Audits & Appeal

Audits & Appeal

Payroll Audits & Appeal

If you’re found guilty after a payroll tax audit, you will be subject to heavier penalties. We’d like to advise you to hire an in-house payroll specialist or outsource it to a reliable accounting firm from the start of your business. However, if the aforementioned advice comes to you a bit too little too late that a payroll audit letter is already in your mailbox, we’d like to urge you to book a consultation and seek professional opinions at your earliest convenience.

The question that never gets old: Why me?

Well, the reason(s) could be as one or more of the following:

  • A missing part: Payroll tax is composed of CPP, EI, and the employee’s income taxes; failure to remit any part of the three could subject you to payroll tax audit.
  • Late filing
  • Incorrect determination of employment status
  • Incorrect calculation of CPP or EI etc.
  • Payroll to persons of arm-length relations. Note: Payroll CANNOT be issued to family members.
  • Hiring illegal workforce (non-resident, or persons without SIN)
  • Embezzlement of corporate’s asset for personal use

What documents to bring to the audit?

  • All T-slips as the proof of payment to all employees
  • Records of payroll tax remittances to the CRA
  • All pertinent bank statements
  • Employment records, including records of employment or ROE to employees who have left their positions.

What happens next?

Well, like the audit for income tax, payroll tax audit will either find no change to be made, hence announcing that you are in the clear; or, it may find you guilty. If the latter does occur, you will receive a decision letter from the CRA, detailing the sum you owe.

Survival tips

Payroll tax audit is a nerve-racking process, and we recommend that you try to reduce the chance of it by complying with the CRA’s rules and regulations. However, if mishap turns out to be your case, please come to us with all the most up to date information listed in “What documents to bring to the audit?”. We will review your situation and plan accordingly. We will negotiate on your behalf with the CRA in efforts to reduce the sum of penalty and interest, if not the possibility of it.