(Originally posted on February 3, 2016)

 

CRA’s Annual Office Audit Letter Campaign

 

We have recently been informed that it is time for the Canada Revenue Agency’s annual fishing trip! CRA will soon be conducting its seventh annual Office Audit Letter Campaign.

Starting shortly, the CRA will send approximately 30,000 “intent-to-audit” letters to selected groups of individual taxpayers and business owners who claim consecutive business or rental losses or who are employees claiming employment expenses on line 229 of their tax return. (Form T777)

The objective for CRA is to encourage recipients of the letter to take a second look at their tax returns and to determine if they have in fact made an error or oversight.

If errors or oversights are identified, CRA would then like the taxpayer to make the necessary corrections through ‘My Account’ on the CRA Website or by submitting form T1-ADJ for the relevant year(s).

CRA says the objective of these campaigns is to help small business owners and individual taxpayers to better understand their obligations and responsibilities when it comes to the Income Tax Act.

 

CRA also goes on to state that it helps them to better utilize their resources (auditors) by having the taxpayer effectively audit themselves.

If this seems a little deceptive or misleading to you – you are right!

IF you receive one of these letters, DO NOT RESPOND TO CRA without first consulting a Tax Professional or a Tax Lawyer!

Anything you disclose to CRA in this manner can be held against you and used to further their objectives (collect more tax) in the future

 

Your rights as a taxpayer

The 2007 Taxpayer Bill of Rights includes 15 fundamentals that are supposed to be guaranteed to each taxpayer:

  • to receive entitlements and to pay no more and no less than what is required by law
  • to service in both official languages
  • to privacy and confidentiality
  • to a formal review and subsequent appeal
  • to be treated professionally, courteously and fairly
  • to complete, accurate, clear and timely information
  • as an individual, not to pay income tax amounts in dispute before you have had an impartial review
  • to have the law applied consistently
  • to lodge a service complaint and to be provided with an explanation of the CRA’s findings
  • to have the costs of compliance taken into account when administering tax legislation
  • to expect the CRA to be accountable
  • to relief from penalties and interest under tax legislation because of extraordinary circumstances
  • to expect the CRA to publish its service standards and report annually
  • to expect the CRA to warn you about questionable tax schemes in a timely manner
  • to be represented by a person of your choice

This campaign is a scare tactic, nothing more.

It does however, let you know that CRA is watching and they are targeting selected industries and individuals that are generally less than fully compliant.