Audits can be a stressful and intimidating time for Canadian taxpayers.
If you find yourself facing an audit from the CRA, it’s important to be prepared by hiring professionals who can help you organize your financial information, ensure your rights are observed and minimize any tax consequences.
Liu & Associates are available to provide assistance and consultation when it comes to personal tax audits.
How do Personal Tax Audits Work?
An income tax audit is an examination of a tax return performed by a member of the Canada Revenue Agency (CRA).
The examiner makes a line-by-line assessment of your tax return and, if something seems off or doesn’t add up, you will be asked to correct the return or justify your claim.
Depending on the results, you may end up owing more in taxes.
This is why it is important that you keep organized and concise records of your income and expenses as well as all tax forms and qualifying receipts.
Even though most taxpayers comply with Canada’s tax laws, the CRA issues audits in order to make sure the tax system is fair for everyone.
Audits can be stressful for Canadian tax-payers, so our expert team of accountants at Liu & Associates are on hand to help you navigate the audit process:
Audit Assessments
As a part of our tax and audit services, our CPA’s will confirm and double-check all of your personal tax assessments done by the CRA.
These assessments include your “Notice of Assessment” (NOA) which is a document issued by the CRA outlining your tax assessment summary as well as other important information.
Your NOA will include key line numbers and reported amounts.
Errors on your NOA can occur. Let our accountants take a look to determine if an error was made, such as forgetting to include important expenses or reportable income, and if any adjustments need to be reported.
Audit Preparation
If you have been selected for an audit by the CRA, there are certain preparations you need to make.
Having a professional accountant aid you in these preparations can ensure that the audit is handled quickly and with your personal rights and interests in mind.
The first step in preparing for an audit is a proactive one: Keep good records. It may happen that you are never audited by the CRA but, if you are, you want to make sure you have all necessary information organized and accessible.
If you don’t have organized records of your finances, it is advisable that you consult an expert accountant to recreate your records as accurately as possible. Liu & Associates can help you track down and organize your financial records.
The next step in preparing for an audit is to understand the auditing process. By talking to a tax professional, you can better prepare yourself for what’s to come and cut down on unnecessary stress.
Liu & Associates can help you with the entire process of preparing for your personal audit. Contact us today to find out how!
Audit Appeals
It is always possible to appeal a personal tax audit. Should you believe there has been an error with the CRA’s assessment, Liu & Associates can represent you during the appeal.
Should you wish to appeal the decision to the Tax Court of Canada, you have 90 days from the date of notice to do so. During that time, you must file a Notice of Appeal that details relevant facts, the issues in dispute and the grounds for the appeal.
This notice is served on the federal Department of Justice who represents the CRA. An appointed lawyer will draft a reply to your Notice of Appeal.
When going forward with an audit appeal, it is crucial that you organize your evidence and gather any information relevant to the tax dispute. This evidence, and any found on behalf of the CRA, are exchanged between you and the Tax Court.
The appeal process isn’t just a paper trail and will require court proceedings to resolve.
While you can certainly approach this situation on your own, we highly recommend you employ the aid of a professional tax accountant.
How to Avoid a Personal Tax Audit
The best way of dealing with a personal tax audit is to avoid one in the first place!
Here are some tips for avoiding a tax audit:
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- Document and support any changes made to your income tax return.
- File all of the information from the slips (i.e. T1) you receive.
- If the CRA questions your return, provide all necessary receipts and related documentation.
- Be accurate and reasonable when it comes to deductions (especially when you work from home).
- Do not claim the entirety of your vehicle if it is also used for personal use.
- Report any cash or trade you receive in exchange for services.
- Be careful not to use too many tax shelters.
By accurately and carefully providing all necessary information on your income tax return, you can easily avoid an audit altogether.
Let Us Take the Lead of Your Situation
Once we are familiar with your needs and the specifics of the situation, our tax professionals will work with the CRA on your behalf in order to resolve the situation quickly.
We will be your go-between and buffer so you can feel less stressed and focus on helping the process.
Facing a personal tax audit? Contact our team today!