Province
You double checked your math. You filed your return on time. You reported all your income.
And yet you still found that dreaded letter in your mailbox from the Canada Revenue Agency that says you’ve been selected for an audit.
Tax experts say the key is not to panic — just because you’ve been tagged for a review of your tax return, it doesn’t mean the tax man thinks you’ve done something wrong.
“There’s nothing to fear — the CRA are not a body to be afraid of . . . the more co-operative you are, the easier the process will be,” said Diane Akelaitis, tax expert at PriceWaterhouseCoopers.
The audit process in Canada is generally random, but the agency does have things it looks for in tax returns that could increase the risk of being audited, such as a return that constantly reports business losses year after year or higher than average deductions.
“They have some metrics around what they expect or what is normal for a particular industry — for example what a commission-based stock broker is entitled to deduct as expenses,” she said.
“So they would look for brokers that might be claiming expenses in excess of what is normal for a stock broker . . . other things that might flag them are individuals who are repeatedly claiming large rental losses or business losses.”
Akelaitis said that compared with the U.S. Internal Revenue Service, the Canada Revenue Agency is much more approachable and offers more assistance to taxpayers.
© The Vancouver Province 2006