5 Things Every Person Should Know About a Cra Audit: Most people hear the word audit and immediately start to tremble. If you have done everything right and kept accurate records, you have nothing to worry about. But not everyone is a tax specialist. Here are some handy tips to help you understand the system.
5 Things Every Person Should Know About a Cra Audit
Why Will I Be Audited?
The CRA may request to audit you at any time of your life. The purpose of the audit is to ensure that the taxpayer is fulfilling their tax obligations. Also, they want to confirm that individuals are adhering to tax laws.
At all times, the CRA’s primary desire is to maintain public confidence. Individuals and businesses alike can be assured that the CRA act justly and with integrity and wish to uphold the rules within Canada’s tax-paying community.
How Will the Audit Be Carried Out?
You will be contacted by telephone or by mail to arrange a suitable time and date for a meeting. You can opt to be visited at either your home or work address; either option is acceptable. Alternatively, you can request for the meeting to take place at your representative’s premises.
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Always ensure that the CRA auditor produces a valid identification before you proceed to be interviewed. The auditor will ask a series of questions to which you must respond.
If the auditor has requested that you present documents at the time of the audit, they may want to make copies of these during the meeting. If the representative from the CRA must take any documents for further study, make sure you receive a receipt detailing which materials have been taken.
Auditors may not receive any records or information from you by email. If there are documents that you need to share electronically, consult with the CRA employee to determine the safest way in which to proceed.
What Records Can They Request to Scrutinize?
Any of your personal or business-related records can be requested and viewed by a CRA auditor. At the same time, the auditor may ask to examine records of family members.
In your business, members of staff who are responsible for accounting practices may be questioned about company operations. The auditor will take care to work through various records and documents. These may include bank statements, company journals, and any contracts that the business is a party to.
Can You Object to Their Findings?
If the auditor decides your tax return needs to be reassessed, you can insist on having a clear explanation as to why this is happening. From the decision, you are entitled to a period of 30-days to either agree or object to the proposal.
When you object, you need to reach out to the auditor and disclose why you do not agree to the proposal to reassess. Any additional documents you have to support your case should be presented to the auditor for assessment.
When Everything Is Said and Done
Once the audit is complete, you may receive information that you have paid too much tax for the period. In this case, you are entitled to a refund from the CRA.
If the reassessment proves that you owe a higher amount of tax, you will be required to settle the additional amount due within a stipulated time-frame. You will receive an official notice of reassessment, detailing the value of the payment due.
As a law-abiding citizen, every individual has a responsibility to keep sufficient records for at least six years. Maintaining good, clear, and concise records reduces the time it will take to conduct an audit. Audits can be carried out at any given time, to taxpayers from all different walks of life.
By cooperating with the CRA’s auditing team and sharing all necessary information, you can rest assured that the process will run smoothly and efficiently.
It is essential to keep in mind that the CRA wants to ensure that the correct procedures and practices are being followed at all times to ensure the functional, effective running of the country.