Audits range from the simple request for vouchers for a personal income tax return (for example, child care expenses) to a thorough on-site review of records, sales invoices and expense allowances for the self-employed or small businesses. With 9000 auditors, the revenue agency has wide powers, the scope of which is worrisome. But you can defend yourself against a financial investigation.
Be ready
The CRA can go back up to four years before your return. Be sure to keep your records accordingly. In the face of messy or incomplete reports , auditors may suspect that you have made a mistake or are hiding something.
Insider Tip: There are great accounting software programs, but the value of a computer program is all about how you keep your paperwork. For the Business Advisors Auckland service this is a very important matter now.
The best tool?
A simple accordion shirt with multiple pockets. Ideally, tax return records are sorted by year and divided into categories.
Think before you talk
An audit does not mean that you are believed guilty, but stay on your guard. If an auditor embarrasses you, you have to react, but not necessarily on the spot. Remember: everything you say could be held against you.
Insider Tip:
If you are not sure how to answer, ask a tax specialist. The best way to find one is to ask for references in your life. Otherwise, contact one of the three professional accounting colleges in Canada: the Certified General Accountants Association, the Society of Management Accountants and the Chartered Accountants.
About the Company: Ramesh, Chartered Accountant at Kiwi Tax Accountants, is based in Mt Roskill, Auckland, but thanks to Xero and the power of the cloud, we can help your business with accounting no matter where you are in New Zealand.