The Canada Revenue Agency (CRA) selects Canadian taxpayers and businesses for audits randomly, and there is nothing anyone can do about that. They also select businesses that they think are up to shenanigans for audits, and it’s a good practice to minimize these things. Here’s an article describing some of the ways businesses get the interest of the CRA.
Self-Employment Catches The CRA’s Eye
If you are self-employed, there is a greater chance that you will get audited by the CRA. People who are self-employed have more control over what they declare as income and expenses, which can get the interest of the CRA. If you’re self-employed, you need to be scrupulous in your paperwork and accounting so you can show the CRA that you aren’t trying to get away with anything.
Cash Business – Be Very, Very Careful
The CRA is also extra-interested in cash businesses. Again, the business owner has more control over what they declare and how, and the CRA wants to see that you are running your business legitimately—declaring all income and expenses properly.
Another Loss This Year? Yikes!
You also need to be careful how much profit or loss you declare. Claiming a loss at your business year after year will get their attention—if you aren’t making any money at your business, the CRA will be very interested to find out why you are continuing with this business.
Extra Style Points for Living Way Above Your Means
Last but not least, and you get extra style points for this one, is to have a lifestyle that is significantly different than the income you are declaring. Declaring a $50,000 income, and buying big houses and expensive cars and taking lavish trips will also get their interest, and they’ll just have to audit you to find out where you are getting the money for this improbable lifestyle. Watch this video to see even more tips on what will trigger a CRA audit.
Shaw & Associates To the Rescue!
Having a professional accounting team like Shaw & Associates working with you can cut down on the likelihood that your business will trigger an audit from the CRA. We know what they like and what they don’t like, what they are looking for, and what raises red flags with them. We can also represent you with the CRA if you do get tagged for an audit, to take some of the scariness out of it.
Contact Shaw & Associates Chartered Accountants for accounting help you can count on. One complimentary meeting with us will put you and your business on a more profitable and positive path.