If you have been notified that you are being audited, don’t panic. We can work with you to correct any discrepancies in your records before the auditor finds them and to minimize the disruption to your life and business. We can help to ensure that the auditor remains within their legal boundaries at all times and deal with any issues that arise to prevent further criminal investigation and reduce any financial repercussions.
An audit is merely the process whereby the Canada Revenue Agency (CRA) asks you to substantiate the declarations and figures on your filed tax returns. Generally, you assemble your receipts and supporting documentation and the auditor will then review them to see if any adjustments are needed. Audits do not need to be feared but do need to be taken seriously as they can lead to broader investigations, significant financial penalties and even have criminal repercussions. If you have any cause for concern, we strongly recommend you obtain professional help before an audit.
You may know what to say, but you don’t know what not to say.
During an audit, the CRA have very broad powers to demand any information from any person with regard to a civil audit. This includes requesting documents and answers to questions from your accountant, family members, employers and colleagues. Typically, our firm becomes involved in audits after the auditor issues their 30 day proposal letter. This is when most clients start to seek help. Our preference is to become involved or work with your accountant from an earlier stage as it is easier to control the direction of the audit that way. We can then ensure that the auditors stay within their boundaries and only obtain information to which they are entitled.
As a law firm, we can give you legal privilege and confidentiality that your accountant cannot.
It is common that a taxpayer has not accurately reported a transaction or additional income. Our tax system is extremely complicated and constantly changing and it is unreasonable to expect someone to maintain a career or run a business and be an expert in tax law. People will make mistakes. Usually, it is not a problem if you have some discrepancies in your tax returns. However, depending on how this is discovered and what is said, it could lead to significant financial penalties and a larger investigation.
Where needed, we can work with accountants to conduct our own mini audit of your books and records and make any necessary corrections before presenting them to the Canada Revenue Agency. This allows us to voluntarily make any adjustments necessary to your returns and minimize the depth and penalties of the CRA audit. If the CRA discover several errors or false statements in your records before we correct them, they can assess you gross negligence penalties and even move towards a criminal investigation.
An audit is adversarial by nature as it is a government official essentially checking to see if you have broken the law. The auditor is there to get information from you to allow the CRA to determine whether you have been tax compliant and to correct any errors to ensure the maximum amount of tax is collected from you. It is important to remember that the CRA is not bound by anything that is said by one of their agents. Even if your auditor tells you not to worry about a certain transaction, their superior may see it differently and you can be re-assessed anyway.
An audit does not need to be an overwhelming experience. We will work with you to minimize the impact of your audit and to deal with any issues that arise to prevent further criminal investigation and reduce the financial repercussions. Whether you are in the middle of an audit, have just been notified or simply want help in getting your records prepared in case of an audit, we can help you to get your tax affairs in order.