A tax audit is NOT to be taken lightly. The Canada Revenue Agency (CRA) has well trained, specialized tax auditors. Unless you’re an expert in tax, you’re taking far too much risk trying to navigate the audit process without real help. A bad tax audit can result in a substantial balance owing, plus penalties and interest and even criminal charges that could potentially result in bankruptcy. At MCO Partners, we’re experienced in all aspects of dealing with CRA. Whether it’s early in the audit process, or after you’ve been reassessed, we can help you. We can explain the AUDIT PROCESS to you, and work with you every step of the way. We can explain your rights to you, and even manage the whole audit process. Don’t go through a tax audit or objection without Serious Tax help from MCO Partners. Contact us today to let us help you with your tax audit or objection.
The Audit Process
The typical stages in a corporate or individual tax dispute are:
- Initial correspondence from CRA – This could consist of a request for information, or a notice to schedule a date for a tax audit. The correspondence will typically identify the nature of the audit (payroll, GST, income tax, etc.), the tax years involved, and a deadline.
- On-site Audit or Review of Information – This is where CRA will develop a list of items of concern, and propose any adjustments.
- Initial Proposal Letter – This letter from CRA will typically itemize the adjustments being proposed by CRA, and will allow the taxpayer additional time (typically 30 days) to provide additional information.
- Reassessment – After reviewing all the information, CRA will process the changes (if any) and issue a reassessment. The reassessment will identify the additional taxes, penalties, and interest owing.
- Notice of Objection – A formal Notice of Objection must be filed within prescribed time periods (usually 90 days) from the date on the reassessment.
- Acknowledgement from CRA – CRA will acknowledge in writing that the Objection was received, and will be assigned to an appeals officer (usually within six months).
- Review by Appeals Officer – The file will be assigned to the Appeals Division at CRA with a mandate to conduct an independent review. Additional supporting documentation can be provided at this stage. The appeals officer can allow the objection, deny the objection, or make changes to the reassessment.
- Reassessment – If the Appeals officer has made changes, another Reassessment is generated with a revised balance of taxes, penalties, and interest.
- Appeal to Tax Court – The taxpayer must file an Appeal to Tax Court within the time period indicated on the reassessment (typically 90 days). This will allow the taxpayer to argue the matter in a court of law. Either the Taxpayer or the Crown can appeal from Tax Court to the Court of Appeal, and potentially to the Supreme Court of Canada.