How to Survive CRA Tax Audit – Few Pointers

Introduction – CRA tax audit is quite common for businesses in Canada, but that does not mean you are naturally capable of dealing with the subject in a suitable manner. The subject of tax return and audit is a complicated and extensive process. Handling CRA audit without proper knowledge and experience on the subject is tough and often proves to be detrimental towards your financial well-being. So, it is wise to seek proper professional help regarding CRA Tax Audits and ensure financial transparency for your business.

The Pointer for Your Assistance – To make the process of tax auditing easier, smoother, less time-consuming and essentially survivable, you need certain pointers. These points are tested and tried methods and have proven to be quite successful over the years. Therefore, when your professional consultant suggests them, paying heed and applying them will be the right thing to do. The advice which will help you deal with CRA Tax Audits successfully are:

  • Being respectful and cooperative will help you go a long way. People who are coming for the audit are just doing their job and if you help, then the job can be done a lot faster which in turn will help both parties. Being organized and having every receipt and paper in order will prove to be quite helpful.
  • If you lack the knowledge and experience in the matter of tax filling and audit, then seeking professional help should be the priority. The best option will be employing the tax lawyer as soon you receive the missive regarding audit. This way, your consultant will have enough time to prepare a better case and help your business.
  • Having a clear idea about your position from the very beginning will be of great help and importance. This way, you can be sure about your chances into the scheme of things which in turn will help you to decide whether to go for win or simply settle for less.
  • Even after hiring professional help to deal with the matter, you cannot be completely clueless in the matter. This is because, the CRA Tax Audit consultant you have hired is helping multiple people at the same time. As a result, a few things may get overlooked which won’t be good for your finances. So, keeping an eye on the things and ensuring regular communication with the tax consultant will be the smart thing to do.
  • Before you decide to question the findings of CRA and appeal, it will be crucial to ensure that such an action makes sense and will be wroth the effort.

This way, you and your business can survive the CRA Tax Audits for the years to come, without any complications or unnecessary worries.

Why Does Your Business Need Comprehensive Financial Planning?

Introduction – Running a business successfully, requires a plethora of things, and a constant supply of money is one of them. If you have secured the required finances, the next step will be using it in a responsible and effective way. If you are looking for someone local, reputed and competent, then choosing from the array of Business Advisors in North York Ontario will be the logical thing to do. Seeking the help of a business advisor will not only help you to manage the organization more proficiently, but understand it better as well.

The Elements of Proper Financial Planning – When you are deciding to go for professional and comprehensive financial plan along with assistances like Accounting Services for business, it is wise to have a basic understanding of what to expect and what is needed. This way, the transaction will be smoother and save time, money and energy, which in turn will be quite beneficial for the business in question. The points that make a comprehensive financial plan effective are:

  • Business goals and objectives, both short-term and long-term
  • Statement of net worth of the business
  • In-depth tax analysis
  • Effective risk-management analysis
  • Cash-flow analysis and summary
  • Expense strategy

The Benefits for Your Business – A capable team of Business Advisors will ensure that your financial planning is truly comprehensive and include the best possible strategies for your business. At this point, you may think, why such planning needs to be done by a professional and why your business needs it in the first place. Exploring the topic further will not only provide the answer, but put your doubts to rest. Once a complete and comprehensive planning is done for your business and put to use, the changes and benefits will become quite apparent. Starting from proper use and distribution of funds, to achieving short-term business goals, better risk-management and tax-management, your business will have a real shot at long-term improvement and success.

The Expense is Worthwhile – If your business is running successfully for some time now, then you may think that additional expenses like Business Advisors or Accounting Services are not required, but that will be a mistake. In this age of speed, specialization and convenience, where the whole world is considered to be a village and reaching a point furthest from another point takes a few hours, every organization, business needs to have an advantage and exploit it too. Proper planning is one of the best ways of identifying that edge and exploiting it completely to ensure a secure, long lasting and successful future for a business. Hence, investing in Accounting Services in North York Ontario or Business Advisors in North York Ontario will be worthwhile.

How the CRA Handles Canadian Tax Evasion

Despite the sincere efforts of the Canada Revenue Agency (CRA), the fact remains that there are still some businesses and individuals that evade taxes. By far, such elements are responsible for various problems related to tax evasion in Canada.

In line with its policies and guidelines, the CRA adopts a zero-tolerance policy for tax evasion as it does in case of tax avoidance. However, tax evasion and tax avoidance are two distinct terms. While the latter refers to the deliberate act of not paying the taxes despite being eligible for it, the former is associated with the act of overlooking the tax law which necessitates a business or an individual to pay their taxes.

