Our clients always ask us how likely it is to be audited and why does the CRA conducts Audits. There are mainly 2 reasons why CRA audit you. The first is through a random selection and use of a statistical tool to randomly select you for an audit based on probability. The second way is through a target selection process based on a number of criteria such as:
CRA Audits can be stressful, time-consuming and can create unnecessary hardships. The audit by CRA is a process wherein the CRA would closely examine your books and records to confirm whether you have correctly fulfilled your tax obligations, followed the tax laws correctly, and received the benefits and refunds to which you are correctly entitled to.
SDG Accountants has been representing clients and providing Tax Audit Support across Canada successfully before the CRA for many years. Choosing the best tax firm to represent you to the CRA is very important as a wrong disclosure of the information is given during the time of an audit can go against you and can have a major financial impact.
The CRA chooses a file for an audit based on a risk assessment such as the likelihood or frequency of errors in tax returns or whether there are indications of non-compliance with tax obligations.
CRA during an audit may examine books and records, documents, and information (collectively referred to as records) for example filed tax returns, credit history, property details, business records (such as ledgers, journals, invoices, receipts, contracts, rental records, and bank statements), personal records (such as bank statements, mortgage documents, and credit card statements), personal or business records of other individuals or entities not being audited (for example, a spouse or common-law partner, family members, corporations, partnerships, or a trust [settlor, beneficiary, and trustee]).
After the auditor examines the records provided either a correct assessment will be issued i.e. you do not owe any taxes or there will be a situation where you need to pay taxes or are entitled to a refund. You will have 30 days to agree or disagree with the proposal.
If you disagree with the proposal, you are encouraged to contact the CRA to explain why you disagree and provide any other documents that support your position.
Our team of experts can help you with the below Tax Audit Support: