Business owners fear the dreaded call from the Canada Revenue Agency(CRA). After all we have all heard stories about how CRA has taken people’s houses, their boats, frozen banks account. They have lots of power. But you don’t have to be afraid. Although CRA does have a lot of power, they generally only rarely wield their stick.
Here is a couple of sure fire ways to get CRA to take your house or freeze your bank account or do some other nasty thing.
- Don’t pay your taxes
- Don’t file your taxes
- Don’t return CRA’s phone calls
- Don’t answer CRA’s letters
Typically, business owners who file on time, pay on time and respond to queries in a timely manner, have no issues with CRA. Most accountants will even talk to CRA on your behalf, so you can rest easy.
Here are some basic tips as to what you should do:
File on time
Be aware of filing deadlines and do your best to be on time.
While it may be tempting to inflate your expenses and / or deflate revenues, don’t do it. An audit is unpleasant enough when you haven’t done anything wrong, it’s downright nerve-shattering when you have.
Make sure you know the rules
There is a lot of misunderstanding out there and you and only you are responsible for the information that gets sent to CRA (even if someone else prepares it). Make sure your preparer is qualified to do the work and keeps up to date with tax rules.
Respond to CRA promptly
If you don’t want to talk to them, get a professional accountant to help. If you already have an accountant and CRA is still calling you, talk to your accountant about getting them set up as a representative for you with CRA. The accountant is then authorized to speak to CRA on your behalf.
Keep all your paperwork and documentation
A major source of expenses not being allowed is due to insufficient or incomplete documentation. Just saying you have the expense is unfortunately not good enough, you do have to be able to prove it. Also don’t forget to have a good filing system as you have to keep documentation for 7 years.
Have more questions? I am a CGA and I work with businesses in the Kelowna area. I can be reached at: email@example.com or by visiting my website at: www.dufordcpa.ca.