Over the years, the CRA has recorded many tax problems associated with the collection of taxes. While some businesses report lesser taxes than they should while submitting their returns. Others either file wrong information about their income or take more deductions than permissible in accordance with the CRA guidelines. By virtue of these practices, the business entities report lesser income or profit than usual and make an effort to elude the prospect of paying the actual taxable amount to the Canadian Revenue Agency.

Another practice which most businesses adopt to get away with paying a fewer taxes is to conceal the purchase of an item in a different area of jurisdiction. For example, businessmen buy articles from other locations and without reporting their purchase in the tax returns, pay a minimum amount of money in the form of VAT.

With that said, the CRA has both measures and resources in place to nab those who evade taxes. The price of Canadian tax evasion can be heavy – a fine ranging from one thousand to twenty-five thousand dollars to a jail term of up to twenty four months. The Informant Lead Program is a program designed to catch the offenders of both tax evasion and tax avoidance red-handed. It is aimed at collecting the information of both known and unknown tax evaders.

When it comes to filing taxes, honesty is the best policy. Besides, getting professional help from a legal consultant can be of great help, especially when you are entangled in a legal issue. Do not delay it any further – get in touch with our experts for services such as tax audit and reassessment in North York, Ontario and other tax related services now!

Penalties Associated with the Late Filing of CRA Taxes

The CRA does not sympathize with a defaulting taxpayer in all circumstances. Though there are certain exceptions which the tax agency takes into consideration, the CRA demands an explanation for the inability to file the tax returns or the failure to pay the tax amount within a given deadline in all the cases.

In case the reasons are genuine, the CRA gives it a thought to waiving the interest amounts or the penalty levied on a taxpayer. However, it depends upon the approval of the Taxpayer Relief Application (TRA). In case it is rejected after a thorough assessment, a taxpayer is required to pay their CRA late filing penalty.

As far as the CRA late filing penalty is concerned, it depends on whether one reports corporate taxes or personal taxes. The repeated failure to file a tax return in a timely manner can lead to a severe form of penalty as it is managed by the federal administrations.  Only Quebec residents are exempted for this kind of penalty. Normally, a person is charged with this form of penalty if they fail to pay the taxes for the current year in addition to the failure to file tax returns for three previous years.

The territorial government or the provincial government may charge as many as ten per cent of the outstanding amount, regardless of whether the pending amount belongs to the current year or a previous year.

However, the CRA can cancel the penalty linked to one’s CRA late filing if one takes the initiative to come out willingly and discloses one’s undisclosed income. In case of non-resident Canadians, the CRA will penalize them only if they fail to report their income despite being eligible for the payment of territorial or provincial taxes.

While the tax guidelines set by the CRA necessitates the bigger corporations to file their tax returns in a timely manner via T2 Corporation Income Tax Return, a failure to do so can trigger a huge penalty which may be applicable to the late returns filed up to 40 months. Also, the agency is critical about incorrect information based on false financial statements. The CRA usually deals with such cases with its stringent rules.

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A Guide to Dealing with a CRA Frozen Bank Account

In Canada, the self-employed individuals who do not pay taxes in a timely manner are subjected to the legal notice letters from the CRA. A failure to reply to such notices translates into the seizure of the assets of the concerned individual.

At first, the CRA freezes the bank account of an individual to draw their attention to the non-payment of taxes. Usually, this happens when a potential taxpayer ignores the pay notices sent by the CRA repeatedly. It can also happen in the event of not filing the taxes for more than 12 months. In instances such as these, the tax officials get the impression that an individual is being non-cooperative in a deliberate manner.

What to do when the CRA freezes your bank account

The wise thing to do following the seizure of the bank account of an individual is to look for professional help. Professional tax consultants can help an individual get out of situations like this. However, it is necessary to get in touch with a professional as soon as possible – the quicker, the better.

It is also recommended that you should open another bank account to prevent the total stagnation of funds. Unless the CRA gets to know about this account, it will not notify the bank.

It is a good idea to establish communication with the CRA to find out the reason behind the frozen bank account. Next, it is necessary to work with the CRA for the release of the funds. The tax collection agency in Canada can allow it if the concerned taxpayers agree to pay their tax returns with a given timeframe as instructed by the CRA.

Given the fact that the CRA considers a payment schedule only post the exhaustion of all the options, including borrowing or selling off your assets, it is important to figure out the outstanding dues so you are able to decide what amount of money you are able to pay.

While the amount of money which the CRA necessitates to pay can be difficult to bear for a taxpayer, not having an agreement would only serve to attract further legal actions or penalties.

