Tax Audit Assistance: Tax Time for Toronto
Have you been audited? Have you ever notified for a tax audit? This can be a stressful circumstance. You are probably very busy in your daily routine yet, you must have to deal with a tax audit head on to avoid unexpectable snags. Being aware of the processes involved and the issues that might possibly be encountered would greatly help to get a high score and pass the tax audit.
Tax Audit Processes
Knowing the processes encompassing the tax audit is a must for a business owner so he could do necessary preparations and the corresponding documents required.Here are the tax audit processes to be kept in mind:
- Initial review- the initial tax audit review ensures the tax return is mathematically correct and all the information slips have been included.
- Desk audit- after checking all the information slips that have been included the CRA will perform a desk audit. The CRA will request supporting documentation for certain tax credits or tax deductions. They will usually provide certain time frame to respond. If there is no response the CRA will remove the tax audit or tax deduction.
- Field Audit- in this situation the Tax Auditor will show up at our place of work and want to review certain documentation for certain transaction such as; bank statements to check deposits,invoice to substance expenses, etc.
- Criminal Investigation- the CRA has a criminal investigation unit that will monitor to those who are reckless in filing of tax return. The CRA will get the department involved when criminal charges may be laid, which is something you want to avoid at all costs. Tax evasion penalties can be severe.
Common Tax Audit issues
Here are some of the issues that may arise in an audit that would cause a taxpayer to be reassessed at the end of an audit.
- Overstated Expenses- If you overstate your expenses, you will pay more income tax than the necessary.
- Overstated Deductions- Overstating your deduction means understanding your tax liability. If you fail to pay all that you owe by the due date them there is proper penalties will be performed.
- Overstated Credits- the taxpayer overstated his or her credits, this means the taxpayer would have received a larger refund, what they were entitled to or they would have calculated an incorrect tax balance due.
- Under reported or unreported Earnings- Negligence and substantial understatement were the possible corresponding penalties in under reporting of income.
- Unreported offshore income- one will be subjected to interest and penalties in not reporting offshore income.
- Unreported offshore assets- a taxpayer should always do a reporting of offshore assets to avoid certain circumstances.
- Credits, such as for charitable donations, that are not supported by receipts- taxpayer should always keep a receipts in certain credits or charitable donations.
Most audit are done to ensure compliance with the Income Tax Act. A Tax Audit is an examination of a taxpayer’s return and supporting records including bank accounts and receipts to make sure that income and expenses have been properly reported and supported by its accounting records. Always seek expert tax audit assistance Toronto to ensure reliability of the documents.
Be sure you have a complete records detailing every expense and deduction you have claimed in your tax return and hopefully you don’t get tax audited, however if you do, call the Toronto’s accounting expert such of National Tax Service. They have an extensive and outstanding records of success in helping many clients.