- Take a Breath, But Get to Work
Tax audits (we will be discussing requests for information, not in-person audits) do not have to be a big deal. They are performed routinely by regular people (CRA agents do actually have families and small businesses of their own!), and who can be very helpful. It is important to remember that the job of the CRA is not to charge you the most tax payable, their job is to collect the appropriate tax payable under the law. We have actually observed CRA auditors help clients benefit from an audit (for example, spotting an ITC that was missed in a claim, thereby increasing the refund available to the taxpayer!).
- Ask for an Extension
Audits typically have a response deadline of 30 days. Whether you think you will need it or not, ask for an extension (30 days is commonly awarded). Act as if you did not receive the extension and start preparations immediately, but know that you have a buffer just in case you need it.
- Read the Request Back to a CRA Agent
Once you have read the information request, write down a list of the information and corresponding documents you think you need to provide, call the CRA and discuss with an agent. This reduces the chance of providing irrelevant or unhelpful information.
- Make a Checklist
When you are clear about what documentation to provide, make a physical checklist and actually check off each item as you add it to the submission. Working methodically reduces the chance that you accidentally omit an important piece of supporting evidence. Ask another individual to check your submission package against the checklist for accuracy and completeness. Add that checklist to the cover letter you are sending to the CRA so that if you do forget to add something, they will see that and call to ask for the missing information.
- Discuss with your CPA.
Still feeling confused or uncertain? Call your CPA to discuss an action plan.
Cedar Creek CPA 