I’m Being Audited By The CRA, What Should I Do?
Depending on your employment position, it should not be a surprise to find yourself the target of a CRA audit. If you are self-employed, the owner of a small business, managing a successful TSFA, or have an income that does not match your postal code, your tax return is going to be looked at under a microscope by the Canada Revenue Agency.
If you do receive an audit, there are a number of steps you should take to ensure it runs smoothly. Contact a law firm specializing in tax law to ensure you follow instructions regarding income tax returns.
The first thing you should do is read the CRA letter carefully so that you understand exactly what the audit is asking for. If you have not familiarized yourself with the Taxpayers Bill of Rights or the purview of the CRA, now’s a good time to do so.
The second thing you should do is provide the CRA with the exact documents they ask for. In most cases, the CRA is looking to make a rudimentary comparison of your tax return to confirm your receipt records match your income (taking into account your expenses and investments). Other documents you should have on hand include: invoices, cancelled checks, bank statements, tax cancellations, plus access any accounting program or booking system you use. If you do some banking or bookkeeping electronically, download and share the files with your appointed CRA agent to avoid hold ups in the auditing procedure.
The onus is on you to prove the accuracy of your income and tax returns. If you are feeling overwhelmed by the procedure, request all information in writing and contact a tax lawyer who specializes in audits. A tax lawyer will inform you of best procedure and remind you of your rights – especially if the auditor is asking for any documentation outside the strict purview of your tax return information.
This article provides information of a general nature only. It does not provide legal advice nor can it or should it be relied upon. All tax situations are specific to their facts and will differ from the situations in this article. If you have specific legal questions you should consult a lawyer.