For many Canadian citizens, submitting their taxes is an annual process that is dreaded and seen as a necessary evil. After taking the time to fill out paperwork and ensuring everything is accurate, the last thing you want is for the government to come knocking on your door for a review or audit, but it can happen, and it is helpful to be prepared.
What is an Income Tax Review?
An income tax review is a process where the Canada Revenue Agency (CRA) quickly reviews your reported income, deductions, and credits for accuracy. The CRA may request documents verifying your records and can also adjust your return if they find any errors.
If you’re selected for an income tax review, it doesn’t necessarily mean that you’ve done something wrong. The Canada Revenue Agency (CRA) conducts more than 3 million reviews annually to check if taxpayers are complying with the tax laws and ensure that everyone is paying their fair share.
What is a Tax Audit?
An income tax review is not the same as a tax audit. A tax audit is a much more formal process where the CRA conducts a thorough examination of your all-financial records to determine if you have accurately reported your income and paid the correct amount of taxes.
If the CRA believes that you have not accurately reported your income or paid the correct amount of taxes, you may be subject to a tax audit. During a tax audit, a CRA representative will contact you to schedule an appointment to review your records.
During a tax audit, the CRA may request to see original documents such as receipts, bank statements, and records of any financial transactions.
What Should You Do If You Receive a Notice for an Income Tax Review or Audit?
If you receive a notice from the CRA for an income tax review or audit, it is crucial to work with a professional CPA to simplify the process. At NaickerCPA, our team of experts will work with you to gather the required documents and information, and we will represent you during the review or audit process.
We understand that an income tax review or audit can be a stressful experience, but we’re here to help make it as smooth and stress-free as possible. Contact us today to get started.
If you have any questions about this article or business taxes, in general, or you want to make an appointment with an accounting professional at Naicker & Associates, please contact us at (604) 469-9369. We are based in Port Moody, BC.
