If you have already endured a CRA tax audit, you know that it is an expensive process. Not only will it make your small business incur huge expenditures but also waste a lot of its time. Tax audit help can be found via some Canadian companies that are familiar with the practice of CRA auditors.
At a personal level, there are things that you can do to avoid being picked for an intrusive review process. This is particularly if you fall in the high-risk areas of taxation non-compliance. The biggest tax audit help you can give to yourself is to avoid the main audit risks. Five of them are described as shown below:-
Non-compliance with CRA’s information requests
Every year you get audited increases your odds of being disturbed again in future. To get tax audit help for yourself, show total compliance when the Canada Revenue Agency officials demand given information from you. Since tax audits are mostly conducted from their offices, the auditors will push you to upload as much business data as possible. Even as you fulfill their demands be careful not to disclose sensitive information that you can otherwise use to defend yourself.
Report employee tax returns truthfully
As an employer you have the responsibility to report everything about your employees. How many employees are part-timers or full-timers? What are their taxable benefits, deductions and so on? Ensure that you totally abide by the CRA tax reporting guidelines for an employer like you. This is a good way to avoid external tax audit help too.
Third parties tax returns filing
The Canada Revenue Agency uses a special matching program that is able to compare data from third parties with your filing position. If they find inconsistencies between the two parameters you will surely be audited.
Strange alterations in credits or deductions
The CRA keeps records of every tax payer’s yearly deductions and credits’ claims. If these claims change significantly from one year to another, this will most likely attract CRA probing. But if you can get tax audit help personally, by explaining your claims fully, you’ll have nothing to worry about. It is, however, important to maintain a consistent trend of deductions and credits year to year, including offshore intellectual property expenditures, management fees, interest fees and so on. This is particularly if groups of entities are involved.
Beware of an angry former independent contractor
Payroll audits can be authorized to find out the taxable benefits earned by an independent contractor who used to work for your organization. This may trigger further inquiry into similar workers’ benefits, including the use of company assets, free parking, low interest loans, incentives, prizes, transfer costs, dismissal compensation and retirement allowances among other thing. If there are emigrants working for you temporarily, the payroll audit can reveal that. It is wise to get tax audit help if you are facing this kind of a problem.
Consulting a tax professional is a very prudent decision. They can provide professional tax audit help to you for an affordable fee.