UNDER AUDIT? BE A WINNER, NOT A LOSER!

1. Get help.
The first decision to make when you get an audit notice is whether to handle it yourself or turn to a qualified representative, such as an experienced tax lawyer. Hiring a qualified representative costs money but, in the end, saves you stress, time and possibly money. Also, if there is gross negligence, a prosecution and large civil penalties might be averted.

2. Be prepared. Review your tax returns and gather requested documentation. If you discover a large understatement of income or overstatement of expenses, discuss this with your representative so that it may be disclosed to the tax auditor in such a way so as to give you the best chance of avoiding gross negligence penalties.

3. Don’t lose your self-control. If you attend the audit, keep control of your anger and resentment. Ranting and raving will likely make the auditor search harder for items where your income can be increased and your expenses disallowed. Nobody likes to be abused.

4. Don’t volunteer information. Just provide the requested documents. Be prepared to discuss only the matters in question. Don’t allow the audit to become a fishing expedition for the taxman to build a better case.

5. Don’t trust the “good cop” tax auditor. Unless a routine examination reveals the likelihood of unreported income, the Agency is not allowed to conduct an indirect determination of income and cannot demand that you complete a statement of your annual estimated personal and family expenses to determine how you lived on the income reported on your return. However, if, despite this warning, you decide to provide it, never allow the tax auditor to help you prepare this statement. The helpful auditor typically gets you talking about the high cost of living and that, in turn, convinces you to unrealistically maximize annual estimated personal and family expenses. The usual ploy is to suggest that you rely on Statistics Canada averages. The result is often an increase in the amount of your unreported income. Faced with this situation, the CRA auditor should be required by your tax lawyer to justify the decision to conduct an indirect determination of your income; otherwise, consider refusing to comply. If the auditor is able to justify this procedure, make it clear that you representative will assist you in preparing a realistic statement of your annual estimated personal and family expenses.

6. Don’t lose your cool. If the auditor indicates that he or she wants to disallow a deduction or otherwise increase the tax you owe and you don’t agree, state your disagreement calmly and only once. Remember, a tax lawyer can file a Notice of Objection on your behalf and, if that fails, take your case to the Tax Court.

7. Don’t be intimidated. CRA auditors may have the authority of the government behind them but they are not God. They are not always right or all-knowing. The tax audit is only the first level of review and there are ways to put a stick in the CRA’s spokes.

TRANSFER OF PROPERTY

If, because of the audit, you foresee a large tax debt, don’t transfer property such as a house to a family member or a friend. In this situation, both the transferor and the transferee can be jointly and severally liable to pay the tax debt. The liability can apply even if no tax assessment was issued. As long as the transfer takes place during or after the taxation year in which the tax debtor is liable, the transfer is caught.

IMPORTANT – Planning should be done and implemented before the CRA registers a lien against the real estate.

© DioGuardi Law
This article provides only an overview and does not constitute legal advice. You are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained in the context of your particular circumstances.

Brigitte DioGuardi

B.A., LL.B

Brigitte obtained her Law Degree from the University of Sheffield in the United Kingdom. Upon her return, she qualified for the Bar and was called to the Law Society of Ontario (formerly the Law Society of Upper Canada) in 2002. She was also a member of the Bar of British Columbia and headed up the Vancouver office of DioGuardi Tax Law.  Fluently bilingual in English and French, Brigitte has broad experience in the areas of:

  • Tax Law, Civil Assessment Negotiation and Litigation, Criminal Prosecution Defense, Unpayable Tax Debt Solutions, Audits, Tax Amnesty.
  • Corporate and Commercial Law
  • Real Estate
  • Wills and Estates
  • Insolvency and Bankruptcy

Tax Law

​If you are one of thousands of Canadians who have failed to file taxes for several years the answer maybe to seek amnesty. Be aware that failure to file for more than one year if you owe taxes is a criminal offence and you may be criminally prosecuted.

The CRA Voluntary Disclosure Program allows taxpayers to come forward and obtain immunity from prosecution and most civil penalties, provided certain conditions are met.

