For any anyone that has ever received one of those infamous ’brown envelopes’ or digital communication from the Canada Revenue Agency (CRA), you know the uncertainty it can bring. You start by asking yourself; am I in trouble? I haven’t done anything wrong, but what’s this going to cost to make it go away?
In Canada, we have a self-reported tax system. This means our tax authority – the CRA, has a duty to make sure Canadians are filing their taxes, both personal and corporate, correctly, and accurately. On top of this, our tax act is filled with special credits, deductions, and transfers. When the rules are complex; disputes are common.
How common is audit activity?
At any given time, more than 170,000 tax reviews are underway in Canada, often taking up large amounts of time, and money to respond, and resolve. On time, accurately filed, and compliant returns can still be randomly selected for reviews, audits, and investigations by the CRA.
Even when the filing position is correct, there is no reimbursement by the CRA for costs you incurred to prove or defend your position.
The costs can be significant…
Simpler matters like personal tax audits can cost a few hundred dollars whereas full corporate audits could easily cost thousands of dollars. In between, there are numerous reviews and audits like GST/HST/PST/QST, payroll, reviews of travel expenses, vehicle expenses, and many more.
The cost of each audit varies on many factors, such as, the size of the business, over how many years these reviews are focused on, what complexity exists in the data, or the transactions being reviewed. There is no price range as each audit is generally its own unique circumstance.
The Audit Shield team is already seeing the CRA return to full capacity and indeed claim numbers from CPA accounting firms responding to this review activity, are up when compared to pre-Covid levels. This is expected to continue as the CRA begins to review the Canada Emergency Wage Subsidy (CEWS) and the Canada Emergency Rent Subsidy (CERS) – reviews of which are both covered by Audit Shield.
Avoid unexpected costs with Audit Shield.
Accountancy Insurance has been around in Canada since 2016, specializing in Audit Shield. With a proven track record of 20 years established down under we have the history and depth of knowledge to ensure Audit Shield has you covered when it matters.
The premise of Audit Shield is very simple. It gives you, as a client of a CPA firm, a choice of protecting yourself against these unexpected costs related to review, audit, and investigations. Audit Shield is an optional service offered by many proactive Canadian CPA accounting firms that provides for the payment of professional fees incurred when you are selected for a review, audit, inquiry, investigation, or examination of filed returns instigated by the CRA or other provincial revenue authorities.
That means if your CPA accountant offers Audit Shield, and you choose to join the program, all professional fees up to a prescribed limit are paid for when your CPA accountant represents you in those CRA review or audit activity matters. That means no surprise accounting bill for you.
Down to brass taxes, what’s the cost?
The good news is that Audit Shield can cost as little as $310 for a Sole Proprietor and their family group per year, which can cover them for up to $10,000 of their accountant’s time to respond on their behalf, which is generally more than adequate for even the most complicated review or audit in their category.
A business is usually much more susceptible to a more involved review or audit by the CRA. Having Audit Shield ensures the matter is delt with thoroughly. This means that the client, nor the accountant, needs to cut corners to keep the time, and cost, down.