Corporations Tax Audits
Background
The Ministry of Revenue considers the audit of tax returns to be an integral part of the voluntary compliance system. The Audit Section, through its programs, strives to support the principles of a self-assessing tax system by ensuring that taxes due under the Corporations Tax Act (CTA) are properly assessed.
Who is subject to Ontario Corporations Tax?
- businesses incorporated in Ontario that have a permanent establishment in Ontario
- businesses incorporated federally or in another province that have a permanent establishment in Ontario
- business incorporated outside Canada with a permanent establishment in Ontario, and
- businesses incorporated outside Canada with no permanent establishment in Ontario but which receive certain types of income or realize capital gains from a source within Ontario.
Objective of the Audit
- to ensure compliance with the requirements of the CTA
- to maintain confidence in the integrity of the tax system, and
- to inform and educate the taxpayer.
Audit Period
A Corporations Tax audit usually covers from two to four taxation years. This time frame can be extended for cases in which the auditor finds that non-compliance is due to neglect, carelessness, wilful default or fraud.
Audit Selection
Under the provisions of the CTA, any business subject to Ontario Corporations Tax can be selected for an audit. Once selected for an audit, the authorized representatives of the business will be contacted to either provide specific documents or supporting information to Corporations Tax audit staff, or to make an appointment for an auditor to visit the place of business or the location of the books and records. The ministry has two types of audit. These are Desk Audits and Field Audits.
Disagreement with the Audit Assessment
If there is a disagreement with any part of the reassessment, a Notice of Objection can be filed within 180 days of the date of the Notice of Reassessment with the ministry's Tax Appeals Branch.
