Tax Tip Thursday

It’s not that bad!

Well, we survived tax season… and now we are in audit season! Now that tax season is finally over, part two begins. The government starts asking questions.

So, your tax tip of the week is to make sure you open AND READ all your mail, ESPECIALLY FROM THE CRA! Then, make sure you take action based on what the letter is asking of you.

I have heard horror stories around investments, life insurance, car insurance, CRA, etc. where people aren’t opening their mail and are causing themselves a ton of grief! So please. Open your mail — ALL of it. We talked about burying your head in the sand last week and this is just a follow-up on that.

The focus over the last few years has been home office and automobile expenses. I don’t think that is going to go away, but I am seeing a lot of pre-assessment reviews for sole proprietors and partnership returns, specifically for the HST rebate. We have also been seeing a lot of review on disability tax credits and support payments, so make sure you have your documentation lined up!

I got a letter. What do I do?

Open it.

If it is a request for information, in almost all circumstances you have 30 days to respond. BUT, the vast majority of the documents sent by the CRA are assessments — notices indicating filing dates, changes to your account, access codes, changes to filing dates (like last year), reminders to pay instalments, acknowledgment of payments, and of course reviews and audits. While “audit” is a very understood word, they rarely happen. Reviews are much more common and they are what most people are faced with.

Remember that a review is usually not that intrusive and is primarily a request for additional information supporting what was filed on your income tax return. For the latest onslaught of reviews, there are a few schedules that need to be provided and that is about it. Most of the information is available in your tax return.

So if you get a letter, please deal with it. If you don’t think you can, just give me a call and we can handle it together! It will cost you a few dollars, but I promise you it will cost a lot less than doing nothing about it. If you do not respond within the 30 days, they will disallow the deductions or rebates in question and you will be out of pocket hundreds or thousands of dollars that you are legitimately entitled to!

We have already had a few this month. If they had done nothing, it would have cost the taxpayers over $8,400 in taxes. It cost each of them $100-$150 for us to complete the documentation and send it in. I think they are much better off as a result. Those people all contacted me as soon as they got the letters and we were able to deal with it on their behalf. Problem averted!

So again. Please open your mail and take action right then and there!

Need help with a review?

We are happy to help you get the right documentation together. Please give us a call or book an appointment to get started.

Disclaimer:

This article provides information of a general nature only. It is only current at the posting date. It is not updated and it may no longer be current. It does not provide legal or tax advice nor can it or should it be relied upon. All tax situations are specific to each individual. If you have specific tax questions you should book an appointment for a 1 on 1 consultation.