AUDIT

 

IF YOU ARE BEING AUDITED

 

  • Do not panic.  

  • An audit can be stressful; however, it can be a less stressful process if you quickly deal with it.  

  • First -  call Judy to see if we have a copy of the letter from CRA.

  • We keep some papers in your file. We may be able to quickly deal with it.

  • If we don’t have the required information, the envelope(s) we returned to you contain important information. (i.e receipts, invoices, cancelled cheques, etc.)  and should have what is required.  

  • We will go through the information in the envelopes.  If there are questions, concerns or information missing, we will call to discuss what needs to be done.

  • In an audit,  CRA usually focuses on a specific area. The auditor makes sure that the totals you have declared and claimed are backed up by receipts. They will look at it to verify. We will put your information into an easy format for them to review.  

  • For a more comprehensive audit, the auditor wants to be able to track all your income to where you have spent the money, saved it, or invested it.   Your records must show that you have included and declared all income. Your expenses must be documented with the corresponding receipts to show how they were paid (i.e., cheque number, bank reference, or a note it was paid by cash, e-transfer, etc).

  • The auditor may do spot checks to see if the records are internally consistent and may investigate in-depth if records do not match. You may have to obtain additional documentation from the bank and/or other people you have dealt with if the auditor feels your records are incomplete.

  • If your documentation ended up being filed correctly and the auditor found no problems,  no tax es will be due.  However, there is always something that will be disallowed - that is their job.

  • At the end of the audit, the auditor will advise you of their findings and confirm them in a letter to you. If it results in you owing, it is most likely because there was something forgotten, an honest mistake or we interpreted a tax rule differently from the auditor.  

  • You have at least 30 days to respond and accept or question the outcome.  You and Judy will discuss the outcome and decide if there is more information that could be provided or if the proposal is acceptable.

  • After the audit, all receipts, etc. will be returned to you. You need to keep those records for at least six years after the audit.