CRA Tax Audit Proof Financial Reporting in Canada

The Canada Revenue Agency requires that all businesses retain at least six years of financial reporting by law. Companies seeking CRA tax audit solutions should look for tools for leaving the best audit trail so that accounting is transparent.

By documenting the sequence of events behind every business transaction, a company will be in compliance rules to audit reporting. The CRA requires that businesses leave an audit trail. CRA tax audit solutions include record of receipts and inventory as evidence of expenditures.

E-commerce has added new CRA tax audit solutions to reporting. Electronic email and web log records confirm transactions. Audio recordings of phone-based transaction are valid CRA tax audit solutions used for audit record. The CRA requires e-commerce businesses to retain information about all transactions conducted via internet or telephone. Electronic record is a CRA tax audit solutions to supply details about sales transactions.

Formal records management CRA tax audit solutions such as electronic storage provide record of financial transaction. Paper records generated in digital format are also CRA tax audit solutions. The CRA allows for scanning of receipts and bill of sale in for official review. Records originally provided in electronic format must be retained in this mode, and may be supplemented by print out.

Companies subscribing to third party merchant services payment gateways may obtain data on e-commerce transactions from their provider. Some companies offer separate online billing software applications and record. Accuracy of record is part of the obligation of firms, and should be subject to review by an accountant or financial controller in the interest of the taxpayer.

 

Follow the rules for CRA reporting

Canadian companies using storage of financial records in a data storage location external to Canada or Canadian registration are responsible for compliance of information to CRA rules. Computer or servers outside of Canada are generally not in compliance with CRA requirements. Registration of file storage should be reviewed prior to reporting of financials. Companies may seek permission to house financial records outside of Canada from the CRA with request for feedback about the rules and regulations guiding this relationship.

Internal record of taxpayer contributions to the Canada Pension Plan, employment Insurance, and related income tax payments should retain record about worker performance and compensation. This includes any financial record in support of payment obligation abided by the taxpayer.

Companies using an outside source of tax solution for audit accounting should pay special attention to the management of payroll tasks. Employers are legally responsible for ensuring accuracy of this record in respect to employee taxpayer record. The CRA requires six years retention of those records. Quebec businesses must retain additional information in the interest of employer and employee obligation to tax.

Taxpayer control of data by way of third party merchant services provision often includes the latest software application as system tax solutions. Databases used for financial control of operations accounting in Canadian businesses should be reviewed in correspondence with CRA’s requirement to audit proof reporting. For more information about CRA accepted tax solutions, contact Tax 911 Now at 1-877-918-2991.