How To Avoid Extra Fees During A Tax Audit
January 15, 2020 Andrew AdolphAudit Insurance
Few things are more stressful for a small- and mid-sized business than finding out that the CRA or other provincial revenue agencies want to perform an audit. Knowing how to avoid extra fees during a tax audit can help. Keep reading to learn how to protct yourself during tax time.
3 Ways To Avoid Extra Fees During A Tax Audit
Tax audits are time-consuming, and the cost of proper representation in these matters can be high. In addition, CRA auditors are under insane pressure to assess taxes, which could mean more penalties for you.
Extra fees are the last thing you want, so to help, here are three ways to avoid additional fees during a tax audit.
1. Keep Your Records Updated For Tax Audit Purposes (Especially For High-Risk Industries)
No business wants to undergo a tax audit. However, the CRA scrutinizes some industries more than others. For example, in British Columbia, anybody in the construction, property development, and restaurant industries has been receiving extra attention lately.
Tax audits targeting larger corporate groups and wealthy individuals receive more publicity. However, the reality is that most of the increase in audit activity focuses on individuals and small- to medium-sized businesses.
Of course, you can’t control whether the CRA audits your business, especially if you operate in a high-risk niche. But careful bookkeeping and honesty can help keep the CRA from knocking on your door. Plus, if they send you a notice, you’ll have a transparent paper trail backing your claims.
2. Hire An Accountant Who Specializes In Government Tax Audits
When most business owners find themselves facing a tax audit, they call their year-end accountant for assistance and guidance about what to do next. But depending on your situation, your accountant may need advice from someone with experience dealing with government audits.
A specialist who knows the policies and compliance procedures can incur additional charges that add up quickly. In addition, your accountant will likely charge you for the extra time spent responding to the audit. This expense is often unexpected and, depending on the complexity of the audit, very costly.
Some accountants will service the audit for a minimal fee, but this usually means putting the auditor in a room and pointing to boxes of invoices. Having been a CRA auditor for too many years, I can tell you that this is not what you want.
You want your accountant to perform all the necessary work and engage any specialists to represent you best, but without passing on all the additional fees associated with that representation.
3. Consider Audit Insurance
Wouldn’t it be good if there was a solution to make sure you aren’t subject to additional fees from your accountant in the event of a tax audit initiated by the CRA or other provincial revenue agencies?
Well, now there is: Audit Shield and is available through accounting firms that have included this into their suite of value-added offerings.
Audit Shield provides relief from professional fees, up to a prescribed amount, that you incur if you are subject to an audit, enquiry, investigation, or review by the CRA or other provincial revenue agencies. That includes your accountant’s professional fees and any other specialist professional advisor expenses your accountant engages in relating to the audit.
As far as I know, Audit Shield is the only service of this kind in Canada. And when it comes to a full-on audit, you want the best solution available. So if you know of anybody else who offers this type of product, please drop me a line.
What Audit Shield Cover?
Audit Shield is retroactive, so it includes all previously filed returns, provided that payment is received before the notice of audit activity. Keep in mind that the service is limited to the detailed terms and conditions provided before acceptance.
Audit Shield coverage offers peace of mind if the CRA selects you for a tax audit. Some of the protections this service offers include:
- Corporate Tax Reviews
- Post Assessment Personal Tax Enquiries
- GST/HST/PST/QST Reviews
- CRA Employer Compliance Audits
- Plus many other relevant matters
You can only purchase Audit Shield through your year-end accountant, the one who prepares your tax returns. For more information about Audit Shield, contact your accountant to find out if they offer the service, or visit AuditShield.info.
Disclaimer: This information is for your consideration only. Gateway Tax is not affiliated with Audit Shield and makes no claims as to its performance.
Get Help With Your Next Tax Audit
If you receive a letter from the CRA about a tax audit, don’t do anything without talking to a professional first. I can help you take the next step and avoid extra costs. That way, you can get back to business as usual faster.
To book your free appointment, call 604-240-6173 or email firstname.lastname@example.org.
Visit the Blog for more resources and news.
Andrew Adolph is a CPA and former CRA auditor with 25 Years of experience. He helps businesses to not par any more in sales taxs than the law says they must and acts as an advocate for you if you are being audited, so you can fous on your business.