Has the CRA frozen your bank account? If yes, then prompt action can save you both money and hassle. Contact us now for help or assistance regarding CRA tax remediation and appeals in North York, Ontario and other parts in Canada.

Different Types of Accountants in Canada

Over the years, accounting has gained in popularity among career-oriented individuals. It is a discipline which offers plenty of options to pick and choose. While some accountants start practices on their own, others choose to climb the corporate ladder or work for larger firms.

In Canada, accountants have three popular choices to advance their career ambitions:  certified management accountants, chartered accountants and certified general accountants.

Despite their familiarity with business and financial principles, they are distinct from one another. Detailed information about the professionals from these disciplines is given below.

Certified Management Accountants

CMAs or certified management accountants focus their attention primarily on the bigger issues related to management and formulation of strategy. The graduates who are desirous of building a career in the profession are required to go through a challenging examination process which lasts for two days. The examination puts their knowledge of the concepts related to accounting and business management to test. Qualified candidates are taken into a training program for two years. The program involves mentoring, case studies and professional experience.

Chartered Accountants

Chartered accountants work in various professional settings, including industry and government settings, and offer services like auditing and tax preparation, management and strategic functions and so on. Sometimes, they are also required to legally determine and certify the precision of financial statements. CAs are required to have professional experience for at least three years in order to get certified.

Certified General Accountants

Certified general accountants are trained to cater to the needs of day-to-day accounting services or hands-on services in corporate or public settings. They take care of the daily operations, calculate taxes and plan financial services for various companies. In order to get a certification, a candidate should have a degree in accounting or finance and complete the PACE training modules offered by the certification body in Canada called the CGA.

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Want to Prevent a CRA Audit? Follow These Tips

Whenever the CRA finds a discrepancy with the submission of a tax return by a taxpayer, the nightmare of the latter translates into a reality – the officials of the CRA turn up for carrying out an audit. And though it may not always spell big trouble for a taxpayer, it can be difficult for them to justify their point, especially if they are caught unprepared.

The reasons for an abrupt CRA audit may vary from simple to complex. Generally, the tax officials in Canada show up for an audit when there is some sort of inconsistency in the tax filings when compared year on year.

For example, if you show an unusually low income in your income tax returns for a given year against your income in the previous years, it may catch the attention of the CRA. However, as long as your case is genuine i.e. it does not involve any fraudulent practice, you need not worry. Getting away with false information is nearly impossible as the CRA keeps an eye out for the earnings of taxpayers, regardless of whether they are self-employed or work in a company.

While there is the provision to penalise an individual for falsification of information or tampering with their financial data, engaging in such practices in multiple instances can lead to an even severe penalty. If you ever run out of ideas, it is a good idea to consult a CRA tax consultant of approach a company which provides assistance in this regard. We provide a wide range of services related to taxation in Canada, including CRA tax remediation and appeals in North York Ontario.

When it comes to the filing of business statements, declaring both profits and losses with accuracy is necessary. Apart from promoting transparency, it lends credence to the tax report filed by an individual in the eyes of CRA officials.

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How Business Drives Differ from Personal Drives

Whether you are a small business owner or someone who uses the company vehicle for business purposes and drives a lot to run personal errands, chances are you might be seeking a way to monitor your mileage. Before you can start doing tracking your mileage, the first thing you need to do is understand the difference between a business drive and a personal drive. Read on to develop a good understanding between the two.

According to the tax laws in Canada, your business-related drives qualify for a tax deduction if, in spite of using your private vehicle for work, your employer does not provide you with a transport allowance. This rule is also applicable to those individuals who are self-employed.

Furthermore, going by the CRA guidelines, above rule is not applicable in case your employer pays for travel expenses, then vehicle expenses are not considered tax deductible.

If an individual uses his/her employer’s vehicle for personal use and still receives a vehicle allowance from their employer, they are required to include a part of it under vehicle allowance while filing their tax return as the CRA treats it as a taxable benefit.

Personal Drive

According to the CRA, the following trips constitute personal drives:

  • Personal trips linked to vacations
  • Trips associated with personal activities
  • Commuting between home and workplace unless one travels to another location to perform their work
  • Trips associated with errands or personal activities

The Regular Place of Employment

The CRA takes the following factors into consideration while deciding whether one’s workplace is a regular place of employment:

  • An office wherein one must report on a daily basis
  • Various store locations wherein one must visit at certain times in a month
  • The premises of a client wherein an individual is required to visit at least on a regular basis for at least six months
  • A client’s premises in which one is required to report their bi-weekly meetings

In case one is required to visit several places of employment, the first drive at the start of a day is treated as a personal trip. The same holds true when one returns home from their workplace.

