Well you made it… Your taxes have been filed on time. It looks good. BUT that was a while ago and you have just received a call or notice from the CRA that you are being audited. You may be worried and uncertain about what to expect.
What Should You Expect In Case You Are Being Audited?
• general information regarding the scope of the audit (related to the regulations administered by the CRA)
• the years that are subject to the audit
• an estimate as to the how much time the audit may take
• information that you will be required to provide for the audit
• maintain adequate books and records to determine your tax obligations and your entitlements
• keep books and records for a minimum of six years
• if you use a computer for your accounting, books and records, keep them in an electronically readable format, even if they are also kept on paper
Information You Must Provide
• your books and records (both paper and electronic)
• supporting documents, and explanations to the auditors questions (given the scope of the audit and the requirements outlined by the auditor when you were notified)
• invoices to back up expenses and revenue
• Director’s minutes etc.
To Move Towards a Successful Conclusion
• Make every effort to establish a positive, courteous and cooperative business relationship with the auditor
• Be as open as reasonably possible but direct any concerns you may have, as issues arise, to an accounting professional with audit support experience
• Ask questions prior to the start of the audit to ensure you know what information you will be required to provide
• Least possible privilege, a well known and commonly accepted principle, says the auditor should have access to the information they require to complete the audit and nothing more. They should have informed, you prior to the start of the audit, of the information they would require. This is not a fishing trip
• Have the auditor address any additional requests for information directly to yourself or someone you designate
• If the auditor needs to take your books offsite, ensure you get a detailed receipt for any borrowed documents. Again, it would be good to consult with your audit support accounting professional
• Provide a specific location for the auditor to conduct their work – don’t provide free reign to them to browse your business. Your audit support accounting service provider may be able to provide office space and administration service to accommodate the auditor throughout the period of the audit, freeing you and your people to carry on with important day-to-day business
The auditor may propose and explain the rationale for adjustments to your. A reasonable amount of time (usually 30 days) will generally be given to you to respond to adjustment proposals with your explanations.
Your questions about the findings and the explanations you offered will be considered and responded to by the auditor. If issues remain unresolved, there are escalations and avenues to pursue before a final decision are made, however, the best time to have addressed these issues was prior to the adjustment proposal. This is not a path to walk alone.
Notice of Assessment and Notice of Reassessment
If CRA adjusts your return, the auditor will arrange to have a notice of assessment or notice of reassessment mailed to you. If the adjustment results in an increase in the amount of your refund, a payment may accompany the notice.
AG Tax LLP Can Help
If you have any tax-related queries or need assistance with tax planning or filing please contact AG Tax. Our tax professionals are highly-experienced with US and Canadian tax laws and can provide you the right guidance to handle your tax situation.
Aylett Grant Tax LLP is a full service accounting firm with a dedicated team of experts, who are highly-qualified and experienced in handling situations related to US, Canadian, and other international tax laws. We can assist with:
- Canadian Personal and Corporate tax returns
- Cross Border Taxation and Business Planning
- US Personal and Corporate Taxation
- Disclosure of Foreign Assets and other information filings
- Retirement planning
- Estate Planning, Inheritance tax advice
To obtain a quote or to arrange for a consultation to discuss your tax related queries, please contact us at:
- 416-238-5920 (Greater Toronto Area, ON)
- 604-538-8735 (Greater Vancouver Area, BC)
- 780-702-2732 (Greater Edmonton Area, AB)
Disclaimer: The information in this publication is accurate as of the time of its publication. AG Tax assumes no responsibility for changes to tax legislation subsequent to the publication of this document. The information provided is for general information purposes only and should not be acted upon without seeking professional advice. If you would like to engage our services, please contact our staff and obtain authorization to send our firm confidential information. A client relationship is not created by the transmission of information. A client relationship is only formed with our firm when a scope and engagement letter signed by the firm and the potential client detailing the terms of engagement is present.