Staying informed about tax updates is crucial for individuals and businesses to effectively manage their finances and comply with tax laws. Tax updates can encompass various changes, such as alterations to tax rates, adminstration procedures as well as reporting requirement. For this blog, I will focus on changes in adminstrative proceures starting from 2023 and you need to pay attenion to.
Oral interview of taxpayers
Previously, the CRA had the power to examine taxpayers’ documents or property to determine their potential tax obligations when they started audits. It is common that they also had the the rights to ask questions. In practice, auditors would often confer with taxpayers’ accountants or tax lawyers. Individual/business clients could also generally have an opportunity to answer questions in writing as well.
However, this has been changed.
Given the pressure in increasing renveues via collecting unpaid taxes, the Government of Canada expanded the powers of audit in its 2021 Federal Budget. As a result, the CRA can now require oral interviews of taxpayers, including owner- managers and employees of an affected business. The new rules allow the CRA to force interviews
and compel answers from both taxpayers and taxpayers’ employees. This change made it easier for the CRA to obtain necessary information and issue assessments.
Are you scared? You, as a taxpayer, may not have sufficient tax knowledge to answer CRA questions clearly or you may fall into a situation that your employee being interviewed provides incorrect information that leads to misunderstanding of the situation by auditors.
What can you do in case you are being selected?
The best practice starts from understanding clearly what auditors are looking for and taking the time to collect required information. The next step is to prepare for the interview by preparing your records and rehearsing your answers. The simpler, the better.
Electronic Notices of Assessment
You may sign up the MyAccount with the CRA already. So, eectronic Notices of Assessment is not a stranger to you. On February 18, 2022, the CRA has announced that beginning in 2023, they intend on providing electronic Notice of Assessments and Reassessments for taxpayers. Note that first-time filers will receive a notice of assessment by mail regardless of how they filed their first tax return.
While EFILE and NETFILE programs has become popular, some issues are noted as well. In some cases, when taxpayers file their returns electonrically. The express Notice of Assessment would be issued within a day or two. This fast service sometimes didn’t capture the latest tax payments and caused worries from taxpayers concerning unpaid amounts. Is that it? I believe this is
just the starting point, as the CRA builds up its online capability, it will enable the agency to scrutinize all filings in details and find the outliers to dig in. So, before you file your taxes, checking for reasonablness and consistency is a must.
Lastly, to stay informed about tax updates, consider regularly checking official government websitesfor the latest information as well
as consulting with a tax professional or accountant who can provide guidance on how tax updates affect your specific situation.
Remember that tax laws can vary by jurisdiction, so it’s essential to focus on updates that apply to your specific location and circumstances.
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