Tax Audit Specialists in Canada
A tax audit can be an overwhelming and potentially expensive experience. A CRA tax auditor will ask to see books and records and bank account statements, and there may be questionnaires to be filled out. Any information entered incorrectly, even if due to an error, will be used against the taxpayer.
As experienced Toronto tax lawyers, we have the knowledge and resources necessary to navigate the CRA tax audit process.
CRA Audit Process
What happens when you are audited?
Typically, you will first receive a notice from CRA of their intention to audit. The notice will usually outline the preliminary information that they require from you. In some cases, you may be provided with a detailed audit questionnaire. The auditor may then follow up and request more information. The beginning of an audit is the best time to obtain legal representation. Auditors are not always reasonable and may not listen to your reasoning for filing your returns the way you did. Our experienced Toronto tax lawyers will speak to the auditors on your behalf and begin the necessary legal work it takes to resolve all issues relating to your return.
If you disagree with the outcome of an audit, it is especially crucial to obtain representation as soon as you have been reassessed by CRA. You have appeal rights, but you only have 90 days to appeal by filing a Notice of Objection. As experienced tax lawyers in Toronto, we can provide detailed assistance in filing your objection.
CRA Tax Audits
There are over 350,000 audit and review actions conducted by the Canada Revenue Agency on a yearly basis. Around 15,000 of these audits deal with “cash only” businesses (i.e. the underground economy). Additionally, an estimated 35,000 are tax shelter audits.
CRA may choose to audit a taxpayer for several reasons. Here are just a few:
- Random selection
- Third-party tips
- Comparison of reported income to other taxpayers in your neighbourhood
- Focused audits such as home renovators or restaurants or crypto traders
- Comparison of information on returns to information received from third-party sources or
- Past history of non-compliance
The Canadian income tax system is based on “self-assessment.” This means that it is up to every taxpayer to properly report their annual income on their return. The CRA performs tax audits to ensure the “self-assessment” system continues to work properly. While most Canadians are truthful on their returns, there are some who are not. Some taxpayers also make genuine errors when preparing their returns.
Most CRA audits are done to ensure compliance with the Income Tax Act or the Excise Tax Act for GST/HST. An audit is an examination of a taxpayer’s returns and supporting records, including bank accounts and receipts, to ensure that income and expenses have been properly reported and supported by accounting records.
Here are a few examples of issues that may arise in a CRA audit that would cause a taxpayer to be reassessed at the end of an audit:
- Overstated Expenses
- Overstated Deductions
- Overstated Credits
- Underreported or unreported Earnings
- Unreported offshore income
- Unreported offshore assets
- Credits, such as for charitable donations or medical expenses, that are not supported by receipts
- Failure to report “gig” income such as from Fiverr or Uber
Be sure you have complete records detailing every expense and deduction you have claimed on your return!
Tax Appeal Assistance
If CRA has informed you of an impending income tax audit, or you have unfavourable audit results, trust an income tax audit expert in Canada to help you through the process.
We offer tax solutions to individuals and businesses across Canada. At Taxpage, you’ll find experienced tax lawyers in Edmonton, Toronto, Mississauga, Brampton, Hamilton, London, Montreal, Ottawa, Calgary, Vancouver, and Winnipeg.
Contact us today to set up an initial consultation. Our top Canadian tax law firm is your one-stop assistance centre and can assist both during the audit process and once the CRA audit is complete. The CRA is not on your side, but our tax lawyers are!
Case Studies
We were retained by Don, who runs a number of businesses near Kingston, Ontario and had various issues. One of his corporations was being audited for HST. His accountant was not able to represent him properly. We took over the audit file. We dealt with his bookkeeper to provide the records needed by the auditor and satisfied all of the auditor’s questions. All of the imputed credits (deductions) which were supported by receipts were allowed.
Z is based in Toronto and is in the business of purchasing cars for export. A GST/HST audit led to holds being placed on Input Tax Credit refunds of over $600,000, which the client relied upon for operating capital. We were referred by his accountant and retained when the accountant was unable to make any progress. We made detailed submissions to the auditor supporting the refunds and demanded a release of the withheld funds. After escalating to the auditor’s team leader, we were successful in achieving rolling monthly refunds for the remainder of the audit. By the conclusion of the audit, we had been successful in protecting the client’s cash flows and achieving a complete refund of the Input Tax Credits.
Dennis is retired and worked in finance. He lives in Newmarket, Ontario and in the Caribbean and has complex issues related to overseas holding corporations and assets. He retained our Toronto tax law firm to assist him with his CRA tax audit. The main audit issue was that the overseas bank accounts, assets and all supporting documentation were held in the corporation’s name. Our Toronto income tax lawyers reviewed the records and then instructed the accountant to provide all of the relevant books and records to the CRA auditor and supplied bare trust documents. Our Canadian tax lawyers provided a detailed explanation and rationale regarding Canadian income tax law and the bare trust concept, and its treatment for income tax purposes, which resulted in a complete acceptance of Dennis’s original filing position.
Find Tax Audit Assistance in Toronto
Taxpage is your trusted resource for tax audit specialists in Canada. With over 30 years of experience, we help individuals and businesses understand what triggers an audit from the CRA and what they can do to find relief.
We understand the complexities and nuances involved in receiving a CRA audit letter and can help clients navigate the process with ease and efficiency.
Trust Taxpage to provide trusted CRA audit solutions in Canada.
