Knock knock. Who’s there? – CRA….
is the thickness of a prison wall. (Denis Healey)
- Timing Issues
- Misclassification of Resource Expenses – For example, claiming an expense as Canadian Exploration Expense (100% Deductible) when it should be subject to a slower write-off pool, such as Canadian Development Expense (30% deductible) or Canadian Oil & Gas property Expense (10% deductible). This is a timing issue which could significantly impact your cash flow.
- Current Deduction versus Capital Expenditure – The issue is whether an expenditure is capital in nature (i.e., subject to a longer write-off period) or a currently deductible expense. The amounts at stake could be material enough to increase up-front taxes owing (Cash is king).
- Successor Pools – The issue is how to support successor pool claims by matching these claims to the relevant successor pool income streams.
- Scientific Research and Experimental Development (SR&ED) tax credits – CRA will review for misclassification of amounts claimed as SR&ED expenditures and reclassify to resource pools or operating expenses as necessary.
- Unusual Changes in Deductions or Credits from Year-to-Year
- Requests to Amend Returns
- Participating in Aggressive Tax Schemes
- surplus stripping;
- section 85 rollover transactions;
- permanent establishment/residency issues;
- interest deductibility;
- management fees;
- interest on debt to non-residents;
- payments for intellectual property to offshore jurisdiction; and obviously
- offshore investment accounts.
- Not complying with CRA requests for Information During An Audit