A recent court ruling has made it easier than ever for the Canada Revenue Agency to target small contractors and home renovators for audit.
Home Depot resisted a request from the CRA to provide the names of all commercial credit card holders, taking the CRA to court. Unfortunately, the court ruled on the side of the CRA.
That’s bad news for contractors and home renovators. Now the CRA can compare the quantum of your commercial credit card purchases at Home Depot to the expenses you reported on your tax return. If the expenses reported are higher than the credit card records, the CRA may then review your personal lifestyle, in an attempt to verify your true taxable income.
It all adds up to higher chance of being audited for your last three years.
So much for protection of your personal and professional privacy. The CRA has trumped the Home Depot on that front.
What should you do now?
If your tax reporting has been aggressive in claiming expenses, some of which might be considered questionable or hard to verify, expect an audit.
If and when it comes, don’t talk to the CRA. Don’t try to justify your expenses by telling the auditor everything about your business, your bank accounts, and your customers. Once the CRA has this information, it can and will be used against you to deny expenses and assess you with more income, more tax, and likely penalties on top of that.
DioGuardi Tax Amnesty is real lawyer protection for your business and personal life. If you believe you are at risk of an audit, talk to DioGuardi . If you are already being audited, call NOW, and stop handing over your information.
Cal DioGuardi at 1-877-4-DIO-TAX.