It is better to be proactive and take professional Canadian tax audit help so that you stay clear off the prying eyes of the CRA. A tax accountant will be aware that there are various types of audits. First, it is an assessment of the books and accounts by the CRA to make sure that the tax returns reflect the taxes owed by you correctly. The second purpose of the tax audit is to make sure that the individual or a business is fulfilling all its tax payment and filing obligations.
CRA may also conduct a tax audit that involves scrutiny of the Harmonised Sales Tax or an employer compliance audit. It may include Canada Pension Plan, tax benefit or tax withholding reporting and employment insurance. You need Canadian tax audit help as there is a possibility of the audit being done of the records either at the offices of the CRA or by means of a field audit. Your accounts could be reviewed at your house, office or at the office of your accountant.
CRA uses various methods to select individuals or businesses to audit. It uses a list which is computer-generated in order to go through financial information of companies within the same trade or industry. This list helps the CRA in deciding on which individuals or businesses to audit. CRA also executes projects that target specific businesses or groups at random times, particularly when there is an indication of any non-compliance concerning the filing of taxes within a group.
Another way for arriving at the possibility of a tax audit is through response to information from other investigations by the CRA or through some external sources and tips. Some files are selected mainly because of their association with other audits. For instance, if your business partner is going through a tax audit, your tax file is also likely to be put under scrutiny. You have to be prepared at all times and take necessary Canadian tax audit help as these audits could be conducted on a random basis by some unusual tax filing or information comparison to third party sources like the slips giving tax information.
When you take Canadian tax audit help, you can look to avoid patterns that trigger tax audits. Reporting business losses for a series of consecutive years could be an audit trigger, particularly if the business is a single owner one. Claiming of high expense items that are related to business revenue is always compared by the CRA to other related businesses in the same industry and it could be flagged.
Income which is under-reported could also trigger a tax audit. Large donations to charity and transactions of a similar nature could also be major audit trigger cases. When you take professional Canadian tax audit help, you will be given proper guidance. You will not try to lead a lifestyle which does not correspond to the income levels that you have reported. CRA may also audit your records if there are large claims towards home office deductions or if there are some unusual contributions to tax shelters that are currently under investigation.