Increasingly CRA is auditing many firms in the area’s of:
1. Payroll: Maintaining payroll records are essential. Filing the appropriate slips whether they are T5, T4, T4A, etc are critical. Any paid over $500 should be issued a T4 or T4A slip depending on the nature of the work and arrangements. Our clients get this service as part of their package so if the CRA calls an Audit we are ready without any costs to the existing clients provided we did the bookkeeping.
2. Personal tax deductions: CRA can ask for rent receipts, tuition receipts, medical receipts, rental property deductions, Professional and Union dues, travel, car logs for employment or business usage, donation receipts, etc. It is critical to maintain these receipts in case the CRA contacts you.
3. GST/HST returns: Electronic bookkeeping and maintenance of GL’s are critical along with the proper receipts and GST #’s should be on all invoices in order to claim the input tax credits amongst many area’s. The invoices should be under the business or corporation and pertain to the period concerned. Also if there is personal usage then the input tax credits should be adjusted accordingly. There should be a clear segregation of personal and business expenses. Even cell phone plans should be corporate to defend the input tax credits and also the vehicle’s and insurance should be under the corporations name.
4. Notice of Objections: If you are not pleased with the decision of the CRA you have a certain time period to file an objection.
5. HST refunds denied for purchase of new property: Several times clients wrongly designate rental properties as primary residence and upon audit are denied by CRA. It is critical to correct this immediately and file the necessary forms in a timely manner to safeguard the refund and clarify the CRA objections.
We have several year’s of experience with CRA audits and even we work with tax lawyers if we need to build a team for tax court challenges.