CRA Audits & Enforcement

Whether it is a personal tax audit, corporate tax audit, payroll audit, GST/HST audit or WSIB audit, having someone besides you who uses a proactive approach and have hands on experience and knowledge is must. Otherwise a simple audit which should be a few pages representation and explaining the Auditor what the facts are could become cumbersome and may result in adverse tax assessment and huge balances owing to Canada Revenue Agency.

What we do here is the moment you contact us, we set up a meeting with you, review your case and advise you what steps are required and how we can help on your behalf to deal with the CRA Auditor. We take every audit seriously no matter how big or small and we represent you like we are representing ourselves to the Auditor.

Corporate Audit is different from personal tax audit. Usually CRA gets information from GST/HST audit or payroll audit or from a related party audit or it could be random. This is serious audit as a senior officer is assigned to your file and he or she can ask anything being reported or claimed on your corporate tax return. For example, an auditor can ask for invoices and proof of payment for professional fees, purchases, automobile expenses, payroll expenses, insurance expense, meals and entertainment, etc. claimed on your corporate return to make sure only business expenses were claimed by your accountant and no personal expense ran through company account and not accounted for personally.

They can also ask for sales invoices, ledgers, third party statements, loan agreements, etc. to reconcile it with bank deposits and with GST/HST returns filed to make sure income is not understated or not reported in the proper period. We know what the Auditors are looking for and what information to provide them so they stop sneaking here and there unnecessary. We know your rights as a taxpayer and have the experience in dealing with the auditor and know what to say and what not to say during the Audit.

When a corporation or a sole proprietor who has an active payroll account (RP0001) and does not make monthly or quarterly (if eligible) payroll deductions (CPP, EI and Tax) for the employee's payroll as required per Income Tax Act, then CRA may audit the taxpayer and request to produce the bank statements to make sure proper withholding taxes are deducted and remitted to CRA for owner's withdrawals and payments to employees. The CRA has a strict policy and heavy penalties are assigned for non-remittance of payroll deductions before 15th day of following month for previous month's deductions. The penalty is:

• •3% if the amount is one to three days late;
• •5% if it is four or five days late;
• •7% if it is six or seven days late; and
• •10% if it is more than seven days late, or if no amount is remitted.

We will make sure the Auditor does not unnecessary treat various payments to shareholders for reimbursement of loans or expenses and treat them as salary payments to owners and explain each transaction to Auditor during the Audit for favourable outcome.

When you owe money to a federal agency or department and the same or another federal agency or department owes you money, these funds may be applied against your debt. This can include but is not limited to amounts such as income tax refunds and/or goods and services tax (GST) / harmonized sales tax (HST) credits, as well as benefit payments or other applicable credits you may be entitled to receive from the Crown. CRA can set these amounts off even if the amounts you owe are the subject of an objection or appeal.

Once CRA issue a Requirement to Pay, or start other legal proceedings, they will usually not stop or withdraw these actions until the account is paid in full, or when it can be shown that the action is causing financial hardship.