In the first article of this series, Bill took some of the mystery out of the CRA process. In this second installment, he gives practical, sensible advice about how to approach working with the CRA.
1. Respond promptly – If the CRA thinks it is being ignored, it may escalate the process by assessing interest and penalties on amounts due.
2. Send all requested information – CRA correspondence tends to ask for precise information. They will tell you which years they are examining and what they are looking for.
3. Call them – If you don’t understand what is being requested, call the person who sent you the request. Being calm and transparent will go a long way towards opening lines of communication. Even if you suspect that there is a political agenda behind the request, the CRA staff member who contacted you has nothing to do with it. All they are doing is following the CRA audit procedures.
4. Be clear – Make sure any information you send is well organized and easy to follow.
5. Computer Security – Recognize that the CRA is a prime target for hackers. They have to go to extraordinary lengths to protect their systems. That is why they will not accept email. You may have to fax information. Pro tip: if you fax a spreadsheet, recognize that the formulas behind the numbers won’t be available to the CRA, so make sure you explain anything that is not immediately obvious.
6. Use a professional – Particularly if you are concerned that something may not be right or that the auditor doesn’t understand your circumstances, involve someone who has experience working with charities and the CRA.
What can you do right now to make future communications with the CRA easier?
1. Be sure they can contact you. The information the CRA has about charities is often out of date, which is awkward if you need to talk to them and find out that the only people authorized to represent you are no longer with the organization. It has also happened that a charity’s Treasurer changed the official CRA address for a charity to his personal address. That made it easy for him to get the correspondence, but when he retired and moved, the mail was returned as undeliverable and the charity fell behind in CRA filings.
2. Appoint at least one representative. You can authorize the charity’s law firm or auditors to represent you. The advantage of this approach is that the representative can be a firm as opposed to an individual, so the relationship stays in place even if the individuals move on. For more information, go to: http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/chng_rps/menu-eng.html
3. Set up an email address for official CRA notifications. Make it an email address that will survive even if the staff changes. You will get alerts that the CRA has sent you an enquiry or an assessment.
4. Subscribe to the CRA Charities and Giving email list: http://www.cra-arc.gc.ca/esrvc-srvce/mllst/sbscrbchrts-eng.html
My personal experience with staff from the Charities Directorate has been business-like and positive. As one representative said to me, “The CRA is not in the business of putting charities out of business.”
Bill Kennedy, CPA CA, of Energized Accounting, works with charity financial and fundraising systems. He can be reached at BillK@EnergizedAccounting.ca or @Energized
