Audits

How many people know their rights when it comes to dealing with the CRA?  My guess is not many.  Did you know that the CRA posts your rights on their website?  This is all good I know until you get the phone call or letter out of the blue saying you owe lots of back taxes and by the way we are charging huge interest on it as well.  This type of thing usually scares the crap out of most people and they assume (we know what happens when we assume, right?) that the CRA are only doing w

Well here we go again.  I got a call from a lady in BC who had what is known as a desk review.  This is a mini audit usually done by part of CRA called Office Exam.  These “audits” are usually limited to one or two issues and are done via mail.  You get a letter saying to send all documents to the CRA for specific issues.  They review the documents send you a letter advising you of the outcome of the review (usually you get a bill with the letter – funny thing don’t you think).

If I ever find the mystical friend “Bob” that is out there giving people advice on everything from home improvement to taxes and accounting I am gonna kill him.  This is the person who has done everything, knows everything about everything and is always telling you what to do.  He is constantly whispering in your ear and giving you advice.  Now that I think about it he is probably related to “Murphy “, of Murphy’s Law fame (or infamy).  You know the “if something can go wrong it will” guy.

In the spirit of Halloween I thought that it would be appropriate to share a horror story.  But not just any horror story, a CRA horror story, which has to be scarier than any movie.

Rumour has it the CRA want to put a tax on Halloween Candy.  When the child goes to the door they would have a box around their neck and the candy giver would have to put 10% of the market value of the candy into the box.  The child would then have until November 10th  to submit the box to the CRA.  They want to call it HST (Halloween Snack Tax). 

Depending on who you talk to you will hear stories about the CRA having motivations to screw people or deliberately be unfair.  While I do not subscribe to this belief, I can tell you that it is always about the money.

This post is meant as a warning to anyone reading to make sure that you are diligent in documenting your expenses.  A new client came to us once they were already under audit and we had to pick up the pieces.  An interesting product of this was the realization that given the way society is changing it is harder to document all expenses.  Let me explain.

An accounting friend called me today and said that her client had been contacted by CRA to re-schedule a previously scheduled audit appointment.  The client told the auditor he would have to check with his accountant to see if they were available.  The auditor’s response was somewhat lukewarm and basically the attitude was why would you need your accountant for an audit meeting.  The client had not previously told the auditor his accountant would be coming to the meeting, so the auditor was probably caught off guard.  That said, the auditor should have been happy, because he would be able c

If you are to believe what the CRA says then you would believe that they are fair and solely concerned about having everyone file their taxes correctly.  You would also be led to believe that they will tell you when you have made a mistake regardless of whose favour it is in.  Well you would be wrong.  I have two clients that had errors made on their personal taxes (the errors were not made by the Accountables).  In both cases a single number was missed on a t-slip (just one number was not entered).  Guess what?

Going to Tax Court is not expensive or complicated.  You do not need a lawyer or even an accountant.  That said unless you are well versed in Tax Law and researching jurisprudence I would at minimum hire someone to research the arguments needed for Court, and to help you prepare.  If you want to represent yourself, you can, again I would suggest taking a professional with you.  CRA has lawyers from the Justice Department to represent them why would you go up against a lawyer by yourself.

The first thing to understand about the appeal process is that it is administered by CRA and the people making the decision are CRA employees.   They are supposed to be impartial and for the most part they are, but they still are trained by CRA and have a bit of a company mentality.