CRA Net Worth Audit
The CRA has the power to review a taxpayer's lifestyle and compare it against their reported income and wealth. Our staff of ex-CRA, tax lawyers, and accountants can help with disputing net worth audits and assessments.
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What is a Net Worth Audit?
Subsection 152(7) of the Income Tax Act is the governing provision that permits the Canada Revenue Agency (CRA) to assess a taxpayer’s net worth. This allows the CRA the power to review a taxpayer’s lifestyle and compare it against their reported income and wealth.
Net Worth Audit Process
A net worth audit begins by comparing the change in a taxpayer’s assets and liabilities. From there, annual income and expenditures are calculated, and deductions are made for non-taxable sources of funds (such as inheritances, gifts, and other windfalls). The net sum of these calculations is the taxpayer’s change in net worth.
This amount is then compared to the reported income on a taxpayer’s returns. If the change in net worth is significantly more than the reported income, the taxpayer will be deemed to have unreported income.
Who Can Expect a Net Worth Audit?
While a net worth audit could happen to anyone, taxpayers with inadequate books and records or those with significant discrepancies between their lifestyle and their reported income are more likely to attract a net worth assessment. Generally speaking, the CRA is resorting to net worth audits on a more frequent basis.
Challenging a Net Worth Assessment
Disputing an assessment based on a net worth audit is difficult and time consuming. Once a net worth assessment has been issued, the onus is on the taxpayer to dispute the unreported income amount with strong documentary evidence that shows errors in the CRA’s calculations.
At this stage, it is crucial to carefully scrutinize and contest every aspect and calculation of the net worth assessment, a cumbersome and daunting task made easier with the help of a knowledgeable ex-CRA or legal professional.
How We Help
Farber Tax Solutions offers a range of services to help you navigate a newly issued CRA Assessment or Reassessment. Our experts can help you understand your rights, guide you on strategy, and represent you at the audit, objection or tax court stage.
Net Worth Audit Support
Farber Tax Solutions offers a range of services to help you navigate a net worth audit, no matter where you are in the process. Our ex-CRA professionals, tax lawyers and tax accountants are well-versed in dealing with cra assessments and can help you win. Our audit representation services include communicating with CRA auditors on your behalf and facilitating the submission of requested information, as well as accompanying clients to their audit meetings and preparing them for CRA interviews. Once the auditor issues a proposal letter, we identify errors and fight to secure a more favorable outcome.
Disputing Net Worth Assessments
Taxpayers that disagree with an auditor’s final decision should file a dispute immediately to the Appeals Division of the CRA or the Tax Court of Canada. Our team of ex-CRA professionals, tax lawyers and tax accountants have the knowledge and experience to win your case. Our comprehensive service includes submitting arguments to the CRA/Department of Justice, conducting the necessary due diligence on your file, researching the relevant statutes and case law to support your position, analyzing all CRA audit reports to find errors and discrepancies in your favour, and corresponding with the CRA/Department of Justice over the course of the tax dispute until a decision is rendered.
Let Us Solve Your Problems
Our team of professionals bring extensive experience to ensure that your audit or tax dispute is resolved smoothly and that your rights as a taxpayer are respected. We are committed to supporting you throughout the entire process and are here to help at every step of the way.
Contact us today to learn more about how we can help.
Farber Tax Solutions can help you successfully deal with CRA problems. We utilize the experience of our tax experts to:
- 1| Offer a comprehensive solution that is focused on achieving the most favourable possible outcome for your tax issue;
- 2| Communicate with the CRA on your behalf and navigate the entire CRA dispute process; and
- 3| Offer a complete solution to your tax problems, including ex-CRA professionals, lawyers, and experienced accountants.
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