A trust examination is a type of business audit that involves only taxes paid by or on behalf of other people and then held in trust for the government-payroll and HST. These generally occur where businesses miss filing deadlines, and in that case trust examiners will review the business' records and assess the taxpayer and assess failure-to-file penalties without their filing a return. Most are very straightforward and do not involve contentious issues; however, some may involve the CRA making significant changes, such as by re-characterizing independant contractors as employees.
Reviews could be described as "mini-audits", in which the CRA will review claims in a tax return. These often occur where individuals claim genrously-treated expenses and credits, such as employment expenses and foreign tax credits. They may take place before or after an initial assessment, which may result in delays to refunds. Reviews involve relatively junior employees, who have little discretion and take a highly restrictive view of the evidence that can substantiate an expense.
Yes. Particularly in the course of formal audits, representation via a tax lawyer can help you explain your position, speak the CRA's language, . A tax lawyer will also know how to prepare the necessary legal submissions that include extensive legal arguments required to resolve the issues relating to your audit. Tax lawyers are trained both in substantive tax law and also in persuasive argumentation. The best time to obtain legal representation is when you first receive notice from the CRA that they intend to conduct an audit.
