Streamlining the sales audit process in Canada

How to create outlook signature

As a business owner, whether you sell fuel, tobacco, goods or services, you’ll be collecting and remitting sales taxes or paying sales taxes as part of doing business in British Columbia. Whatever your business, you may be selected for an audit. There are a number of reasons why you might be selected, including: we’re focusing on your particular industry or business activity you were randomly selected, or because of information received from other sources. We could also decide to do an audit when we’re processing your request for a refund of overpaid taxes. You may be selected even if your business is located outside of BC, but you do business in BC. Whatever the reason, the BC tax system operates based on voluntary compliance. This means that every taxpayer is responsible for correctly paying taxes on their purchases, and for charging, collecting and remitting tax on their sales. We do audits to identify and collect unpaid taxes that are used to support important government programs and services, such as health care, education, transportation and social services. In this video, you can see the steps we take working with you during an audit. So, how do you prepare? First, let’s meet Curt. Curt is a real property contractor specializing in kitchen installations. To start the process, an auditor will contact Curt to arrange a time for a pre-audit discussion. The auditor will go through the Taxpayer Fairness and Service Code. This ensures Curt is aware of his rights and what he can expect during the process. The auditor will explain the general process. She will ask Curt about the nature of his business and accounting systems and provide him with instructions so he can prepare his records. Curt may be asked for both paper and electronic records. The auditor and Curt will discuss the best method to review some or all of Curt’s business records, and decide the best sampling method. If Curt has business premises and a kitchen showroom, the auditor may request a tour of the premises to better understand Curt’s business. After the pre-audit discussion, Curt will receive a letter outlining the records he needs to make available. Curt may want to provide a contact person to work with the auditor, such as his accountant or bookkeeper, or another knowledgeable member of his staff. To ensure an efficient audit, Curt can minimize the disruption to his business by having all business records the auditor has requested available for review. The auditor will keep Curt informed of the progress and will be available to answer any questions. The auditor will review Curt’s business records to make sure he’s charging or paying the right amount of tax. The length of time it takes to complete an audit depends on the size and complexity of Curt’s business, the state of his records, and his cooperation through the process. The auditor will advise Curt of the start and end dates of the audit period before she begins her work. If the auditor needs to extend those dates, she will discuss this too. Curt’s records will be safeguarded and kept confidential at all times. At the end, Curt can expect to meet with the auditor to receive a copy of the final audit working papers and to discuss the results. The auditor will let Curt know if he owes or if he’s overpaid taxes. If he’s overpaid taxes the auditor will explain how to complete a refund claim. Curt will also receive a letter explaining the reasons for any taxes due. He’ll receive a “Notice of Assessment” and a statement of account showing how much tax to pay and when it’s due. If Curt doesn’t agree with the “Notice of Assessment” he can appeal the decision directly to the minister. If he’s still dissatisfied, Curt can appeal to the courts. It’s important to know the law imposes time limits on appeal submissions. If Curt examines his financial records after he’s advised of owing taxes and discovers that he has already paid the tax, he can contact the ministry, provide a copy of the new information and ask for an adjustment to the assessment. Our website can help you find more information. Go to: gov.bc.ca/taxes and click on Tax Audits, Rulings and Appeals