Ok. So I didn’t actually get an actual audit, but I thought I was going to. This is what happened:
I got home and there’s a message waiting for me on my voice mail requesting that I call Canada Revenue Agency (CRA). What would they want to talk to me about? I file and pay my taxes every year and everything is always on the up and up.
I call and I start speaking to the woman who left me the message. We go through the usual steps to verify that I’m the rightful owner of the account. I was hoping at this point she would open my account and say “oh, actually there’s nothing wrong, sorry to bother you.” But alas, that never happened.
She found my file and takes a moment to herself to review what needs to be done.
I don’t know about you, but I always get a bit nervous when a person with seemingly so much power over my records wants to talk to me.
“This is about your 2007 tax return,” she says and continues, “What was your total income and source for that year?”
I reply, “Do you want the exact number from each revenue stream?”
And of course she says, “Yes.”
Many of you can probably relate as you likely have multiple streams of income, including acting revenue. At this point, I still wasn’t sure what was going on, but I did have two things on my side that kept me from over-thinking and freaking out about the situation: 1) I knew I didn’t do anything wrong, and 2) I tend to be well organized with my finances.
I looked behind me on my shelf and grabbed my binder labeled “Finances 2007.” I find the tab labeled “Revenue” and flip to that section. I flip to the summary of all the income for that year indicating the company that paid me, the category for the services I provided, and the total amount received.
I promptly provided the CRA representative those details and she thanked me. It turns out that all she was doing was verifying that I had reported my income from a specific company I had worked for that year. I had gotten myself a bit anxious for no reason at all.
Why do I share this story?
Because as a person who is self-employed with multiple streams of income it’s important to have things organized. In this case it helped me keep my cool (for the most part) and allowed me to move through that process faster. If my receipts and files were sitting around in a box and I didn’t have proper records of all my finances, it could’ve taken me much longer to get all those details figured out again.
It’s been mentioned more than a couple times here. Treat your acting as a business. Having things organized will not only allow you to be more efficient in your work but it can also ease your stress along the way. Knowing that many actors already get stressed out with auditions (or the lack thereof), keep the business-side organized and give yourself time to focus on the creative/artistic side.
Read about getting things done on our blog, and read down to Linda Watters’ comment about how she likes to be organized http://www.productionheads.com/2009/01/88/
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As a previous agent at CRA. All I can say is CRA agents are there to help taxpayers in any way they can so even if you are “randomly audited” do not panic. CRA agents are just normal people like the ones you meet picking up a latte at Starbucks. The only difference between them and us(taxpayers) is that their job consists of upholding and administrating the laws of the federal government that our members of parliament enforced. There is no need to feel overpowered by the job they have. If for some reason, you are unable to obtain all the financial information requested on hand, just let them know and give them an approximate time frame of when you can perhaps obtain the information (ofcourse you try to obtain them within their deadline though). Like Kenji said, it is very important to keep in track of all the financial side of you income for atleast five years because our tax system is a self-assessment system; you are responsible and liable for filing your taxes. Take note that they do have the authority to reassess/audit your taxes within the last four-five year period. Lastly, it’s very very important you know exactly what you are filing instead of filling up the spaces on the T1 and T2 returns.
Yeah, it’s extremely important to keep everything in order…and also be in contact with a good accountant if you can’t handles this stuff yourself.
I was personally in DEEP, DEEP trouble with CRA and had little way out because I wasn’t organized and had no clue what I was doing. After years of trying to deal with issues regarding it – I simply went and had a talk with an accountant that not only saved my bank account, but gave me a piece of mind that it’s not nearly as stressful or complicated when you make sure to keep tabs.