Proactive tax planning to avoid disputes

Most Canadian taxpayers want to avoid tax disputes at all costs, since such disputes can usually be lengthy and costly. By enhancing your tax compliance management and optimizing interactions with federal and provincial tax authorities, you can greatly limit, if not entirely eliminate, the risk of tax litigation.

Reduce your risk of a tax dispute with these top tips:

Actively manage a tax audit

Tax audits are often demanding and stressful for taxpayers. Investing time and effort at the outset of an audit will maximize the chances of a positive outcome. Taxpayers are strongly encouraged to contact their accountant and tax attorney as soon as they receive an audit letter from the IRS. Proactive, multidisciplinary management of an audit will leverage the expertise of each person involved in the process while minimizing the cost to the taxpayer. There are many elements to consider during an audit, including document and information requests, attorney-client privilege, managing statute of limitations requests, penalties, and so on. It is this interaction between taxpayers, accountants and attorneys that usually leads to a quick and positive resolution of tax cases.

Identify tax-related problems or areas for improvement

A review of a company’s operations can also identify tax issues that can be improved for the future or that need to be corrected immediately, well in advance of an audit. Such a review is particularly useful for tax planning, the development of new businesses, or acquisitions. Tax authorities also have procedures for correcting tax errors.

Maintain proper accounting and tax records

Optimal management of accounting and tax documentation (information) also enables taxpayers to avoid problematic situations with the tax authorities. This statement may seem obvious, but it is not necessarily so at all times. Indeed, many taxpayers believe that they can dispose of their documentation after a period of seven (7) years, without taking into account all the vital information contained in these documents that may prove necessary (or even mandatory) in the future.

Ready to dive deeper?

Register for a one-hour interactive presentation with Miller Thomson’s dedicated Tax Disputes Resolution team on how to effectively handle disputes with tax authorities. Learn best business practices to adopt by, before and during a tax audit, and more. Don’t miss this valuable opportunity to elevate your tax planning strategy.