No one wants to get audited. It can be stressful, anxiety-inducing, embarrassing, and cost you money. The worst part is that everyone will get audited occasionally, whether you own a business or not. The best part is that if you’re a law-abiding person, you won’t suffer any consequences. So why does the idea of getting audited still seem scary? It won’t be once you know the basics of audits — this guide lays it out.
You’ll soon learn how a CRA audit works and what information the officials typically look at, which you’ll need to provide.
How A CRA Audit Works
During a tax audit, the Canada Revenue Agency (CRA) meticulously scrutinizes a taxpayer’s documents and financial records to verify their adherence to tax regulations, accurate tax reporting, and receipt of eligible benefits and refunds.
An appointed CRA auditor initiates the audit process by contacting you through mail, telephone, or both. They will specify the audit’s date, time, and location.
Typically, an in-person audit is conducted at your residence, place of business, or the office of your designated representative. The auditor will equip you with a valid identification card upon arrival before commencing the audit. On-site audits offer the advantage of addressing queries promptly and reducing delays in finalizing the audit.
If an on-site audit isn’t feasible, it will be held at a designated CRA office — which might not be the closest one to you. On the bright side, the auditor may let you send your necessary documents instead of making trips to the location.
If you’re frustrated gathering all the required documents or dismayed with the process of sending documents back and with your auditor, we can help.
Contact our Chartered Professional Accountants today for a certified representative with years of experience dealing with CRA officials.
Here’s the information a CRA auditor looks at:
- Operational records.
- Tax, credit, and property history.
- Your personal financial activity and investments.
- The personal financial activity of people close to you.
- Your accountant or bookkeeper’s adjustments.
If the auditor verifies the accuracy of your previous assessment, no further action is necessary. You will receive a completion notice, and the audit will be concluded.
However, if the auditor determines that a reassessment is required, you may have to pay extra tax on your next return or repay the government as soon as possible. You will be issued a proposal letter outlining the basis for the reassessment. You will then have 30 days to either accept or contest the proposal.
Getting Audited By The CRA: Frequently Asked Question
Can The CRA Audit Your Bank Account?
Yes, the CRA can look at your bank account and statements. The CRA checks everyone’s details, whether the person runs a business or not. This can even include checking your spouse’s or family’s accounts and looking at credit card bills, electricity bills, and other financial records.
However, the CRA can’t just peek whenever it wants. Officials need a good reason, and usually, their reason is based on the info you give them.
That’s why it’s vital you’re confident with the info you sent the CRA. Contact our pros today and they’ll confirm your finances are in line with the law. Whatever needs straightening, trust our Charatered Professional Accountants to handle it.
