Audits of Personal Taxes
The taxpayers who most frequently fall into this category are post-secondary students, single parents, and people who make large charitable donations or have large medical expenses in the year. In other words, the people least likely to intentionally cheat on their taxes in the first place are audited the most. Before you reach for your MP list, we suppose it’s fair to mention that it’s actually a computer making the decision to audit you. Because the groups of people mentioned above have very valuable tax claims, CRA is trying to stop the frauds that would theoretically cost the government the most money. We leave the analysis of the tremendous flaw in that logic as an exercise for the reader. Even still, the CRA pre-assesses and reassesses taxpayers to the tune of billions of dollars each year, so this is no trivial consideration. Unsurprisingly however, there seems to be no data available on how many of these audit assessments are later overturned, resulting in exactly what was submitted in the first place… Anyway, because we at Pi seldom claim anything we’re not supposed to, these audits almost never result in any tax recovered from our clients.
Thus far, in well over 100 audits, our clients have received net refunds from the process, with only one client ever having to pay a reassessment of tax; just $78. Our bad.