Tax audits are the way of the CRA or Canada Revenue Agency of making sure that your tax return is representing the taxes that you’re obliged to the government correctly. An audit normally means that the CRA has found something strange in your taxes. In this case you need to call lawyers like The Victoria Tax Law Group.
A Canadian may face two different level of tax audit: desk audit or full-scale audit. CRA performs desk audit by checking only one component of a certain tax return that appears to be doubtful. Meanwhile, full-scale audit is the evaluation of one’s entire taxes. This type of audit can be stressful and exhausting.
Although audits are rare, most Canadians, of course, wish to avoid them. The number of people being audited is actually at a minimal; however, the number has slowly increased over the years. If you are being audited by the Canada Revenue Agency, then there’s nothing much that you can do to avoid it. But, you can lower the chances of being audited in the first place by following these steps:
How to Avoid an Audit?
Assess your Risk of an Audit
Over time, the Canada Revenue Agency will have a list of particular industries as high risk for tax evasion. The well-known target for the Canada Revenue Agency are salesmen, restaurant staff, unregistered vehicle salesmen, jewelers, auto mechanics, carpet installers, subcontractors, construction businesses, and independent couriers. If you are working in one of the mentioned industries, be more careful in filing your taxes and ensure that you have supporting papers for credits and deductions.
Don’t appear to be “too generous”
The Canada Revenue Agency knows that some taxpayers are extremely generous, at least in the charitable contributions that they declare. Giving about 10 percent of your income may call attention since the normal is only 2 percent of your income. If you like to donate a lot, make sure to be ready in backing up your claims with the right documents. Get the receipts or letters from the charities you give to – particularly donations over $250.
Track your Bank Transfers
When your returns are identified, the auditor is going to run the sum total of all the deposits you make in your bank. If they see that you transfer a great amount of money into various accounts, it may look like you have more money than you really do. Just make sure to have documents of these transfers to show that deposit does not mean new income. Hot having proper documents and tax lawyers in Victoria BC on these activities can put you into great trouble.