Categories
Taxation

Audits don’t happen randomly

Commissioner and chief executive of the Canadian Revenue Agency reminds us in a story in the Financial Post that there are no random audits in Canada.

If your tax return is selected for audit, the CRA has identified some aspect of your return, be it a deduction claimed or an industry that it is focusing on, for additional scrutiny.

This should be reassuring to the majority of filers, since most people earning a wage have limited deductions available to them, compared to corporations. But should there be some percentage of tax audits selected at random from the entire population?

Categories
Taxation

How to read the Income Tax Act

Continuing the new post series where I answer readers’ questions they’ve Googled to find my site, as logged by 103bees.com, the next one is sent chills down my spine: “How to read the Income Tax Act?”

The last time I cracked open the Act, it was probably tax class in university. Once you’re done those classes, there’s really no need to delve into the swirling mass of dense legalese again. There are many more comprehensible sources for tax information, so don’t read the Income Tax Act. In its place, do these things:

  • Read the Canadian Revenue Agency’s website. They write about tax in plain English (most of the time) and it’s reliable information since it is from the source.
  • Read accounting firm websites. All the major firms have sections on their websites that offer regular tax facts and updates, detailing bits of tax law applicable to your situation, whatever it may be. Again, plain English (for the most part, although we do tend to introduce jargon from time to time).
  • Read tax textbooks. I still do this when I want a refresher. Textbooks are occasionally dense, but usually still much easier to read and understand than the Act.
  • Call in to tax related TV call-in shows. These seem to be on regularly, on CityTV especially and other fringe channels that predominantly have call-in shows. They feature knowledgeable experts sharing advice for free.
  • Use tax software. If you own one of the tax packages people use to do their own taxes, these can be used to answer your questions in a meaningful way: with your numbers, or with dummy data as examples.

Reading the Act is best left to the professionals who have specialized in tax. As you can see, there are many alternatives, most of which are available on the web, that the average person can use instead to find guidance on any particular issue.