10 Things Small Businesses Must Know Before CRA Audit

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maandag 6 juli 2015 om 10:39:11

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Doesn’t it sound scary to hear, “You’ve been selected for audit”? It may not have any impact on multinationals and big businesses. But when auditors send notifications to small businesses, they start to panic. And there’s nothing worse than hearing these words from CRA auditors.

 

Fast forward few hours when you come back from trauma you received. How will you respond to the notification? Will you ignore it completely? Or will you get panic and create a bigger mess than you already have?

You can talk to Canadian tax lawyers and ask for their assistance. They will help you understand the whole process and may offer you additional help, if required. In order to get prepared for such events or to take assistance, you can visit the website www.barretttaxlaw.com for help.

 

Furthermore, follow these tips to get prepared for any such events in future:

 

  1. Its Not Bad Being Audited

CRA chooses businesses for audits in two ways:

  • They select particular business because they found something suspicious in their records.
  • They also select businesses randomly
  • They may choose a business because they may be auditing similar businesses this year.

So, it’s not an odd if you’re the “Chosen One”.

  1. Audit Notification is Important

Don’t ever think they would leave you if you ignore their notification. In fact, you should call them to have updates and information about next steps. So, you can prepare yourself.

  1. Visit with a Professional

Don’t be to naïve to face them alone. They’re tax auditors and you have basic information about tax. It’s your right to have a Canadian tax law lawyer who could help you answer their questions.

  1. Read Taxpayer Bill of Rights Thoroughly

By reading it, you can understand your rights and make your assumptions. For example,

  • You have the right to review
  • You can appeal
  • The right to be treated professionally and courteously

 

  1. Be Courteous

Make their job easier and help them perform their job. It will make them happy and they may return the favor.

 

  1. Audits Take Long

Audits don’t complete in days or weeks. Some may take more than six months. Even a desk audit, in which CRA reviews only one item, may take more than a month. You have to be patient with it.

  1. Your Records Must Be As Accurate as Possible

CRA has your previous tax records. It will review your business and personal records. They may request for the records of other individuals, and check all the adjustments made by your accountant.

  1. Start the Audit

Audit starts as soon as auditors are permitted to enter the premises. They start by observing the human side, followed by a meeting with you (the owner), your tax advisor and the head of accounts.

 

  1. Prepare Yourself for Questions

Make sure you have your advisor so that he can explain the real meaning of the question asked.

 

  1. Panic is Not an Option

If auditors inform you that you need to pay more, you can either agree and pay or disagree and appeal. To appeal you have to file an objection within 90 days after notice of assessment was sent.

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