5 Common Mistakes to Avoid When Dealing with a CRA Tax Reassessment
Dealing with a CRA tax reassessment can be an overwhelming and stressful experience. When you receive a notice of reassessment, it is natural to feel anxious about how to proceed.
Many Canadian taxpayers, in their attempts to resolve the issue quickly, often make simple yet costly mistakes. The best way to protect yourself is by staying informed and taking the right steps.
Avoid These Common Mistakes
Here are five common mistakes to avoid if you find yourself facing a CRA audit or tax reassessment:
1. Failing to Report All Streams of Income
One of the most common errors that triggers a tax reassessment is failing to report all streams of income. Whether it is freelance work, rental income, or earnings from investments, any unreported income can lead to serious consequences. The CRA has ways of cross-referencing information, so always ensure you report every dollar you earn.
2. Not Updating Personal Information
Another common mistake is not keeping the CRA updated with your current personal information. Whether it is a change in address, marital status, or dependents, failing to update your personal details can lead to miscommunication and delays. This can trigger a CRA audit or result in a tax dispute appeal if incorrect information affects your tax return.
3. Making Claims for Personal Expenses
It is important to clearly distinguish between personal and business expenses. While you may think you can claim personal expenses as deductions, this can lead to a red flag with the CRA. Ensure that you are only claiming legitimate business expenses and that you are following the appropriate guidelines for deductions like home office or vehicle-related expenses.
4. Not Keeping Records of Income & Expenses
Accurate and detailed record-keeping is key to preventing a tax reassessment. Without proper documentation of income, expenses, and deductions, you’ll have a harder time proving the validity of your claims in the event of an audit.
5. Ignoring Deadlines or Not Seeking Professional Help
Ignoring CRA deadlines or attempting to handle a tax appeal on your own can create bigger problems. The CRA operates on strict timelines, and missing a deadline could limit your options.
Tax Lawyers: Your Best Allies When Dealing with CRA Tax Reassessments
When it comes to navigating the complex world of CRA tax reassessments, our tax lawyers are here to help. At Taxpayer Law, our experienced tax lawyers are here to help you avoid these mistakes and provide the support you need during a CRA audit or tax reassessment. Remember, you do not have to go through this process alone!
Get in touch with us today to chat with a tax lawyer about CRA audits, notices of reassessment, tax dispute appeals, and other CRA-related issues. We are here to provide expert assistance in resolving your tax issues and protecting your financial future.