Which Factors Can Trigger CRA Tax Audit For Your Business?
The first thing you need to know about CRA tax audit is the simple fact that, you cannot possibly know when you will be audited. If your business is to come under the inspection, it will happen once you have been informed by the concerned authorities regarding the matter. So, the only thing you can do is research and gather information about CRA Tax Audits, Problems & Representation in North York Ontario and the ways of dealing with the problem. This way, you will know about the professionals who can help and hire one when required.
The triggers to know about – During your research, it will become clear that despite not seeming so, CRA audit does function under rhyme and reason. This is why; there are a few actions which can trigger such an audit for your business. Knowing about these trigger points will help, but the whole matter to tax is an area full of complications. Hence, despite having the knowledge, you will always need help from a capable professional. The triggers that you need to keep in mind are:
- Making unreasonable claim of expenses is a sure shot way of getting noticed by the concerned authority and ensure CRA audit. Always make sure that the expense claims made are not very high and are effectively proportionate with sales.
- Using rounded-off totals is a huge triggering factor for CRA audit. If you provided rounded numbers as totals, then the concerned authority will know that, proper records are not being kept and you most likely do not have all the receipts. Using exact amounts will be less feasible to trigger an audit.
- It may be easy for you to forget a T-slip, but CRA does not forget such things. They tend to charge you 10% penalty the first time and for the next times, the penalty will be 20%. So, being extra careful and not missing anything is another way to avoid the audit.
- If your business falls under restaurants, construction or small retail category, then you have a good chance of getting audited. Keeping this in mind and being extra careful mostly does the trick.
- Paying unusually high spousal or children salary and reporting business loses for year after year will have a great chance to trigger a CRA audit for your business. So, do not take these shortcuts and roundabout ways of saving tax.
- Being self-employed or working as an independent contractor will increase the chance of getting audited. To stop that, you need to declare all your income or clearly state and prove that you are indeed self-employed and not an employee looking for more tax breaks.
Knowing about these points and taking the preventive measures will help you to deal with CRA Tax Audits, Problems & Representation in North York Ontario successfully emerge victorious.