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Navigating a CRA Trust Account Exam: Tips and Best Practices

By April 10, 2023General


A trust account examination by the Canada Revenue Agency (CRA) can be a daunting experience for businesses. The CRA conducts these exams to ensure compliance with payroll, GST/HST, and other trust account obligations. To help you prepare for and navigate through a CRA trust account exam, we’ve put together a list of tips and best practices to ensure a smooth process.

  1. Understand the Scope of the Examination

The first step is understanding the scope of the examination. Trust account exams typically focus on a specific period and cover payroll deductions, GST/HST remittances, and other trust account obligations. Familiarize yourself with the relevant tax laws and regulations for the period under review to ensure you have a clear understanding of your responsibilities.

  1. Gather and Organize Relevant Documentation

Before the examination, gather and organize all relevant documents, including:

  • Financial statements
  • Bank statements and cancelled cheques
  • Payroll records
  • Sales invoices
  • Expense receipts
  • GST/HST returns
  • Payroll remittance forms

Ensure that your records are accurate, complete, and organized to facilitate a smooth examination process.

  1. Seek Professional Assistance

Consider seeking the help of a tax professional or accountant to assist you with the examination. They can help you understand the process, review your records, and provide valuable advice on how to address any potential issues or discrepancies. Book a call with us

  1. Be Responsive and Cooperative

During the examination, be responsive and cooperative with the CRA auditor. Provide any requested documentation promptly and answer their questions honestly and accurately. Maintaining a professional and courteous attitude can help create a positive atmosphere and foster a constructive relationship with the auditor.

  1. Address Any Issues Promptly

If the auditor identifies any errors or discrepancies, address them promptly. This may involve correcting bookkeeping errors, making adjustments to your records, or making additional payments or refunds to the CRA. Demonstrating a proactive approach to rectifying any issues can help minimize the potential for penalties or further scrutiny.

  1. Implement Lessons Learned

After the examination, take the time to review the process and identify any areas for improvement in your trust account management practices. Implement any necessary changes to prevent future issues and ensure ongoing compliance with your trust account obligations.

A CRA trust account examination can be a challenging experience, but with proper preparation and a proactive approach, you can successfully navigate the process. By understanding the scope of the examination, gathering and organizing relevant documents, seeking professional assistance, and being responsive and cooperative, you’ll be well-equipped to handle a trust account exam and maintain compliance with your tax obligations.