Income Tax Audit: 5 Critical Things To Do If You Get One
November 21, 2022 Andrew AdolphAudits
So, you’ve received an income tax audit letter from the CRA, and now you’re scrambling for answers on what to do next. Let me give you some advice…
An income tax audit is nothing to play around with. I should know because I was a CRA auditor for over two decades. The good news is you’re not dead in the water just yet. There are steps you can take to get everything in order, provided that you follow these steps carefully. If you have not received an income tax audit letter yet and want to know how to avoid one, please read this article.
1. Get Organized
The first and most important step is to get all of your documents ready for your income tax audit. This means all the documents/deductions that you used to report your income for the past three years. The CRA will be asking you A LOT of questions, so make sure you have everything on hand.
2. Make Sure You Make Copies of Important Documents!
The CRA will be interested in seeing the documents that you’ve used to prepare your tax returns. This includes financial statements, receipts for money you’ve given to charity, and employment documents. Make sure you make copies of these documents just in case the CRA asks for them. You’ll want to hold onto the originals, trust me!
3. If They Don’t Ask, Then Keep Quiet
The CRA is not your friend, and you must not treat a call from them like a social visit. Only provide the information they ask for. If you’ve made charitable donations or changed jobs, these are rare scenarios where you could offer up some insight, but it’s better just to stay silent unless they ask you a direct question. Just remember to not be wishy-washy and give clear answers.
4. Talk to A Tax Professional
An income tax audit can be tricky. If you’ve received a call from the CRA, I’d recommend you talk to a professional because you probably won’t be able to go through this process alone.
The intricacies of tax law can be difficult to learn overnight, and one mistake could land you in big trouble. Tax accountants help people with these issues on a daily basis, and they’ll have the knowledge you’ll need to increase your chances of getting out of an income tax audit unscathed.
5. Be Prepared To Get Your Wallet Out
If you’ve received an audit, there is a high statistical probability that you will have to pay additional taxes, as well as interest and penalties.
Hiring a tax audit accountant or CPA can help navigate the process of being audited. Having someone in your corner who knows exactly what to do is key if you want to get out of paying more than you should.
To book a free meeting, call 604-240-6173 or email me at email@example.com. I can answer any financial or tax-related questions and help you set a profitable financial plan. You can also visit the Blog for additional tax-related resources.
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.