Canada Revenu Agency Audit is Up This Year

Canada Revenue Agency audit is up significantly for tax payers all across the board. And if you are a self employed or independent contractor, you are more likely to be audited to provide proof of certain expense deduction claims. It is very important to have not only sufficient but 100% backups of expense claims with original documents or third party proof. Here are some of the expense deductions that CRA is primarily auditing from Canadian Tax Payers. If you have any of these deductions in your 2012 tax returns, you could be asked to provide supporting documents to support your claim.

1. Education/Tuition fees expense.
2. Transfer of Tuition fees to spouse or parents.
3. Professional Membership dues
4. Donation Claim receipts
5. Medical expense claims

6. Property Tax claim
7. Home Office claim supporting documents
8. Car Expense claim, travel log.
9. Office Rental expense
10. Meal expense
11. Bad Debt Claim

Your bank statement or credit card statement is not accepted by CRA to support your expense claim for CRA audit purposes.

You must provide, original receipts from Vendor, if paid by cheque, must provide both the front and back copy image of the cheque from your bank, with the proof that the cheque was issued to make the actual payment. For credit card payment, you must provide the original credit card receipt from the vendor with the invoice. CRA might also ask for the credit card statements to reconcile the receipt with your card statements.

If you get a request for information from CRA, consider getting help from a professional who has experience with CRA audits. Other wise, there is high possibility that they will run you over with intimidation and you will end up losing your claimed deduction.

CRA not only will assess you more tax but also start charging you with interest from the day, taxes were due. Don’t hesitate to ask for help from a Tax Professional.