Corporate Income Tax Audit & Appeal
Every year, the CRA assesses the risks of non-compliance for all tax returns. If the assessment result identifies your business at higher risks, a delegated officer from the CRA will review your case to determine whether they should address the risk by conducting an audit.
Reasons include but are not limited to:
- You are reported for misconduct by a named individual or anonymously.
- Cash income
- Mixing personal incomes and expenses with business
- Deduction of large or unexplained business expenses
- The number of your business income is significantly above or below the industry average.
- Discrepancies in payroll tax returns or late submission
- Discrepancies in GST/HST returns or late remittance
If the CRA raises an eyebrow at your tax report, an auditor will inform you by phone. A proceeding email will be sent to you to confirm the details of the audit.
- Incorporation articles
- All the pertinent business records, including but not limited to logbooks, journals, receipts, invoices and bank statements.
- Personal financial records, including but not limited to personal accounts, bank statements, mortgage or property deeds.
- Records of related persons, such as a spouse or common-law partner, close relatives, business partners, or shareholders.
Aside from the litany of documents listed above, the CRA auditor may delve into your case by seeking a second opinion. Your accountant(s), bookkeeper(s), or other employee may be required of their presence to provide information related to your tax returns.
We advise preliminary tax planning to reduce the risk of audits to minimum. However, had the mishap occurred, we would like to urge you to come to us at your earliest convenience with all the necessary information kept in good faith. Please DO NOT attempt to fabricate numbers on your own - only if we are accurately aware of your situation could we hit home with our challenge to the CRA.
If you are deemed guilty, you will expect the following events:
- A reassessment from the CRA that rules how much you owe in taxes, penalties and interest
- You need to respond to the CRA, either to accept the penalty, or to appeal, within the given timeframe
- This may lead to other audits from the HST or payroll department.
However, with 15 years of professional experience, Ke Wang has helped many small businesses reduce penalties and interest. We pride ourselves on our records of success when it comes to negotiating with the CRA. Most of our clients received a summary of findings from their audits in lieu of a reassessment，and in case you still haven’t noticed the difference, a summary means, congratulations, you are out of the woods.
Having said that, we DO STRONGLY recommend you to take precaution from the start and plan early. Book a consultation with us today to learn more about tax planning!