CRA Taxes – Know Your Rights

bookkeeping services Newmarket

We’ve filed a large number of personal tax returns in the last few months, and customers for the most part have received their Notices of Assessments. But something else could be coming in one of those brown envelopes in the next few weeks – a request from the CRA for documentation or additional information. So whether the demand relates to personal or business taxes – know your rights.

Usually at this time of year Canada Revenue Agency (CRA) is looking for receipts to substantiate deductions and credits. The most common are:

  • Daycare expenses
  • RRSP contributions
  • Medical expenses
  • Property tax or rent paid
  • Donation receipts

These are what I consider the nice and more than reasonable requests. What bothers me and my customers is the ongoing request for information and documentation where it might concern schedules i.e., rental properties or employment expenses. I agree that if the expense is claimed there had better be documentation to support it, however, I take issue with the person at the CRA that is continually asking for more information from what the original demand outlined. The communication can drag on for months.

Paperwork, especially faxes to the CRA, go missing on a regular basis. The stress it puts on taxpayers who’ve done everything right is horrendous. Sometimes it seems like the auditor is creating a make-work project for themselves. Do they get paid a bonus if the audit is dragged on for more than 3 months?

The CRA has a list of 16 rights for your personal taxes and an additional 5 for business. Here are a couple that I believe are of the utmost importance, right from the beginning of the customer-CRA communication.

  • You have the right to be represented by a person of your choice. All too often I’ve heard CRA representatives say to taxpayers that there’s no need for the CRA to speak to someone else; that the request is straightforward and shouldn’t take long. If you’re not comfortable in dealing with the CRA, then seek a responsible person to represent you. Don’t be tricked into thinking… you can handle a one-time request or the auditor seems really nice… what could go wrong? Taxpayers also need to understand that they have a certain amount of time to collect their paperwork. The request could be a demand, but it doesn’t have to be responded to in the next 2 hours. To appoint a representative you will need to complete a form titled T1013.
  • You have the right to be treated professionally, courteously and fairly. I’ve saw first-hand that this isn’t always the case when I assisted a customer to lodge a complaint against a very rude, demanding and obnoxious auditor. The auditor appeared to be judge and jury, before even starting a very simple fact finding audit. Intimidation indicates a lack of respect and you’ve done nothing yet to cause that.

For the full list of rights for both personal and business taxpayers please click here.

Request for information, documentation and potential audit can bring many a taxpayer to their knees. Know your rights when it comes to dealing with CRA. Get professional help immediately if you’ve procrastinated on responding to the CRA requests, are feeling intimidated or it’s having an impact on your health, business or family life.

I welcome your feedback. You can leave a comment right here on the site or click the contact tab at the bottom of the screen.

Until next time,

Maureen

Tenant & Landlord Rent Receipts – What you Need to Know

bookkeeping services Newmarket

I covered this topic briefly a few years ago but all through this past tax season numerous questions and situations continued to arise as to what is acceptable and what to do if audited by the Canada Revenue Agency (CRA) when it comes to tenant and landlord rent receipts. Here is some information on what you need to know and what you will need to supply if requested.

Since the credit varies by province I will address what the CRA across Canada requires and then for the province of Ontario only. Continue reading

Lying to Revenue Canada about Foreign Property or Investments?

Revenue Canada and Foreign InvestmentWhether you’re preparing your personal tax return for 2014, or having a tax professional do it for you, there’s a possibility you might be lying to Canada Revenue Agency (CRA). It’s so easy to skip, or say ‘No’ to the question on the information page – Did taxpayer own foreign property at any time in 2014 with a total cost of more than CAN $100,000? Foreign property is not limited to real property such a condo in Florida that you use for personal and rental purposes.

