Good Tax Advice Is Hard To Come By.
Taxes are complicated. I know that, you know that, we all agree. Sometimes we need to call an expert for help. But what’s a person to do when even the experts get it wrong?!
The CRA gets the answer wrong 25% of the time.
What’s worse, it takes an average of three tries to get through to an actual human.
This report card from CFIB and this news piece from CTV show that even when you are trying to do taxes right, you still don’t always stand a chance.
[Tweet “If you make a mistake based on the CRA’s bad information, you are open to tax investigation – at least a review, at worst an audit.”]
Filing your taxes based on incorrect information has grave consequences to you, the taxpayer. If you make a mistake based on the CRA’s bad information, you are open to tax investigation – at least a review, at worst an audit.
“The consequence to the individual taxpayer is high and there has been a shocking lack of accountability,” Kelly said (video).
So, what’s an honest taxpayer to do?
Four things:
- Call to ask for help.
Wait, what?! But they get it wrong 25% of the time. That brings me to the next step. - Write. Down. Everything.
Since the inquiry, the CRA has implemented the requirement that call centre agents provide their ID number to callers to increase accountability. But don’t stop there, keep a log of every:- Attempt to contact the CRA
- The names and ID numbers of everyone you talk to
- The purpose of the call and the resolution suggested
- Ask for confirmation in writing.
- Consult an accountant
You may already have an accountant, maybe they are the ones who are calling the CRA on your behalf. If you don’t already have an accountant, we recommend it, especially in complex tax situations. In any case, an accountant will be skilled at corresponding with the CRA and keeping records of the tax advice given. - Consider tax investigation insurance
If you have an unusual tax situation that requires expert tax advice, there is a higher chance that the CRA will investigate your taxes. If they give you wrong tax advice, the chances are even higher. With tax investigation insurance an accountant of your choosing can put the CRA in their place and clear your name and you won’t pay the accounting fees to do it. Even better, the small premium covers you going forward and your complete tax history.
There’s no silver bullet in this case.
They’re still the “experts”, and we still need information so we still have to ask. The important part here is to protect yourself from future investigation.
Keep an accurate log in with the rest of your tax documents and when they come back to you with a mistake, you can show them the error of their ways. Unfortunately, it may still be a case of he said/she said.
One last thing: CRA recommends that if you have a complaints about them (like for example they gave you bad information and then audited you because of it) you should register your complaint on their website. (By the way, I don’t see a phone number on that website.)
Unfortunately, this goes to show you how much your tax risk is mostly out of your hands. Even when you do everything right, the odds can still stack up against you. For more information about tax risk, download our white paper below.
Finally, you should find out more about protecting yourself and your business with Tax Investigation Insurance.
Have you ever called the CRA for help? How did it go? If you have any tips for getting good information, share them in the comments below!
