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!! Attention: You should talk to us first before contacting CRA tax auditor to avoid any risk that could harm you.
♦ Stand on your side to communicate with the tax auditor for your rights;
♦ Attend all audit appointments on behalf of you;
♦ Review your documentation before the CRA auditor sees it;
♦ Review your tax return for additional problem areas;
♦ Handle all CRA tax audit correspondence.
Do You Understand the CRA tax audit?
A tax audit is the CRA exam the taxpayers’ books and records to double checking the tax returns are filed accurately and to make sure the taxes were reported honestly under tax act. There are different types of audit can be: GST/HST tax returns audit; Income tax returns audit; Payroll documentation audit, etc.
Some tax audits are simple, auditors just simply need you mail or fax in the supporting document. Some other tax audits are very complex, and they will demand to come to your business workplace or your home office to perform the audit.
How long does the tax audit take?
It depends on the case by case. Generally, it will base on the complexities of the case, the type of organization, the availability of the records, the size of the business. Usually, it takes a couple of weeks or months.
What are financial records for tax audit?
Here are examples:
Expense account statements;
Bank statements for business account and credit card;
Income tax return records;
Any supporting documents such as bank deposit slips or corresponding for business which can prove the financial information reported is true and accurate.
All those records should be sufficient to determine the amount of taxes filed and owed to the government of Canada.
You have to clearly separate the financial records for each business if the taxpayer has more than one business.
If your business register as corporation, trusts or partnership, it requires additional financial document, such as ownership of the corporation; transfer of shares agreement if any; minutes for directors meetings.
- Six years rule for financial records; Taxpayers should keep their financial records and supporting documentation for six years from the date in which the taxes are filed. In some cases, specific financial records are required to be kept for longer period of time requested by CRA. In general, the business owner should keep the financial document or any records related to share registry, disposal of property or acquisitions or sale of business.
- Format of financial records keeping; Taxpayer can keep the financial records in both an electronic format and paper format, such as scanning receipts and invoices saved in the computer as long as they are readable.
- Who is legally responsible for financial records? Regardless of whether you have hired professional bookkeeper or accountant to manager your accounting and tax tasks, as a business owner or taxpayer, it is wise to keep all your important financial record personally because you are legally responsible for those financial records as per tax act.