1 

Canada Revenue Agency (CRA)

Accounting businesses in Canada play a crucial role in providing various services that help clients comply with tax regulations, manage finances, and optimize their operations. When it comes to services related to the Canada Revenue Agency (CRA), these firms help individuals and businesses navigate tax laws, ensure proper filings, and manage their tax obligations. Here's an overview of the typical services provided by accounting firms related to CRA:

1. Tax Compliance and Filing

• Personal Income Tax Preparation: Accounting firms assist individuals with preparing and filing their T1 income tax returns. They ensure that clients claim all eligible deductions, credits, and exemptions to minimize their tax liability.

• Corporate Tax Preparation: For businesses, accounting firms handle the preparation and filing of T2 corporate tax returns. They help businesses understand tax deductions, credits, and corporate tax rates to ensure accurate filings with the CRA.

• GST/HST Returns: Accounting businesses manage the filing of GST/HST returns for clients. This includes calculating the correct amount of sales tax collected and determining Input Tax Credits (ITCs) for expenses that are eligible.

• T4/T5 Filings: These filings report employee income and dividends to the CRA. Accounting firms help businesses issue T4 slips to employees and T5 slips to shareholders for income tax purposes.

2. CRA Audit Support and Representation

• If a client is selected for a CRA audit or review, accounting businesses provide audit support. This includes gathering required documentation, preparing responses to CRA requests, and representing the client in dealings with the CRA.

• They may also review and resolve any discrepancies or issues that arise during an audit, working to reduce penalties or tax assessments where possible.

3. Tax Planning and Advisory Services

• Tax Planning: Accountants help businesses and individuals develop tax strategies that comply with CRA regulations while minimizing tax liabilities. This includes advice on how to structure business operations, investments, and expenses.

• Income Splitting & Retirement Planning: Accountants offer advice on income splitting strategies, such as distributing income among family members to reduce overall taxes. They also assist in planning for RRSPs, pensions, and other retirement-related tax considerations.

• Business Structure Consultation: Accounting firms provide advice on choosing the most tax-efficient business structure (e.g., corporation, partnership, or sole proprietorship) and guide clients through CRA compliance for each type.

4. Bookkeeping and Payroll Services

• Bookkeeping: Accounting firms manage day-to-day financial records and ensure they comply with CRA guidelines. This includes maintaining accurate records of expenses, revenues, and other financial transactions.

• Payroll Services: These firms help businesses with payroll management, including calculating employee withholdings, remitting payroll taxes to the CRA, and issuing year-end tax forms like T4s.

5. Assistance with CRA Programs

• Canada Pension Plan (CPP) Contributions: Accountants assist businesses in managing CPP contributions for employees and ensuring they are properly reported to the CRA.

• Employment Insurance (EI) Contributions: Accounting firms help calculate and remit EI contributions for employees, ensuring compliance with CRA rules.

• Scientific Research & Experimental Development (SR&ED) Credits: For businesses involved in innovation, accounting firms help prepare and file SR&ED tax credit claims, which can significantly reduce tax liabilities.

6. Tax Objections and Appeals

• If a client disagrees with a CRA tax assessment, accounting firms can help file a notice of objection or assist with tax appeals. This involves reviewing the assessment, preparing supporting documents, and arguing the case before the CRA or the Tax Court of Canada.

7. CRA Installment Payments and Negotiations

• For businesses and individuals required to make tax installment payments, accounting firms ensure that the correct amounts are paid on time to avoid interest and penalties.

• If a client owes back taxes or faces financial difficulties, accounting firms may negotiate payment arrangements or settlements with the CRA.

8. Voluntary Disclosure Program (VDP) Assistance

• If a taxpayer has made a mistake on previous tax filings or has failed to report income, accounting firms assist clients with using the Voluntary Disclosure Program (VDP). This program allows taxpayers to correct errors and avoid certain penalties.

9. Business Tax Registration and Deregistration

• Accounting firms help businesses register for various tax accounts with the CRA, including GST/HST, payroll, and corporate income tax accounts. They also assist with deregistration if a business closes or changes structure.

10. Handling CRA Notices and Requests

• Accountants act as a liaison between clients and the CRA when dealing with notices, requests for information, or re-assessments. They help ensure that responses are timely and accurate, helping to resolve any potential issues before they escalate.

In summary, accounting firms in Canada provide essential services to ensure businesses and individuals comply with CRA requirements, reduce tax liabilities, and manage interactions with the tax authorities effectively.