I am often asked the question: what reason would CRA ever have to audit me? This is my opinion but it could vary in many ways:
- If you owe them money. Did you forget to pay your taxes or delay submitting payroll deductions? Did you forget to remit your HST filings?
- If you over-claim expenses.
- Not complying with your expected commitment file your payroll, HST and taxes on time.
If you are unable to make the payments on time, do installment payments until it’s up to date. As long as you are making payments and commit to what you agreed with them, they will leave you alone. Why wouldn’t they? They are getting interest and penalty charges from you. If you are using money/cash that you received from your employees or your HST collections, it doesn’t belong to you. That is money you hold in trust until you send it to CRA. If you can’t set it aside, create another way to save it, for example, a tax-free savings account.
Be careful with your expenses. If you go from a $1,500 vehicle expense to a $8,000 vehicle expense you will need to show why. Be consistent. Keep a log book.
If you file on time and pay on time, they will likely never bother you unless it’s to do a random spot-check for something that just doesn’t look right.
Keep your bookkeeping up to date. CRA is not your enemy.