WHAT TO EXPECT & HOW TO PREPARE FOR AN AUDIT
Trust Liberty Tax for expert guidance on audit preparation.
When it comes to income tax preparation, one word can send shivers down the spine of taxpayers: audit. However, understanding what an audit entails and knowing how to prepare can alleviate much of the associated stress. In Canada, professional services like Liberty Tax are poised to demystify the audit process, ensuring that you're not just prepared, but confident in facing it. Here are the key aspects you need to know.
Understanding the Audit Process
In Canada, an audit involves a review of your financial records and tax returns by the Canada Revenue Agency (CRA) to verify accuracy. Generally, most audits are the result of a 'red flag' that has triggered a closer look by tax officials.
Reasons for an Audit Selection
Audits are not always random. The CRA often selects returns for audit based on a variety of risk factors, including discrepancies or inconsistencies in income declarations, unusually high charitable donations, and abnormal deductions claims. Audits can also be triggered by a history of prior non-compliance or if your returns deviate significantly from standard norms for similar taxpayers.
Effective preparation is vital for a smooth audit process. It’s essential to keep all tax-related documentation organized and easily accessible, as this demonstrates your diligence and compliance. This includes not only basic documents like receipts and books but also detailed records, bank statements, and digital information. Proper documentation can help clarify your financial situation and validate your tax return entries.
During the Audit
Throughout the audit, cooperation and transparency with the CRA auditor are paramount. Be forthright in providing requested information and documentation. If there’s something you don’t understand, don’t hesitate to ask questions. Understanding the auditor's queries and responding accurately can help expedite the process and may lead to a more favourable outcome.
After the Audit
The conclusion of the audit process is marked by the CRA providing a detailed report of their findings. This report will outline if any discrepancies were found and, as a result, whether you owe additional taxes, including the reasons for these conclusions. Should discrepancies that we made be discovered, Liberty Tax’s accuracy guarantee ensures that we will shoulder the cost of any penalties and interest; an audit may discover errors or omissions that a client made, and we do not cover penalties and interest in that situation.
The Role of Liberty Tax
Liberty Tax, with its team of local tax experts, offers support throughout the audit process. Their commitment to maximum refunds and precise accuracy means that you're in reliable hands. If the CRA queries your tax return, Liberty Tax is there to assist.
Get Peace of Mind with Liberty Tax
Filing with Liberty Tax means you receive the assistance of professionals who are committed to getting you your maximum refund. Their accuracy guarantee offers additional reassurance during the audit process.
Common Questions and Answers
What triggers an audit?
Audits can be triggered by various factors, including random selection, specific concerns, or regulatory requirements.
How long does an audit typically take?
The duration of an audit varies based on its scope and complexity but can range from a few weeks to several months.
Can I refuse to cooperate with auditors?
Refusing to cooperate with auditors can have legal consequences. It's advisable to work collaboratively with auditors.
Are there penalties for non-compliance found during an audit?
Depending on the nature and severity of non-compliance, penalties and fines may be imposed.
Can I hire a professional to assist with audit preparation?
Yes, many individuals and businesses seek the expertise of professionals like Liberty Tax to prepare for audits effectively.