Just about everyone is a little intimidated by tax season in Canada, but you don’t need to be. While there are significant differences between filing for a small business and filing personal taxes, there are a few universal things everyone should know.
Keep tax season simple for you or your business
Tax season doesn’t have to be a stressful time of the year. Just be sure to file before April 30, 2019, and have a look below to learn more about retention of records and get a basic understanding of audits.
#1 – Retention of records
Not to encourage clutter in your home or office, but it does benefit you to hang onto anything tax related for at least 6 years after filing. Having the necessary documents can prove quite helpful in the event you are facing an audit from the CRA.
Audits, like taxes, can sound intimidating – and they are serious – but the right documents can help you speed through the process and defend your tax filings.
#2 – Understanding audits
As previously mentioned, audits are intimidating to most people. While the stakes are higher in an audit – since the CRA wants to make sure you aren’t skipping out on paying your fair share – understanding what to expect can help you feel more at ease.
First things first, a standard audit is when the CRA investigates your submitted claim based on some discrepancies or irregularities they may have found. Simply put, they believe something is wrong with what how you filed your taxes and now you’ll have to prove your case to them – via your books, accounts, records, etc.
It’s important to know the different types of audit that exist, starting with a desk audit. A “desk audit” would likely require accounting advice as it deals with business income or declared losses, as well as a real estate transaction. These require you to present receipts, and/or records on ANY area the CRA may be auditing.
There are also different styles of audit:
Correspondence Audit – This is quite common, as it asks for more information about particular parts of a tax return.
Field Audit – If someone visits your home or business to investigate, it’s known as a field audit.
Aggressive Tax Planning Audit (ATP) – Here, an ATP will address issues regarding claiming tax avoidance.
Office Audit – Individuals, not businesses can expect an office audit.
If you or your accountant make an error or you fail to stay organized enough to prove your case, a legal professional can be there to keep things sorted.
Near the end of your audit, you can expect to receive some kind of verification of mistakes found or if you owe more tax. You’ll have 30 days to dispute these claims if you choose to – leading to a court appearance.
An important term to remember too is CRA reassessment. These are commonly distributed after an audit as a notice that adjustments will be made, so be sure to provide the correct information if asked.
Other important things to remember, include:
If you owe any money to the CRA and can’t pay, you may need legal advice
If you disagree with the reassessment, you have 90 days to follow with a “Notice of Objection”
Be sure to have a lawyer with you once you file your “Notice of Objection” for support
You don’t have the right to refuse an audit, but you do have the right to question and object to any findings or requests prior to reassessment
While you may need a lawyer for specific parts of the audit process, you would also benefit from an accountant as well. Bottom line, if you’re facing an audit, don’t try to weather this storm alone.
Need legal support when dealing with taxes? Trust Sicotte Guilbault
Taxes aren’t always everyone’s strong suit, so if you need legal help, don’t be afraid to go with the best. At Sicotte Guilbault, we know tax season is a hectic time of year for you. That’s why we take pride in diligently supporting our clients by providing the legal support they need to succeed in court. While no two cases are ever the same, rest assured our team of experienced litigators can be there to fight for you or your business. Give us a call at (613) 837-7408 to set-up a meeting to review the details of your situation. You don’t have to fight alone.
by: Denis Sicotte -
posted on: April 17, 2019