How CRA Audit Protection Can Protect You During Tax Audits

You may think your done with the recent filing of taxes as the April 30 deadline has passed and refund is on the way. But the CRA has just started, as it assesses more than 13.4-million returns between February and May 9. The usual refund is deposited to your bank account. Somehow, along the way, you will need CRA audit protection to back you up in times of tax audits.

Filing your tax returns online may only take few days. The CRA will pay back your refunds based on what you filed, but it may take a closer look at your business through tax audit. They don’t have to mention how many returns they have audited every year. Some are randomly chosen, but there are those where they need more information.

So, to know more how CRA does tax audits on businesses, here are some factors on how they’ll do it:

  • Being Self-Employed: If you own a small business, CRA will most likely take a closer look at your records to ensure you are declaring right. You may own a restaurant, retail or construction business, where income can go unrecorded, and CRA will likely flag it.

 

  • Any Major Changes: CRA will declare tax audit especially if they doubt there has been a mistake made or when there are changes in your records. To ensure that there is someone standing on your behalf during tax audit, CRA audit protection may be required.

 

  • Huge Expenses: You can obtain tax deductibles for expenses that allow you to move closer to your business. Have all expenses supported with receipts. Though CRA can question and create a battle for your claims, but if it’s well supported with documents, then they can’t do anything about it.

 

  • Not Blending In: The CRA will compare your report against the usual norm of your business, what colleagues and even neighbours report. If you declare $40000 for your annual income and you live on a street where everyone else makes more, the CRA will verify this account especially on how you live.

 

  • Aggressive Tax Planning: If your business participates with a variety of programmes, like donation schemes, tax shelters and extreme tax planning, 100% you’ll be audited. They will look deeper into the plans, which you’ll need a CRA audit protection to back you up.

 

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