We specialize in lawyer-negotiated tax debt settlements and tax amnesties with federal and provincial tax authorities, offering taxpayers a much-needed resource for the resolution of situations that all too often put personal and financial lives at risk. We stand as your protector, defender, and advocate to ensure that you the taxpayer, receive the best treatment possible. 

We offer solutions for tax problems such as:

  • Unreported income
  • Unfiled tax returns
  • Payment arrangements
  • Unpayable tax debt
  • Tax dispute litigation
  • Criminal tax defense

Wills, Estates & Trusts

​We offer the following will, estate and trust services for individuals and business-owners:

  • Wills
  • Preparation of trust agreements
  • Powers of attorney
  • Estate administration
  • Probate
  • Representation in estate driven litigation
  • We currently offer a special time limited package for one will and two powers of attorney (property and personal care) for $295 plus HST

Real Estate

We can assist you with all your real estate needs including:

  • Drafting agreements
  • Purchases and Sales
  • Title transfers
  • Leases

Tax Debt Relief

With the coronavirus pandemic leaving many in a precarious and dire financial situation, it is essential that you protect yourself financially. If you have a large, unpayable tax bill, we can help. We act in the best interest of the tax debtor. Unlike us, insolvency trustees represent not only you but your creditors (ie- the tax collector). The more tax you pay, the more trustees earn. Our goal through leveraged negotiations, is to reduce your tax debt.

Please consult our blog post Protecting Your Assets from Creditors for more information.

Business & Tax Planning

If you do not already have a certified financial planner, we can provide one or more highly qualified people who can work closely with us to assist you with such matters as:

  • Resident and non-resident corporate restructuring
  • Optimum use of holding corporations
  • Continuity and succession planning
  • Tax-free transfers
  • Losses and ABIL planning
  • Making interest tax deductible
  • Small business planning

Corporate & Commercial Law

We have represented business clients for the last 50 plus years and have supported their legal requirements on an on-going basis by offering the following services:

  • Incorporations and corporate governance
  • Corporate reorganizations and transactions for the directors and shareholders
  • Negotiation and drafting of agreements, professional corporations, minute book maintenance

Brigitte DioGuardi

B.A., LL.B

Brigitte obtained her Law Degree from the University of Sheffield in the United Kingdom. Upon her return, she qualified for the Bar and was called to the Law Society of Ontario (formerly the Law Society of Upper Canada) in 2002. She was also a member of the Bar of British Columbia and headed up the Vancouver office of DioGuardi Tax Law.  Fluently bilingual in English and French, Brigitte has broad experience in the areas of:

  • Tax Law, Civil Assessment Negotiation and Litigation, Criminal Prosecution Defense, Unpayable Tax Debt Solutions, Audits, Tax Amnesty.
  • Corporate and Commercial Law
  • Real Estate
  • Wills and Estates
  • Insolvency and Bankruptcy

Joyce Bruno

EXECUTIVE LEGAL ASSISTANT

Joyce Bruno has worked as executive legal assistant to Paul Dioguardi for 35 years and continues to offer her expertise and experience to the Dioguardi Law firm. Joyce’s role has evolved over the years and has acquired and developed many skills. She is an invaluable asset in case management and ensures the smooth running of our office.

Paul DioGuardi

B.A., LL.B, Queen’s Counsel

Paul obtained his Law Degree from Queen’s University in 1964.  He is a member of the Bars of Ontario, British Columbia and the Turks and Caicos Islands, a British tax free territory in the West Indies. He has over 50 years of experience and was trained at the Ottawa head offices of Revenue Canada and the Tax Litigation Section at the Department of Justice. Paul has had and continues with an extensive career in various areas of law such as:

  • Tax Law, Civil Assessment Negotiation and Litigation, Criminal Prosecution Defense, Unpayable Tax Debt Solutions, Audits, Tax Amnesty.
  • Corporate and Commercial Law
  • Real Estate
  • Wills and Estates
  • Insolvency and Bankruptcy