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Audit by Canada Revenue Agency (CRA): What Happens and How to Respond?

When the phrase "I'm being audited by CRA" is uttered, many people experience a visceral reaction. The prospect of a tax audit can instil fear and anxiety, but understanding the process can ease these feelings. This article will outline what happens when the CRA audits you and provide options on how you can respond or get assistance through the CRA website, mobile app, or call centre.

Understanding the CRA Audit Process

A tax audit by the CRA is a method of checking the accuracy of the figures presented in a business or an individual's tax returns. When the CRA decides to audit you, they send a letter declaring an intent to check specific tax elements. They may wish to reassess income, deductions, or credits. Throughout the audit, the CRA reviews various financial statements, including sales receipts, bank statements, and ledgers. The goal is to establish whether you have indeed paid your fair share of taxes as outlined in the tax laws and regulations.

What to Expect If the CRA Audits You

If you are audited by the CRA, you will receive a notice of audit. Once this notice is received, you will need to cooperate fully with the auditor. You might consult with a tax professional for advice. Audits can occur on your business premises or through correspondence asking for evidence to back up claims made on your tax return. After the audit, CRA issues a letter explaining their findings and any adjustments needed. If there are adjustments, you may owe more tax, receive a refund, or remain the same.

Responding to a CRA audit: Three Options

Option 1: CRA Website

Using the CRA website is one of the ways to respond to an audit notice. With a My Account, you can communicate with CRA, see your tax records, and submit documents electronically. If you have not registered for a My Account, it is worthwhile doing so, as this portal enables smooth digital interaction with the CRA. It streamlines the process and removes the need for paper documents.

Option 2: CRA Mobile App

The CRA also offers the mobile app, MyCRA, as a platform for you to review your tax status. You can keep track of your taxes, benefits, and manage your tax affairs in real-time, providing mobility and flexibility. The mobile app also allows you to access the digital services, keep records, and share documents with CRA securely.

Option 3: CRA Call Centre

If you prefer a more personal approach or need specific clarification, the CRA call centre may suit your needs. The call centre agents can guide you through the audit process and answer any queries you have. The call centres also aid in setting up payments if your audit results in additional tax owing.

Moving Forward

An audit by the CRA is a procedural measure, and responding efficiently is paramount. Whether using the CRA website, mobile app, or the call centre, make sure that you act promptly, keep open communication, and provide all the information requested. It's recommended to consult with a tax professional to understand the implications and your responsibilities further.

Remember: An Audit is not an Accusation

Lastly, it's important to note that an audit is not an accusation of wrongdoing, but rather a process to ensure everyone pays their fair share of taxes. So, breathe, prepare, and utilize the available resources to get through the audit process effectively.