Getting a letter or a call from the CRA advising you that you (or your business) have been selected for an audit can be daunting. In this post, we talk about the audit process and how a tax litigator can help you.
How a Tax Litigator Can Help
Your tax lawyer especially a tax litigator can assist you throughout the audit process. A tax litigator is experienced in advocating for the taxpayer each step of the way.
Information you share with your tax lawyer is protected by solicitor-client privilege. This means that the information you have shared with your tax lawyer will not be used against you in court. On the other hand, an accountant could be forced to disclose certain information you have shared with them or may be compelled to testify in court.
Before the Audit
A CRA auditor will contact you by mail or phone, or both, to start the audit process and tell you the date, time, and location of the audit.
Normally, an audit takes place at your residence, your place of business, or at your representative’s office but it can also take place at a CRA office.
Auditors are not allowed to receive records by email because information sent this way may not be secure. Your auditor can provide information about how you can send documents online through the CRA’s secure services.
During the Audit
An auditor will examine your books and records, documents, and information such as: ledgers, journals, contracts, banks statements, mortgage documents, credit card statements.
You must provide the auditor with all the relevant records (both paper and electronic) and supporting documents. You also have to provide complete and timely explanations to the auditor’s questions.
During the audit, your auditor may find issues and discuss them with you. You can also raise your concerns with the auditor.
After the Audit
After the auditor examines the records you provided, one of the following can happen:
1. You do not need to take additional steps: If the auditor finds that your previous tax assessment is correct, nothing more is required. You will receive a completion letter and the audit will be closed.
2. You have to pay more taxes: If the auditor finds that you owe additional taxes, you will have to make payments. You will receive a proposal letter explaining the reason for the reassessment. You will have 30 days to agree or disagree with the proposal.
3. You get a refund: If the auditor finds adjustments resulting in less tax owing, you will get a refund.
Your Rights
The Taxpayer Bill of Rights sets out the rights you have as a taxpayer in your dealings with the CRA. You have the right to be treated by the CRA with a high degree of accuracy, professionalism, courtesy, and fairness.
Under the Taxpayer Bill of Rights, you also have the right to file a complaint if you are not satisfied with the service you get from the CRA.
Your Responsibilities
You are required by law to keep adequate books and records. Generally, you must keep your books and records for a minimum of six years.
If you use a computer for your accounting records, you must keep your books and records in an electronically readable format, even if you also keep them on paper.
For more information please contact us at info@queenstonelaw.com or 604.900.8082
NOT LEGAL ADVICE. Information made available on the Queenstone Law website in any form is for information purposes only. It is not legal advice. You should not rely on, or take or fail to take any action, based upon this information. We would be pleased to discuss any specific legal concerns you may have.
Although we attempt to keep the information on our site accurate and up-to-date, due to the ever changing nature of the law, as well as, the speed at which new cases are released, we cannot guarantee that the content is fully up to date or remains completely accurate.