The Desk Audit
The desk audit is a very prevalent audit these days and it is unavoidable. What is it? It is the letter from CRA asking for backup documents to support a deduction on your T-1 personal tax return. It is computer generated and it targets large deductions that are being claimed by the tax payer. The most common areas are: Donations, Medical expenses, Education expense and Business expenses. You cannot legally avoid this form of audit but you can prepare for it.
When filing your tax return make sure you have proper documentation to support any deductions. Areas where people get tripped up are: claiming a charity donation without a slip showing the charity tax number, claiming education deduction without the slip T2202A. And claiming auto expenses without back up to support the usage of the automobile in question (mileage log).
Keep all of your slips for seven years ready to send to CRA at any time.
The procedure here at Proactive Accountants Inc., is, we always digitize and store all of this information for our tax clients. When, and if they get the desk audit letter we ask them to send it to us and we take care of it at no charge. We make sure that CRA has all of the information they need to make the audit go away resulting in our client having peace of mind.