Preparing for and Surviving a Business Tax Audit

How to Deal with a CRA Business Tax Audit

No one wants to be audited. Even if you’re one hundred percent certain that you’ve filed every document correctly and paid every dollar you owe in taxes, it’s still stressful to go through an audit. Not only does being audited cause anxiety and worry, but it’s also time-consuming. Most businesses would much rather spend time on their business and not looking over books with a CRA auditor.

However, audits do happen and, when they do, it’s important to be prepared for them. Here are some tips for how you can prepare for a business tax audit and what you can do to make it less painful.

Know What Information the CRA is Asking For

If your business is selected for an audit, they will send a letter confirming that the audit is taking place and provide you with details on the audit. In some instances, the CRA agent will request that certain documents be sent to them and the audit will take place at the agent’s office. This is commonly known as a “desk audit.” In other cases, the agent will want to physically visit your workplace.

Either way, it’s important to know what sort of information the CRA is asking for. Find out which tax years are being audited, what specific records the auditor wants to see, and any other relevant information about the audit. This can help you prepare.

Have Your Documents and Answers

Once you know what information the auditor is looking for, you’ll need to make sure that you have it available. Ask the auditor how they would like to receive the information they’ve requested. In some cases, even if the audit is taking place at your office, an auditor will want to see the documents before they arrive. In other cases, they’ll want them available on site.

If you need time to find and organize the documents and information, let the auditor know. If your request is reasonable, you may be able to get an extension.

Make the Auditor Happy

Always be polite and courteous with CRA auditors. It might be your first instinct to try to avoid them or to be evasive with the auditor. However, this certainly will not help your situation. In fact, it can make it more difficult for you. The auditor will not “go away” or “leave you alone,” no mater what you do. Once you have been selected for an audit, there’s nothing you can do to stop it, so it’s in your best interest to be professional.

If the audit is taking place at your workplace, make sure that the auditor has a quiet place to sit and work. Discourage staff from bothering the auditor and make sure that you, your accountant, and your bookkeeper are available to answer questions as needed.

Get Assistance if Needed

A Chartered Professional Accountant (CPA) can be a big help during a CRA audit. At Ralevic & Ralevic LLP, we can guide you through the audit process, help you answer questions and respond to any concerns the auditor may have, and advise you of your rights to make sure the audit proceeds as it should. Find out more about our tax services and contact us today for more information.

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