Hi all,
I (or my company) has been "selected" for a 3 year tax audit. I incorporated my business in Feb. 2012 (a company of one "employee" being myself) and the audit covers 2012 through 2014. CRA (Canada Revenue Agency) will be coming to my home (where I work from) to conduct their due diligence which apparently will include measuring the square footage of my place to determine if the 20% of costs that I claim for a tax expense write-off are legitimate. (I think it's close!)
In addition to providing my company's bank statements for that 3 year period and all business accounting from my Quickbooks, I have been instructed to produce my personal bank account statements for the same time frame. This is where I am freaking out! All of my online gaming transactions have been conducted via my personal bank account until Visa cut off such transactions earlier this spring. I don't and have never used any on-line gambling wallets. (I also haven't gambled on-line since March of this year when Visa cut us off from on-line gaming. This has been a good thing on the home redecorating/ purchasing and organizing front, but that's a topic for a different discussion!)
An acquaintance of mine told me she/ her company was audited a couple of years ago and when I asked her about the personal bank side of things, apparently they totally scrutinize all deposits made over the period being audited and ask for a full accounting of them. She said for a period of at least a year they would randomly call her asking about for example, a $150 deposit made 4 years prior. The casino withdrawals/ deposits might be straightforward or not... but what about that lamp I sold on Craigslist which I totally forgot about, or the $500 I was paid back from a loan to a friend 4 years ago? (Not saying either were real transactions but you catch my drift... they can and will question all deposits into my personal bank account apparently.)
Here comes my concern. Although playing on line is theoretically legal in Canada, I have been (until now!) a closet gambler. I hated having to tell my accountant that i gambled on line and although he was non-judgmental about that, if I really have to produce documentation about on-line transactions I have made over 3 years (there are a lot!) and any winnings I deposited (clearly not nearly as many but there were some, a few of which were quite substantial), I will now have to talk to my bank which also handles my business account about any such transactions. I dread this! I will have to go back 4 years to figure out where any deposits I made to my personal banking account came from, including any casino cash-ins and face the further scrutiny of CRA, if in fact they are entitled to this information. (My accountant told me the reason for them asking for personal banking info is to ensure I never received any business payment which I deposited into my personal vs. into my business account to avoid any corporate and personal taxes for earned revenue).
I still think it is questionable that they can scrutinize my personal bank account info but apparently it is not uncommon that they ask for this. My accountant initially told me he has never provided personal banking info for his clients to CRA, but then told me to forward him this info after a further conversation he had with CRA on my behalf "in case" we really need this. My acquaintance who was audited said in her own case, she realized that accountants ultimately want to avoid being audited themselves and that in the end they really aren't looking after their client's best interest in favour of protecting their own butts.
Has anyone been through this and if so, I would be so grateful for any advice, especially regarding providing personal bank information. It kind of feels like a gun to my head because if i refuse to provide this documentation, will it lead to further scrutiny and ultimately hassle?
Thank you in advance for any advice from those who may have "been there"!
I (or my company) has been "selected" for a 3 year tax audit. I incorporated my business in Feb. 2012 (a company of one "employee" being myself) and the audit covers 2012 through 2014. CRA (Canada Revenue Agency) will be coming to my home (where I work from) to conduct their due diligence which apparently will include measuring the square footage of my place to determine if the 20% of costs that I claim for a tax expense write-off are legitimate. (I think it's close!)
In addition to providing my company's bank statements for that 3 year period and all business accounting from my Quickbooks, I have been instructed to produce my personal bank account statements for the same time frame. This is where I am freaking out! All of my online gaming transactions have been conducted via my personal bank account until Visa cut off such transactions earlier this spring. I don't and have never used any on-line gambling wallets. (I also haven't gambled on-line since March of this year when Visa cut us off from on-line gaming. This has been a good thing on the home redecorating/ purchasing and organizing front, but that's a topic for a different discussion!)
An acquaintance of mine told me she/ her company was audited a couple of years ago and when I asked her about the personal bank side of things, apparently they totally scrutinize all deposits made over the period being audited and ask for a full accounting of them. She said for a period of at least a year they would randomly call her asking about for example, a $150 deposit made 4 years prior. The casino withdrawals/ deposits might be straightforward or not... but what about that lamp I sold on Craigslist which I totally forgot about, or the $500 I was paid back from a loan to a friend 4 years ago? (Not saying either were real transactions but you catch my drift... they can and will question all deposits into my personal bank account apparently.)
Here comes my concern. Although playing on line is theoretically legal in Canada, I have been (until now!) a closet gambler. I hated having to tell my accountant that i gambled on line and although he was non-judgmental about that, if I really have to produce documentation about on-line transactions I have made over 3 years (there are a lot!) and any winnings I deposited (clearly not nearly as many but there were some, a few of which were quite substantial), I will now have to talk to my bank which also handles my business account about any such transactions. I dread this! I will have to go back 4 years to figure out where any deposits I made to my personal banking account came from, including any casino cash-ins and face the further scrutiny of CRA, if in fact they are entitled to this information. (My accountant told me the reason for them asking for personal banking info is to ensure I never received any business payment which I deposited into my personal vs. into my business account to avoid any corporate and personal taxes for earned revenue).
I still think it is questionable that they can scrutinize my personal bank account info but apparently it is not uncommon that they ask for this. My accountant initially told me he has never provided personal banking info for his clients to CRA, but then told me to forward him this info after a further conversation he had with CRA on my behalf "in case" we really need this. My acquaintance who was audited said in her own case, she realized that accountants ultimately want to avoid being audited themselves and that in the end they really aren't looking after their client's best interest in favour of protecting their own butts.
Has anyone been through this and if so, I would be so grateful for any advice, especially regarding providing personal bank information. It kind of feels like a gun to my head because if i refuse to provide this documentation, will it lead to further scrutiny and ultimately hassle?
Thank you in advance for any advice from those who may have "been there"!
