Tips and Updates
|Posted on 24 February, 2014 at 16:55|
I have a small business, will I get audited sometime? What triggers an audit??
These are questions that can keep many business owners tossing and turning at night. But an audit doesn't have to be scary.
So let's explore the answers to these questions :
The short answer is Yes, you will probably get audited eventually.
CRA does many kinds of audits, some audit only GST or payroll remittances. WCB also does audits to check on payroll reported and premiums remitted.
You might have a “desk audit” where CRA is looking for additional information on 1 or 2 types of expenses such as meals and entertainment.
You may receive a letter from CRA asking you to “self-audit”. This can happen if CRA suspects you aren’t doing something correctly but the money involved is not worth them sending out an agent. This is an opportunity to refile without penalties.
The audit most people dread is a full corporate field audit just because it can take so much time.
What can trigger an audit?
Late filing of GST
Late filing of corporate tax returns or personal tax returns
Late filing of payroll remittances.
Late payment of any of the above, though it is better to still file on time and then pay late if you have no other option. In other words you have cash flow problem.
Large changes in sales, expenses, profits or losses.
Audits with in the industry. For example: CRA is targeting your industry because they are seeing a pattern of incorrect reporting or even fraud.
Audits from other companies. here is a possible scenario: one of your major suppliers has just been audited and found to be underreporting their revenue. CRA is going to check that the unreported sales to you have been properly recorded in your books. In other words, CRA is wondering if you bought goods, paid cash to avoid the GST/and or get a deal and then didn’t report the purchase?
Do I need to be worried about being audited? How do I get ready?
So here’s the cliff-hanger – I will address those two questions next week.:/
Categories: Small Business