How To End Your Fight With Canada Revenue Agency (CRA)

cra auditThe first thing you have to remember with a CRA audit or another issue involving Canada Revenue Agency is that you’re in an unfair battle, meaning that they have unlimited resources to work against you.

It’s interesting when you take a look back at how many court cases have actually gone through to the Supreme Court. That’s really the end fight but most of the cases that make it that far either have a lawyer involved or it’s a large enough company that they can afford to spend the money needed to go that route.


When You Need A Lawyer

Once you are past the capability of your accountant, which includes things like negotiation and notice of appeals, the next step is going to court and you will need a lawyer. Of course you could always represent yourself…but I wouldn’t advise it.

If you’re fighting against a CRA audit or another issue with Revenue Canada and you are unhappy with the results of your notice of objection and you truly believe that you have been wronged – you are looking at hiring a lawyer. Make sure you hire a lawyer that is specifically a tax lawyer.

Related: 6 Things That Can Trigger A CRA Audit


Pick Your Battles Wisely

Yes, this involves writing cheques to keep your lawyer around while Revenue Canada uses your tax dollars to fight against you – I did mention it was an unfair advantage, didn’t I? Some might argue that isn’t the case, but it definitely is. There is only one place the government gets money and that’s from your tax dollars.

That said, there is nothing that you can do about it so you should pick your battles appropriately.


Is It Worth It In The End?

If you’re getting through the notice of objection and you’re getting nowhere, talk to your tax accountant and get a really good referral to a tax lawyer to have them work together. That way they can be brought up to speed a lot faster and then that tax lawyer can give you advice on whether or not it’s worth carrying forward.

I recently went through the entire process with a client during a CRA audit.  This included all of the standard procedures such as filing the notice of objection, appealing CRA’s position, etc. …but in the end CRA disagreed with our position

If that client stood in front of a judge and told them the scenario, we believe that the judge would have no problem saying CRA was in the wrong. The real problem is the expense to get in front of that judge is so high that it makes the objection amount seem insignificant in comparison.

Related: How Much Should You Be Paying Yourself?


Sometimes You Have To Let Go

Do you want to pay more to fight it or just pay it? It might not be right but to keep fighting will just cost you more dollars, time and energy in the end. This is where having valuable advisors on your team becomes paramount.

Work with your accountant to make sure that you aren’t fighting a losing battle before you go the whole nine yards, after all, dealing with a CRA audit is stressful enough. If you both decide that it makes financial sense, get a tax lawyer involved but be careful to not make decisions out of spite as they can cost you much, much more than the amount you owe to CRA – let cooler heads prevail!

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