More and more companies are facing audits from the Canada Revenue Agency (CRA). Now that the agency ramped up assessments of small to medium-sized enterprises, you want to ensure that your company can survive a CRA audit.
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Fortunately, audits are nothing to be afraid of if you comply with tax rules. Another thing that can help you get through the process is learning the tips below.
Before the audit starts, you must confirm what taxation years are under assessment and what records will be needed. Doing so can help ensure you have all crucial documents ready when the auditor arrives.
Make It Easy for Auditors
You must make it as easy as possible for auditors to rifle through your records. So prepare a quiet, comfortable workspace and organize your documents before the CRA assessment.
An audit will finish sooner if essential records are in your possession. So try to prevent auditors from taking them off your premises.
They may also ask you to authorize a check of your bank records and safety deposit boxes. You can sign the authorization form, but block out the line saying you will pay for service charges.
Keep Important Documents
You should prepare the receipts and documents to support your claims if your business is up for an audit.
You must keep your records, financial data, and supporting documents for at least six years. If you place the data online, you need to keep them in an electronically readable format.
Some documents, like your directors’ minutes for a corporation and general ledger, must be kept longer. Keeping records can help reduce the time required to complete the assessment.
When you talk to an auditor, always be professional. Do not be afraid to ask for clear expectations, direction, and due dates. You can also request that all questions be in writing. Doing so can help you to remain organized and give you ample time to think of responses instead of feeling rushed on the spot.
You should only provide what the auditor asks. Do not surrender all the documents you have ever saved for your business. You should also refrain from rattling off a long list of expenses. This mistake can lengthen the process.
If the auditor asked for specific lists or documents, only give those.
Do Not Be Afraid To Appeal
After the auditor completes the assessment and the agency decides tax adjustments are needed, you will get a proposed statement of adjustments. The CRA sends the document within 30 days before sending a notice of reassessment outlining any additional taxes and interest you owe.
Keep in mind that you have the option to appeal this statement. If you disagree with the audit results, all is not lost. Gather the necessary documents and send your rebuttal through the agency’s assessment appeal process.
You should know your rights as a taxpayer and not hesitate to exercise them anytime. You do not have to accept the audit results if you think it is inaccurate.
If you need assistance filing an appeal, look for an accountant who offers CRA audit assistance. With professional help, you can request a reassessment after your appeal comes through.
You can do these simple things to ensure you will survive a CRA audit. Although this assessment can be daunting, you have nothing to worry about if your business pays taxes right.