Should I use a tax lawyer or tax accountant in during a tax audit?
It is best to use a tax lawyer in cases of audit, as tax lawyers are trained in the art of persuasive writing, oral advocacy or negotiation and are experts in the rule of law, the Income Tax Act, the Excise Tax Act, and jurisprudence (which are judicial rulings by the Tax Court of Canada). Accountants are specialists in their field of bookkeeping, financial reporting and annual T-form preparations (T1, T2, T4’s etc).
How many years back can the CRA conduct a tax audit?
Audits typically cover between one and three years depending on the issue, although little is set and stone and the CRA is able to review, and often to reassess, many years into the past.
What is a business audit?
A business audit can examine a business’s income and expenses or a subset of a business’s income, such as a particular line item or employee benefits. The CRA can conduct a trust examination, which looks at the businesses GST/HST or payroll deductions and remittances.
What will the CRA look at in a business audit?
The CRA will examine previous tax returns, receipts/invoices, ledgers, bank statements, mortgage documents, credit card statements, and the personal or business records of others close to you.
What if I disagree with an audit?
Before closing an audit file and reassessing, the CRA generally sends a “proposal letter”, providing thirty days to provide additional information and change their mind. After this, they will typically send a “decision letter” followed by reassessments if they determine changes are necessary. If you disagree with the Notice of Reassessment, you have 90 days to file an appeal.
