Seeing a brown envelope with the little black Canadian flag can be nerve-wracking. Sometimes, it’s good news, like a cheque! Other times, you open it to find a letter full of confusing text.
These letters often contain process reviews, which are essentially mini-audits. They can happen for various reasons and are becoming more common each year. We handle them daily, making sure to take care of them with minimal hassle for our clients. We're here to help you navigate through these reviews smoothly and stress-free.
What do you do when you get one of these brown envelopes?
If it’s a cheque, cash it. If it’s a letter, please send it to us or your accountant immediately. The Canada Revenue Agency may be requesting specific documents and only give you a short window to respond.
They might ask for your donation and medical receipts or the bill of sale for the vehicle your corporation bought a couple of years ago. Either way, it’s important to respond to them.
Extensions can always be requested but are not promised. If you’re unresponsive, the CRA may assume the worst-case scenario and send you a hefty tax bill with extra penalties and interest that you might not have owed had you sent them the proper information.
What do you do when the CRA calls you?
Tell them to call your accountant. If they object, say you have to go and will call them back. Then contact us, and we will call them back.
We recommend this for a couple of reasons. First, the phone call may be a scam. Scam calls are becoming increasingly frequent and harder to distinguish from a legitimate CRA agent. Don’t give them any information.
Secondly, legit CRA agents often seem to speak another language, using terms and phrases you don’t hear every day. There is always a risk of miscommunication or simply providing the wrong answer because of a misunderstanding, which could cost you. We don’t want that to happen to you. Wrong info can be reversed, but it can take a year to resolve simple mistakes. We know how to deal with the CRA, so please leave those discussions to the pros.
How do we avoid full-blown audits?
These CRA process review letters usually give you 30 days from the date of the letter to respond. If these little requests or questions aren’t handled properly, it may make the CRA agent suspicious, leading to an actual audit — which no one wants. We are very diligent about responding to every CRA inquiry immediately. We are also super familiar with what’s allowed and what’s not.
If we do your taxes, we are adamant about getting copies of all your medical receipts, official donation receipts, equipment purchase invoices, etc. We know what will be requested, and we scan them into our system so they are convenient to access when the CRA agent comes knocking.
What is CRA representation?
Need CRA support? True North Accounting acts as the representative for all our clients. We are on file and can handle everything the CRA needs for your tax accounts. We provide audit support to our bookkeeping and tax clients so they can sleep well at night knowing where they stand with the tax man. By being responsive, polite, and doing our work correctly, we can prevent 95% of audits.
Call our CPAs for a quote if your accountant doesn’t stand behind their work.
Read more about Corporate Tax topics that may be helpful to you and your small business.
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