A call from the Canada Revenue Agency (the CRA, sometimes known by the former name of Revenue Canada) can feel scary and intimidating. We understand. It’s one of the reasons having your taxes done by a professional and keeping records together and complete are so important for your peace of mind and the continued success of your business.
That being said, audits happen. It’s not something to panic about unless you have concerns that your taxes have not been done correctly, but either way, if your business is selected for an audit, it can’t be avoided – it’s not optional. It could have come up because of a potential for errors, how similar business files look or a flag for non-compliance for one reason or another. In most cases the audit will be performed at your place of business to ensure efficiency and accuracy.
The CRA will look through all business books, records, files and documentation related to your taxes as well as possibly your personal records and taxes. This can include credit card statements, mortgage statements and other documents that may seem unrelated. There may also be a need to look at the records of others (your spouse, a business partner, etc.). The best thing to do is to be open and helpful with an auditor. You want the process to be quick and easy and once complete there are two possible outcomes:
- The original assessment is correct and nothing more will be done. You will receive a letter indicating the audit is closed.
- You return is reassessed, meaning you will receive a letter outlining you need to pay more taxes (or will receive a refund!) then have 30 days to respond.
Audits can be stressful, but having an accountant prepare your business taxes will help reduce that stress by ensuring there is someone helping you along the way to understand the process and keep everyone on the same page. If you need help with an audit or negotiation of a reassessment letter, let us know, we’d be more than happy to assist.