Tax audit for businesses
A corporate tax audit is an efficient and effective mode of scrutiny, especially when done by a primary corporate tax accountant. It is important for organizations to identify leading practices for the filing of corporate tax returns by taking the help of advisors and corporate tax teams in improving their corporate tax audits experience.
It is important to take note that the larger and more complex the audit is, the higher would be the delays or misunderstandings during the filing of corporate tax returns. Irrespective of the size of the business, it is important to ensure that your organization is adhering to generally accepted accounting standards and laws.
A professional tax audit performed by leading audit firms is quite important for running your businesses smoothly without attracting the suspicions of the Canada Revenue Agency or CRA.
The process of Corporate Tax Audit – an Overview
The process of preparation for corporate tax audit begins when you prepare the T2 or other returns. Organizations should anticipate what issues, transactions or business changes might attract a tax auditor’s vision when preparing their accounts. Organizations should also be prepared to be ready with the answers properly documented for any questions that may arise when filing corporate tax returns.
Tax returns file must include the final copies of the tax returns working papers in addition to the documentation of completed transactions. The documents protected by privilege should be well-marked and kept separate from the unprotected ones. The files should be in line with the concerned organization’s document retention policy.
At the outset of the audit, it is better to be acquainted with all the members of the audit team. This involves going beyond finding out the name of your large case file manager and field auditors. Learn the due dates when the auditor needs information and ask the auditor to put all the questions in writing.
How to Prepare for Tax Audit?
To prepare for a tax audit you should first give all the basic financial information to the auditor. The auditors usually request for an income statement, balance sheet and trial balance of your business. Therefore, it is important to have these three reports in place at all times. In dealing with a tax audit, it is better to hire a primary corporate tax accountant.
Once the audit is in full swing, keep in touch with your CRA audit team. Schedule regular on-site status meetings with the field auditor.
Discuss the queries with your auditor to ensure that your accounting team shares the same understanding of the query. The scope, times, and resources would be required to devote to comply.
The best possible tax outcomes from the audit process can be achieved by following the below-mentioned processes:
- It is important to read the notification letter very carefully and respond before the 30-day deadline.
- Keep your financial records organized.
- Actively engage with your CRA auditor to help the auditor to narrow the focus of inquiry.
The Way Ahead!
Billah and Associates Inc. can be your primary corporate tax accountant in Ontario, with its team of highly skilled accounting professionals, who can review your books and practices ensuring that you are abiding by the law of the land.