A tax audit is a frightening experience, and if the results are bad it can be a very expensive one. The CRA tax auditor will ask to see books and records and bank account statements. There may be questionnaires to be filled out. Any information that is wrong, even if due to an error, will be used against the taxpayer. A tax professional such as a Toronto tax lawyer should be involved as soon as the auditor contacts you.
Problems with the tax man require immediate response by one of our top Canadian income tax lawyers. The initial CRA contact will usually be either from an auditor or a tax collections officer. We will help you so that you can sleep at night.
Taxpayers are often overwhelmed by a tax assessment or a Tax Statement of Account that shows a balance owing that is impossible to pay. One common reaction is to ignore it since you can’t afford to pay.
Income Tax Debt
A CRA tax debt has to be addressed immediately. If it is ignored a CRA collections officer will commence tax enforcement actions. This means your bank account will be seized, your wages or accounts receivable or rents will be garnished, and your house may have a lien registered.
Dealing with the CRA tax collection officer yourself is usually a mistake. Collection officers are very aggressive and will come to your home or office with one purpose – collect as much as possible as quickly as possible. They have many collection powers, but may mislead taxpayers as to your rights are.
You need to retain a professional as soon as CRA notifies you of a tax debt. We have been solving tax debt problems since 1987. We may be able to challenge the tax assessment by filing a Notice of Objection. If you owe the full tax debt we may be able to reduce penalties and interest by filing a Taxpayer Relief (Fairness) Application. We are usually able to negotiate affordable payment arrangements with the tax collections officer in order to avoid enforcement actions such as bank account seizure or wage garnishments.
If the amount is too large to ever pay off we will direct you to a bankruptcy trustee who will either make a consumer proposal or submit a bankruptcy application to fully eliminate the taxes owing.
Tax Audit Assistance
There are over 350,000 audit and review actions conducted by the Canada Revenue Agency on ayearly basis. Around 15,000 of these audits deal with “cash only” businesses (i.e. the underground economy). Additionally, an estimated 35,000 are tax shelter audits. Read more
Tax Audit Process
What happens when you are audited? Typically, you will first receive a notice from CRA of their intention to audit. The notice will usually outline the preliminary information that they require from you. They may then follow up and request more information. The beginning of an audit is the best time to obtain legal representation. Tax auditors are not always reasonable, and may not listen to your reasoning for filing your returns the way you did. We will speak to the auditors on your behalf, and begin the necessary legal work it takes to resolve all issues relating to your tax return.
If you disagree with the outcome of an audit, it is especially crucial to obtain representation as soon as you have been reassessed by CRA. You have appeal rights, but you only have 90 days to appeal by filing a Notice of Objection. As experienced Ontario tax litigation lawyers, we can provide detailed assistance in filing your income tax objection.
Notice of Objection
The result of an income tax audit by the tax auditor is a reassessment by the Canada Revenue Agency. The Canadian taxpayer’s first step is to file a Notice of Objection requesting an internal review of audit by an Appeals Officer with a mandate to make an independent review of the case. The Notice of Objection has to be filed within 90 days from the date of the Notice of Assessment/Reassessment, with extension requests allowed, but not always granted, for an additional year from the expiration of the 90-day objection period.