CRA Tax Audits

4 Ways to Save Yourself from CRA Tax Audits

Audit is one of the most dreaded words for business houses. A tax audit is like a nightmare to many. You need good defense mechanisms to save yourself from the stringent CRAtax audits.To tell you a secret, learn the difference between a request for information and an audit. There are a fewthings to know which will help you to save your ass from these filthy CRA audits.

  1. Do a self-audit:

Always double check your tax returns before releasing a final copy. A proper mathematical accuracy is something that you need to be particular about. Check if all the entries and numbers are accurate. Even a simple silly error can put you in trouble. Tax audits could either make or break your business.

  1. Reveal all your earnings:

Ensure that all your income is reported. Your report must includedividends and interestsfrom various accounts held by you. Do not make a mistake of forgetting someone, as your auditor will somehow find it. These auditors are skilled enough to find out the flaws andsecrets of the company.A pro CRA will tally all the receipts received with the entries of the data toensure nothing is missing.It would also be wise to compare the last year’s earnings with the current year to know if anything is missing.

  1. Expect reasonable profit:

Be extra cautious in case you are reporting a loss of your returns in the current year. If you are doing so, you need to claim these losses. Expect only a reasonable amount of profit that year. If you don’t do these, the losses claimed by you are more likely to get denied. CRAtax audits always check for the company profits whenever you claim for any losses. Too many losses reported could also hamper your business as the CRA supports the report of losses for only a few years. Recurring losses for a course of time may put your business credibility at stake.

  1. Always submit your tax returns:

Many people often assume that the best way to get saved from audits is not to file tax returns. If there is no entry, what will the CRA conduct? Non filing of data is a fraudthat can lead you to penalties and interests. To the worst side, it may also put you in legal custody.Tax audits follow their own set of punishments to those who do not file their tax return form. If you have also been following something similar to this, it is time to set things right before it is too late. Be as transparent as you can in your financial issues.