.

 If you do not agree with the assessment, you can file an objection.  This will extend the time for the payment of the extra tax until the dispute is resolved.  You also can file a complaint if you do not feel the agent's actions were unsatisfactory.

 The CRA maintains a system to identify tax returns and subsidy claims that are prime targets for audits.  This includes the number of errors on previous returns or indications that the business will not pay its tax obligations in a timely manner. 

 The CRA auditor has the right to examine all books, records, documents, and other pertinent information.  That will include ledgers, journals, payroll, invoices, bank statements, and contracts.  They are also allowed to look at the personal records of the owner(s) including mortgage, bank records, and credit cards.  If there are other individuals associated with the business like spouses or investors, the audit can also involve their personal records as well.

 Remember that the auditor can request information or documents in addition to that which was in the original request.  You can send them electronically.  The auditor may also make copies of your documentation if the audit is in person. Capex CPA has qualified and experienced tax consultants to help you with your CRA Audit. Contact us today click on this link —> https://capexcpa.com/contact

-The Capex CPA Team