Tax Consulting

This list is not exhaustive, but our services include the following:

CRA Audit
  • It is hard to imagine anything more stressful than finding out that CRA wants to do a GST audit of your business. No matter how good or not-so-good your books may be, a CRA audit can be a very expensive cost of doing business.
  • A CRA auditor’s job rating depends upon how much tax they assess and how many of their audits result in assessments. Higher up the ladder, CRA bases its executive bonuses on how the audit programs do achieving their “targets”.
  • CRA Audit Help
  • While most auditors are reasonable, all of them are under pressure to produce and they make mistakes. Sometimes they request too much information, even though CRA has committed to keep their information requests to the minimum needed to do their job.
  • As a business owner, you don’t want to have to deal with the auditor at all, and [b] need someone to be the go-between. And what better than a businessman and former CRA auditor?
  • What to Do if You are Selected
  • Being selected for an audit can happen for many reasons. Sometimes it is random. More recently, auditors are assigned audits by the Business Intelligence unit (BIQA), who tell them specifically what to check. While there, the auditor is supposed to look for other issues, both income tax and GST.
  • Usually, you would find out you are selected when an auditor calls you. Sometimes they send a letter without calling first. Once you receive the letter, call us. Our initial consultation meeting is free.
  • “It’s Too Late – They Already Assessed me!”
  • Auditors are under a lot of pressure to produce. Not just to assess you, but also the other 23 audits they are supposed to perform every year, for an average of 30 years. Mistakes get made. You have 3 months to appeal an audit assessment already made, and in some cases it can be extended to a full year.
  • CRA Guide
  • CRA Guide RC4070
  • CRA Giude RC4118
GST Refund Claims
  • While it is hard to truly appreciate any kind of tax, the GST/HST is respected by the business community because it promotes exports and allows businesses to purchase major assets tax-free.
  • There are many reasons to be in a G/HST refund position. You could be building up inventory in your off-season. You could be exporting. You could be a fish processing plant, or a grocery store, or a farmer. Refunds are part of how the system, and the government knew even before GST came into being that there would be fraudsters.
  • The GST Refund Integrity Program
  • The objective of the GST Refund Integrity Program still is to prevent paying out fraudulent GST refund claims. It was originally designed to prevent the government from the embarrassment and bad press of being duped out of taxpayer money.
  • MIND-BLOWING FACT – some time after Revenue Canada became CRA, they stopped doing existence checks, like the one that would have prevented this embarrassing $20 million fraud. Whereas refund claims used to be assigned to the closest CRA office, now the workload is assigned nationally and no existence checks are done.
  • GST Refund Audit Letter?
  • A letter from the GST Refund Integrity department is not a full audit, just a check. The verifier gets 5 hours to analyse your tax filings, contact you, collect info, deny or adjust the refund claim, write a report, and upload it.
  • A lot of times, the verifier sends a form letter, which can be very intimidating.
  • Unnerving as it is to get a letter from CRA, Refund Integrity officers rarely do field visits. They do, however, sometimes ask for too much, or are hard to get hold of. This can mean delayed cash flow, and stress.
  • Please don’t ever stress about a letter from Refund Integrity. Do take it seriously, though.
GST Objections and Appeals
  • Once an auditor has finished most of their audit work and have found an assessment, they are required to send a proposal letter, giving you 30 days to respond.
  • A Notice of Assessment is always issued at the end of a CRA or PST audit, whether there was a change to tax owing, or not.
  • What if I Disagree with My Assessment?
  • If you don’t agree with your assessment, you have 90 days from the date on the Notice of Assessment to do something about it. The form to do this is called a Notice of Objection. The department that handles these is called the Appeals Division.
  • The Appeals division is supposed to operate independently from the Audit division. Their job is to make sure audit adjustments are legally correct and supported by appropriate audit evidence.
  • I Lost My Appeal – Now What?
  • There is a final recourse level, called Tax Court. These cases are heard by real Supreme Court justices. If you are still in disagreement with CRA, enough to retain a tax lawyer, then your case will be heard before a judge, who will decide it for you.
  • It is expensive at this stage, both for you, and for CRA. The CRA actually has to pay for legal counsel out of their budget, just like you do. If they lose, it can open a pandora’s box of problems for them if it sets a legal precedent.
  • Very few appeals end up in Tax Court because even CRA doesn’t want to go there.
  • The Problem with GST Appeals
  • The problem with the Appeals process is that it is very slow. It takes approximately 143 days to resolve low-complexity objections, and 896 days for higher complexity.
  • You might think CRA would delay taking collections action while an assessment is being appealed. This is partially true: for income tax assessments, they will wait. But for GST assessments, the CRA can, will and has taken collection action while an appeal is ongoing, even if the delay is CRA-caused.
  • What if the 90 Days is Expired?
  • It is still possible to file a Notice of Objection after the 90 day period is expired, up to one year, if you can demonstrate your failure to meet the deadline was due to circumstances outside of your control.
  • Hopefully, you will call Gateway Tax early on in the audit stage. But if an assessment has already been issued and you don’t agree with it, give us a call for a free consultation.
Sales Tax, GST/PST Recoveries
  • We find sales taxes fascinating. Your year-end accountant spends 98% of their time dealing with income tax issues. Most make sure that your GST and PST reported makes sense when compared to your sales reported for income tax.
  • Overpaid sales taxes can be claimed back. You just have to claim them.
  • As easy as it is for a CRA auditor to come in and pick instances of under-remitted GST collected, it is just as easy to comb in the other direction and find where the business under claimed an ITC, or didn’t claim a PST exemption that was available to them.
  • Using the same software the CRA auditors use, we can comb in the other direction, finding instances of under claimed input tax credits and PST overpaid. Unlike income rules, where expense must be matched to revenues, most businesses have FOUR YEARS to claim input tax credits.
  • Like Discovering Cash
  • An under claimed input tax credit is like a ticket you can redeem for cash. So much attention is focused on getting income tax filings right, that sales tax systems rarely get looked at to see if they are squeezing out every ITC.
  • The software we use dredges up transactions where the input tax credit didn’t get claimed properly.
  • Even if you have the best bookkeepers, there are many reasons input tax credits gets missed:
  • The GST isn’t clearly shown on the invoice, or it is confusing. Examples are airline tickets, hospitality (taxis, restaurants)
  • Wrong rate used. Claimed a 5% ITC when expense was incurred in Ontario (13%)
  • Entire accounting system not switched over properly from the BC HST experiment
  • Anytime in the past four years there was any bookkeeper that was not diligent in scraping those tax credits off supplier invoices.
  • Bad debts being written off
  • Change in bookkeepers anytime in the last four years
  • Anytime things got so behind that the accounting department let a batch of invoices through that only got coded enough to match the payment but no sales tax info was discerned
  • Clearing errors within the accounting system
  • Keying errors
  • Paying PST on goods the qualify for a PST exemption.
  • Just looking for these things usually finds other instances where sales tax that has been overpaid.
  • CFO’s love us because we can squeeze a sponge that produces cash and improves the financial position. Controllers dislike us because we point out inefficiencies in the accounting system. We make sure to explain our findings in a way that the accounting team can learn from.
  • How Much Does it Cost?
  • We charge a percentage of what we find. If we find nothing, your cost is zero.

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