The CRA loves it when people use ‘off the shelf’ software’, because people make mistakes. The average person does not know what they can and cannot claim and although the software may walk you through an interview process, it does not KNOW YOU.
There is nothing difficult about preparing a personal income tax return right?
Just go to the store, buy a program and away you go. It’s easy.
The software is 100% guaranteed right?
Yes it is. It is guaranteed to do exactly what you tell it to do. But what if you do not know what you can claim as tax deductions or tax credits?
Does the software know that you are now the caregiver for your elderly parents?
Does the software know that you had a new addition to the family this year?
How about those medical expenses and the kids after-school activities, can you claim them?
How much? Which receipts do you need to keep? How Long?
A Tax Preparer takes the information you give them and produces a tax return, likely no better than your purchasing off the shelf tax preparation software.
A Tax Planning Professional interviews you, gets to know you, takes the information you give them and then prepares your tax returns. Once your returns are complete, a Tax Professional will then offer you guidance for future tax planning and savings.
For some, it is their greatest fear, for others, a fact of life. The letter from CRA saying they want to review your tax returns.
There are only 2 ways that a taxpayer can be selected for an audit:
We’ll ignore random chance and give you the details for the Targeted Selection Process (TSP).
The TSP is based upon risk factors; the CRA looks for those that are more likely to owe more taxes based upon some specific criteria and experience:
10% of randomly selected taxpayers face an additional tax bill of more than $5,000 while 35% of TSP taxpayers owe more than $5,000 in additional taxes.
Filing online vs. paper filing has absolutely no bearing on being selected for an audit;
What does matter though are:
CRA conducted 366,260 audits in one year resulting in $2.5 Billion in additional taxes, interest and penalties. (small business audits) CRA conducted about 63,000 GST/HST audits in this same period resulting in assessments of more than $600 million.
They conducted 20,635 audits on ‘underground economy’ businesses – resulting in additional tax, interest and penalties of more than $284 million. 98% of tax evasion cases prosecuted by the CRA result in Convictions! And the rate of conviction has NEVER fallen below 94%