Whether you run a Canadian business or you’re a Canadian citizen, you can get audited by the CRA. There are a lot of potential triggers for audits – the CRA has risk assessment algorithms they use to determine whether or not an entity should be audited. Regardless of why you’re audited, it’s important to know the steps you can take to get through the audit.
Step #0: Always be Prepared
The best thing you can do to prepare for an audit is to have proper bookkeeping practices in place well before tax season. That means keeping all essential documents filed, and having digital copies of any relevant tax documents. This can help you do your taxes when tax season arrives and help you through the most stressful parts of an audit.
Step #1: Talk to Your Auditor
Some people feel a sense of animosity toward their auditor – that the auditor is trying to hurt their finances, or ruin their business. It’s important to remember that your auditor is doing an important job – ensuring that taxes that have to be paid are paid. When you’re doing your taxes properly each year, there’s nothing to fear.
Talk to your auditor. Ask them for the exact due dates for all of the documents and information they’re looking for. Work with them if those due dates aren’t feasible for you. Ask them to spell out any questions they might have, or any irregularities they might be looking for. Ask them if they can guess at documents they don’t need right now but might need in the future, so you can prepare them. Work with your auditor, not against them.
Step #2: Organize Your Documents
Now that you know exactly what the auditor is looking for, you can take an extra step and organize all of your documents so the auditor has no trouble finding relevant information. Again, seeing the relationship as mutually beneficial is to your advantage here. The more work you put in upfront, the less work your auditor will have to put in. Bureaucracies, as we know, are very slow moving machines, so anything you can do to expedite the process will help end your audit sooner.
Step #3 Hire a Tax Accountant
When you’re being audited, it can be very helpful to have a professional by your side who has been through the auditing process many times. They can help you through technical terms that you might not understand, and give you a better idea of:
- Why you’re being audited
- What the auditor might be looking for
- The steps you can take to expedite the audit
The most practical time to have a tax accountant is, of course, before you get notified that you’re being audited – tax accountants are very good at ensuring that your taxes are done accurately, which reduces the chances of getting audited in the first place and drastically reduces the chances that the audit will lead to any changes.
Need a Winnipeg accountant to get you through an audit, and/or to help you with all of your bookkeeping and tax accounting needs? Get in touch with us.