Susan Ward from Small Business Info has an informative article on the 10 Red Flags that will get the attention of CRA. These are great tips for entrepreneurs and business owners to follow. It is so important to not get flagged by the CRA. If you follow these practises you can have peace of mind that you are making the right decisions for your business.
As Susan says, would really stroll through a farmer’s field waving a red flag around, trusting that the bull was asleep?
If you’re self-employed, this is exactly what you’re doing every time you file your Canadian income tax – except that when it comes to the Canada Revenue Agency (CRA), the bull is always awake and it’s really, really easy to get its attention.
Some of the red flags are:
Discrepancies in your revenue, deducting large business expenses, claiming the home office deduction, claiming 100% business use of a vehicle and showing recurring losses. Read about those flags here
Because the CRA scrutinizes the tax returns of small businesses especially closely, Canadians who are self-employed always have a higher risk of being audited than those who are employed by others.
And while there’s no sure-fire way to avoid a CRA audit, you can cut down the odds by avoiding known audit triggers.
If you want to decrease the chances of your small business being audited by the CRA, avoid these 10 Red Flags.
BACD has a workshop with the CRA on business expenses and taxes on February 11th. 2021