Specified Foreign Property (SFP) includes: Continue reading

3 Questions to Ask a Prospective or Current Bookkeeping Provider

bookkeeping expert NewmarketThis is the time of year when many small and medium size business owners decide they need to get a better handle on their bookkeeping. Perhaps you want to get your 2014 bookkeeping up to date and you don’t want to do it yourself, or you want to start 2015 with a professional taking care of your bookkeeping needs so you can focus on your business. As you move forward into the New Year, here are 3 questions to ask a prospective or current bookkeeping provider:

1.  Do you offer fixed price invoicing?

Fixed pricing is an agreement between you and your provider which details what and when you the customer, will supply your provider with information. It also details what the service provider will do with that information. Whether it’s: Continue reading

3 Problematic Responses to Probing Bookkeeping Questions

bookkeeper NewmarketIn the last few weeks I’ve had an unusually large number of inquiries about hiring us for our accounting, bookkeeping and tax services. And as much as business owners need to ask numerous questions (which I strongly encourage), I also have a responsibility to ask numerous, sometimes probing questions. This ensures that I can help them make informed decisions and give them a sense of direction if something is not correct. Here are 3 recent questions that I asked and the problematic responses. P = Problematic. Continue reading

Tax Audit from Hell? – Part 2

bookkeeper NewmarketA couple of weeks ago I thought this would be part two of a three part series, even though it was originally planned for two. But thankfully it appears we’re on the final leg of this very long and stressful journey. Let me take you back as to why this has been the tax audit from Hell.

In my previous blog, I finished with the auditor’s request for a 2011 personal breakdown of expenses and income. And, the income wasn’t just related to T4s and Child Tax Benefits. It related to every deposit made to all of their bank and investments accounts along with that of their children for all of 2011. The auditor wanted closing balances of all their accounts at 2010 and opening balances for 2012 which included but wasn’t limited to: Continue reading

Are you Prepared for an Audit from Hell? – Part ONE

bookkeeper NewmarketIn early May 2014 I received a call from a long-time client of mine. They just received a call from Canada Revenue Agency (CRA) saying they were being audited for the year 2011. My client is sharp. He didn’t panic or get angry, but simply asked “how do I know who you really are based on a telephone call?” And, “I want your request in a letter before I do anything further”. My client also contacted their CA as they weren’t sure who was to do what, and what was to happen next. Little did we know this would become the Audit from Hell for both my clients and me. Continue reading

5 Tips & Tricks for QuickBooks Online (QBO)

QuickBooks Online Pro Advisor NewmarketIn the past month I’ve spent numerous hours training new and transitioning clients in QuickBooks desktop and QBO. While some are new to either version, I’ve found those transitioning from the desktop version to the online version experiencing a bit of a culture shock. To ease the transitioning hiccups, here are 5 tips and tricks for QBO to make the entering and retrieving of information go a little smoother.

1. In order for you to allocate the GST/HST in QBO you must first set-up Sales Tax. You do this by selecting the Sales Tax tab from the menu bar and follow the on screen guidelines. QBO then automatically adds two default accounts; GST/HST Payable and GST/HST Suspense. You cannot allocate a payment amount directly to the GST/HST Payable account. But, you can allocate it to the GST/HST Suspense account. If you can’t easily relate to the word Suspense you can rename it to something that will be more familiar to you i.e. Clearing. Continue reading

Time to Move from QuickBooks Desktop to QuickBooks Online (QBO)?

QuickBooks Pro Online Advisor NewmarketI don’t know whether it’s customers getting into the fall routine, and their business mindset from disappointing summer weather, or the marketing Intuit is doing, but I’ve received a lot of inquiries from new and current customers about QuickBooks in the cloud. The question being; is it time to move from QuickBooks desktop to QuickBooks Online (QBO)? Continue reading

Reducing Canadian Payroll Taxes with a Tax Waiver

reducing taxesIt makes a world of difference to all business owners in surrounding themselves with intelligent and professional associates. Carolyn Bogseth is one of my associates that I certainly respect for her intelligence and genuine desire to help those she meets. Whether they are her clients or someone that would like a general investment question answered she will take the time to assist those who contact her. Below is an excerpt from her recent newsletter outlining how reducing payroll taxes can help you. Continue reading