The Best Way To Monitor Your Business Mileage

One of the best ways to track business mileage when you are on the go is to download an app in the niche. You can download it on your smartphone. Run the app after its installation and let it run in the background while you drive.

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A Guide to Salaries, Commissions and Taxes of Real Estate Agents

About 108,000 real estate agents operate throughout Canada. This gives an idea as to why there is an increased focus on the CRA guidelines in connection with the taxes, commissions, salaries and deductions pertaining to real estate agents in Canada.

Whether you have been filing CRA taxes for several years or you are going to do so for the first time, here is what you need to know about these aspects.

The Average Salary of Real Estate Agents

On average, Canadian real estate professionals receive an income of $60,000; the figure may be slightly more or less based on the experience level of an agent. Sometimes it may also fluctuate depending on the market conditions.

The salary range for the real estate professionals who operate in Canada is given below.

  • Total Pay: $35,000 – $121,010
  • Salary: $36,799 – $120, 00
  • Bonus: $503 – $39,732

The level of earnings may vary from the baseline of $60,000 in the following manner:

  • Entry-level: – 3 %
  • Mid-Career: + 17 %
  • Experienced: + 54%

Commission Rates for Real Estate Agents

Real estate agents in Canada have the liberty to set their preferred commission rate at the initial stages of signing a contract. Not only are they allowed to negotiate the rates but are also provided with the choice of deciding on whether to get paid hourly a certain percentage of the actual amount of money generated by virtue of a sale.

At times commissions may vary owing to three key aspects: the present situation of the domestic real estate market, the company for which a realtor works and the cost of purchasing a property.

While the commission rates may be lesser when smaller companies are involved, relators may consider lowering commission rates in markets that are more competitive.

What is The Difference Between a Real Estate Agent and a Salesperson?

The real estate market is a diverse world which comprises of a variety of professionals such as salespersons, mortgage brokers, real estate agents and more of the same.

The job role of a mortgage broker is to assist their clients in financial transactions pertaining to real estate. On the other hand, a real estate salesperson, a term used in Ontario, is a lesser-trained version of a registered broker who deals with the aspects of a real estate.

On the other hand, according to the CRA, an agent is someone who facilitates the operations of a registered broker. They may either be self-employed or they may work for a broker as their employee.

The CRA takes the following considerations into account while deciding whether or not a real estate agent has filed their report appropriately:

  • What activities of an agent are controlled by the broker?
  • Is the advertising of an agent self-paid?
  • Is the broker allowed to hire their own staff?
  • Are the commission rates determined by the broker?
  • Is an agent allowed to hire their own staff?
  • Does an agent require to carry out a particular task for their broker?

As for a real estate agent, they may operate either as a proprietor or a partner. We provide accounting services at competitive prices. Contact us for accounting services in North York Ontario.

Useful Information about Changing Your Tax Return

The tax system in Canada is centered on numerous laws related to taxes that are proposed by the CRA. As a result, taxpayers seek an answer to a number of questions. A majority of them wonder whether or not there is a way to change their tax returns. A pertinent question which they ask in this regard is this:

Yes, it is possible to change your tax returns. You can do so after getting a notice of assessment. Though experts strongly recommend using the “My Account online” option to make changes to your tax return, some alternative options such as sending a letter of request to the local tax centre are also available at your disposal.

Reasons for Changing a Tax Return

There can be various reasons for altering your tax return. These are as follows:

  • You got a revised slip
  • Your slip was delivered at a later date than the date at which you were supposed to receive it
  • You have queries regarding the published information of the CRA

While applying for a change in your tax return, you can also add an additional piece of information to lend credence to your claim, regardless of whether or not your reason for applying for a tax change coincides with one of the reasons mentioned above.

Form for Requesting An Adjustment

An applicant can request for an adjustment by filling up the T1 Adjustment Request Form. Even a representative can also fill out the form on behalf of an applicant if the latter provides a signed letter of authorization to the former.

What Happens When You File An Adjustment Request?

Owing to the fact that the inventory levels of the CRA always remains high, the processing of a T1 Adjustment request form submitted by an applicant can take longer than anticipated length of time.

After carrying out a review, the CRA sends a notice of reassessment in connection with a request to the address of correspondence as furnished by an applicant. It also provides the explanation of its review to an applicant by virtue of a letter.

While the CRA makes every possible effort to improve its services, it also deals with the problem of the scarcity of manpower to accomplish all its tasks.

For help or assistance regarding CRA taxes, including CRA tax remediation and appeals in North York Ontario, contact us now!