Last updated: Jul. 11, 2018
How Tax Professionals Can Help with CRA Representation and Audit Support
Preparing taxes can be stressful at the best of times but dealing with the Canada Revenue Agency (CRA) and getting audited takes it to an entirely different level.
If you’re a small business owner, independent contractor, or farm operator, and you’ve been incorrectly assessed or re-assessed, you understand how stressful, intimidating, and scary the process can be; you are at risk of losing your business, savings, house, and way of life.
Below are some of the top ways that tax professionals can help small business owners with audit support and CRA representation.
Get Professional Tax Audit Help Before You Need It
In a court of law, you’re innocent until proven guilty; with a CRA audit, you’re guilty until proven innocent. From the outset of a CRA audit, it’s up to business owners to provide supporting documentation and to defend any claims.
Getting CRA representation and audit protection before dealing with the CRA ensures your filed taxes do not raise any red flags. In the unlikely event a business is audited by the CRA, it also ensures you will be treated fairly and the case dealt with quickly and efficiently.
The CRA Tax Audit Process
What happens if you are audited by the CRA?
You will most likely receive a notice from the CRA stating their intention to audit. The notice will outline the information the CRA needs and where the audit will take place. It could be a desk audit that occurs at the CRA offices, or it could take place at your business.
The CRA auditor will comb through any relevant information they want. This can include previous tax returns, business records, and even personal records. While routine CRA audits usually last less than three months, some audits can drag on for years.
There are two possible outcomes once the CRA audit is finished.
- In the event of a correct assessment, there is nothing more to do and the audit is closed.
- Sometimes though the CRA auditor will find that your tax return needs to be reassessed to determine whether
- you paid too much and are eligible for a refund, or
- didn’t pay enough and need to pay additional taxes and most likely interest and penalties.
If you do not agree with the CRA auditor’s reassessment, you can file an appeal.
Red Flags That Might Lead to a Reassessment
The best way to avoid a CRA audit is to have your taxes prepared by a professional and be filed on time. To make sure that happens, businesses need to be organized and be reasonable with their claims.
Even then, this does not mean a business will never get audited. Some small businesses get randomly selected for an audit. Others are audited because of:
- Overstated expenses
- Unusual changes in deductions
- Overstated credits
- Underreported or unreported earnings
- GST/HST non-compliance
- Third-party tips
- Credits not supported by receipts
- Unreported offshore income
- Unreported offshore assets
Let a Professional Deal with the CRA Audit
A lot of people are tempted to represent themselves in a CRA audit. This could be a costly mistake.
The CRA has infinite resources at its disposal and total access to your financial information. Because a CRA audit can be stressful, it’s not uncommon for people to voluntarily offer too much information, which can further complicate and prolong an audit.
That’s why it’s a better idea to let professionals with years of CRA tax audit experience help with CRA representation and audit support. In most cases, a professional will handle all of the communication with the CRA; this helps control the flow of information and protects you from revealing more than you legally need to.
Things Included in CRA Representation
What does a tax professional do when they provide CRA representation?
- Consult about CRA audits
- Deal with voluntary disclosures of tax liabilities
- Review previous tax returns
- Help comply with pre-assessment reviews
- Deal with tax re-assessments and file tax adjustments
- File any late taxes
- And more
FBC, Canada’s CRA Representation and Audit Support Experts
You might not be able to avoid a tax audit, but you can certainly take the right steps to ensure the process goes smoothly.
The key is hiring the right professionals to help with CRA representation and audit support. The tax professionals at FBC have been helping small business owner’s deal with the CRA for over 65 years.
Since 1952, FBC has worked exclusively with small business owners, farm operators, and independent contractors, helping represent them with audit support and CRA representation.
And when it comes to CRA audits, we’ve seen it all, from helping business owners who have had their taxes prepared incorrectly by another company, to those who have tried to ignore the CRA, and people who have called us less than a week before a tax audit.
In addition to audit support and CRA representation, FBC has helped tens of thousands of clients maximize their deductions and minimize their tax burden, ensuring they don’t get audited in the first place.
At FBC, we understand that no two small businesses have the same financial planning and tax preparation need. That’s why we’re the only firm in Canada to offer integrated tax services on a year-round Membership basis.
For a fixed fee, Members get year-round access to our tax planning, tax preparation, consultation, bookkeeping, and financial planning services. FBC also provides all new Members with a review of their previous 3 years’ tax returns.
As an FBC Member, if you’re audited by the CRA, we’ll represent you (all the way to tax court if necessary). And, at no extra cost to you, including any court costs or legal fees.
For more information on FBC and the services we offer, call us today at 1-800-265-1002 or submit an online form and an FBC tax specialist will contact you at your earliest convenience.