Has the CRA Flagged Your Business? How to Survive a Post-Assessment and What to Do Next
Givens LLP | JUN 25 2024
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Ever felt like you're finally winning the tax filing game, only to be blindsided by a surprise letter from CRA? That sinking feeling in your stomach? Yep, that's a post-assessment notice. Don't worry, you're not alone.
Canada Revenue Agency (CRA) conducts post-assessments to ensure businesses are playing by the rules. While these assessments are a normal part of the tax process, they can be stressful, especially if you're unprepared.
This is where knowledge becomes power. Understanding how post-assessments work and what CRA typically looks for can help you navigate them smoothly.
Why Should You Care About Post-Assessments?
A post-assessment is CRA’s way of taking a closer look at specific areas of your business tax return. They might have questions about your mileage claims, advertising expenses, or even that generous fruit basket you sent to a client. While it's not an audit (yet!), it can still be time-consuming and raise a sweat bead or two. Remember, the smoother your response, the less likely you are to face further scrutiny. By being prepared with the right information, you can save yourself time, money, and a whole lot of unnecessary stress.
Knowing what to expect helps. Let's delve into some common areas CRA likes to scrutinize:
- Mileage and Vehicle Expenses: Think gas receipts and detailed logs. CRA wants to ensure those business trips were actually, well, business. Please note that as of 2024, CRA will give back $0.70 for every km driven up to the first 5000 km and then $0.64 for every km thereafter.
- Advertising Expenses: Did that flashy billboard campaign translate to sales? Be prepared to show CRA how your advertising dollars worked for you.
- Meal and Entertainment: Business lunches can be tricky. CRA allows some deductions, but proper documentation, like receipts and meeting minutes, is key. This documentation should include the name of the person or people you met with and the reason for the meeting.
- Gifts and Donations: Charitable giving is great, but CRA wants proof that your donations went to registered charities. Receipts are your best friend here.
This isn't an exhaustive list, but it gives you a good idea of CRA's focus. The point is that keeping clear and organized records is your best defence.
Okay, So They Want More Info. What Now?
The CRA post-assessment notice will outline the specific deductions or claims they're questioning. Gather all the requested documentation (receipts, logs, etc.) within the timeframe provided. Keep in mind that regardless of whether you receive a post-assessment, the CRA expects you to keep all relevant information for a full seven years. So, ensure you have a safe, organized space set aside.
Why Do I Get Post-Assessed Anyway?
Post-assessments are part of the CRA's routine verification process. They help ensure that the tax information businesses submit is accurate and complete. Staying compliant means fewer surprises down the line.
The Audit Shield Advantage
So, you know what post-assessments are and why you should care about them, but how are you going to handle one when it happens? That's where Audit Shield comes in.
Think of Audit Shield as a monthly insurance policy that protects you from the unexpected costs of a CRA audit, including Corporate Tax Filings, Personal Tax Filings, GST/HST Filings, Employer Compliance Audits, Business Audits, and even post-assessments. It's about peace of mind, knowing you have a team of experts in your corner, ready to spring into action if needed. Here's how it works:
- We Take the Wheel: If the CRA selects you for an audit, enquiry, investigation, review, or post-assessment. We'll handle the entire assessment process on your behalf, freeing you up to focus on what matters most – running your business.
- A Minimum of $10,000: Audit Shield provides a minimum of $10,000 worth of professional coverage per year. This ensures we have the resources to thoroughly defend your tax filings, whether it's corporate tax, GST/HST, payroll, personal tax, or post-assessments, as long as the audit or post-assessment review occurs during the period your insurance covers. Please note that Pre-Assessments are not included in Audit Shield coverage.
- No Hourly Rate Shocks: Business owners often worry about the skyrocketing costs associated with tax audits. With Audit Shield, you avoid that nasty surprise. We waive our hourly rates so that you can avoid being hit with unexpected bills on top of the stress of an audit. The annual fee for Audit Shield is predictable and based on your business revenue, not the whims of an hourly meter.
- Peace of Mind, Even for the Compliant: Even if you have filed your taxes correctly, Canada Revenue Agency may still audit you. They use advanced data analysis to review all tax returns, even those without any errors! Audit Shield helps you deal with the inconvenience and potential costs of responding to a CRA audit inquiry. It provides protection regardless of whether the audit results from a routine verification process or an actual discrepancy in your filing.
Beyond Compliance: Proactive Protection
The number of CRA audits and reviews is on the rise. Audit Shield provides a proactive shield against these unforeseen events. It's a small investment for a significant return on peace of mind. Don't wait for an audit to strike before taking action. With Audit Shield, you pay a single annual fee. This fee is tax-deductible for your business, with no hidden costs or surprises.
Don't Go It Alone: Partner with Givens LLP
Proactive tax planning and expert support can make all the difference when dealing with the CRA. Contact Givens LLP today! We can help you confidently navigate post-assessments, set up your Audit Shield, and provide expert advice to keep your business running smoothly. Remember, knowledge is power, and with Givens LLP on your side, you'll always be in the know.
