Understanding the Taxpayer Bill of Rights Part 1

In my next blogs I will help you understand your basic rights as a taxpayer.  Many people do not even know the Taxpayer Bill of Rights even exists in Canada, never mind read it.  So here it is (please click on the link below):

Taxpayer Bill of Rights

1. You have the right to receive entitlements and to pay no more and no less than what is required by law:

This means that you can take advantage of all tax credits, tax deductions and options available to you for saving taxes.  You can do everything within the guidelines to save tax, and yes there are a ton available.

2. You have the right to service in both official Languages:

This is simple, you can have service from CRA in either or both English and French.

3. You have the right to privacy and confidentiality:

Unfortunately this is a tough one as you don’t always know when they are breaking your confidentiality or privacy.  In the case that you do find them breaking this rule, you must immediately write to the Tax Payer’s Ombudsmen (http://www.taxpayersrights.gc.ca/)

4. You have the right to a formal review and a subsequent appeal:

This means you can object and have a formal review of your case.  If they disagree with your claim or reassess you and you don’t agree with it, you need to object.  You may want to call for any clarification before you file the Objection.  A Notice of Objection can be filed within 90 days of an assessment or Reassessment that you don’t agree with.  If after the initial review is done and you still don’t agree with their decision, you can appeal further to the tax court and even on to higher courts!

5. You have the right to be treated professionally, courteously, and fairly:

Sometimes they do, sometimes they don’t!  If you are not being treated in a professional, courteous and fair manner then you can go to their superior for a complaint.  If the complaint is not resolved at that level then go directly to the Tax Payer’s Ombudsman.  Remember it is best not to speak to CRA directly, but to do everything with them in writing.  If you do have to speak to them, always get their full name and badge/bond number!

We will discuss more of your rights on my next blog!

Tips on Audit Proofing your Business Part 5

I cannot stress how important notes are when it comes to your source documents and bookkeeping, this is why I’ve mentioned it a few times in this blog series.  Because audits always happen years after the fact of the transactions, you must be able to go back in history and know exactly what happened.  So if you are not on top of your paperwork regularly (daily-weekly-monthly) you should not expect things to go well if you are audited.  At the end of each day, look at your receipts and make notes on them.  Make notes in your bookkeeping, or for your accountant to do the bookkeeping.  The more notes the better.  For example if you are claiming meals and entertainment expenses then ensure you note who you took out for the meals and entertainment or your claim will most likely be denied in an audit.

For claiming home office expense, ensure to have proof of your office/business usage and the square footage that proves the percentage of expenses.  This is something that CRA looks at frequently in audits.  For example if you have a house that is 2000 square feet and you are using 200 square feet for business purpose, then you can deduct 10% of your home overhead costs.  These costs include rent or mortgage interest, insurance, property tax, utilities and other over head costs.  Ensure you can prove this in the case of an audit.

One more tip for you at this time, it is best not to pay for business expenses with cash as cash is not very traceable.  If you lose the receipt you don’t have any statement or anything else to back the claim. 

Typically in most audit situations the CRA auditor will reassess whatever they can and the onus is on you to substantiate your claim.  Many claims by CRA may not be correct, however it is up to you to appeal if you don’t agree.  If you are reassessed you have 90 days from the date of that reassessment to file a Notice of Objection (appeal).  If the appeal doesn’t go in your favor and they still disregard your claim, you can appeal further to the tax court within 90 days of their denial of your Notice of Objection.

As we now wrap up this blog series you can see that there is a lot to think about in the case of an audit.  Be detailed and be able to prove everything.  If you have questions or concerns in regards to any of my blogs, please don’t hesitate to contact me.