There are many good reasons why CRA audit protection is very important for accounting firms. The audit protection will cover professional fees so that the accountant can assist the client in responding to an official audit or investigation. CRA is increasingly focusing its efforts at different kinds of data to confirm whether the taxpayer is cheating on his taxes.
CRA practices risk-based compliance for taxpayers that are considered high risk. CRA collects and analyzes any relevant information that is publicly available and related to risk-based factors for the taxpayer. Most of those that CRA considers as high risk are wealthy Canadians that have offshore accounts.
According to Tobi Cohen, spokesperson for the privacy commissioner, they were notified of CRAs’ fact gathering processes from publicly available information on social media. Information collected must berelated to tax fraud and non-compliance of risk analysis audits and investigations. Meanwhile, David Christopher from the advocacy group Open Media stated his group’s opposition towards the monitoring of government agencies of Canadian’s social media posts.
When Canadians post something on social media, they simply want to share some experiences with family and friends. They do not expect that their posts will be scrutinized by some government bureaucrat in Canada. Many people wrongly assume that the Privacy Settings of their Facebook account is working well but sometimes a post ends up being shared with the whole world.
The revelation that CRA is gathering information from social media posts came at a time when the agency is expanding the use of cutting-edge technology and data analysis to confirm tax cheaters, to target people who should be audited and to improve the tax services for Canadians. Data analysis and business intelligence have provided CRA with a tool that gives them a better insight on the behaviour of taxpayers. All resources can now be focused on deliberate non-compliance.
An audit starts from a simple letter that CRA wants to examine your documents and records. If it is a simple audit, you can always turn to your accountant but if there are legal issues involved, you may require a lawyer and an accountant. CRA audit protection will cover the professional fees resulting from an official audit.