Common Canada Revenue Agency (CRA) Payroll Audit Adjustments
What is A Payroll Audit?
A payroll audit is a review of the accuracy of a company’s payroll processes. Payroll audits are conducted annually to ensure that a company’s payroll process remains current and legally compliant. Companies may be chosen by the CRA for an audit if the information provided appears inaccurate or misrepresented. However, it is possible for the CRA to select companies for payroll audits at random through computer-generated audit lists.
10 Common CRA Payroll Audit Adjustments
The CRA distributes an annual list of the most frequent payroll audit adjustments requested due to an employer misreporting employee wages and benefits. The listing below highlights the top 10 common requested adjustments after a CRA payroll audit.
Failing to Report Payments to an Independent Contractor
Employers are not completing Form T4A concerning payments for services to independent contractors.
Standby and Operating Expenses for Automobiles
Employers are not properly calculating the automobile standby charge and operating expense benefit on employer-owned vehicles.
Unreported Vehicle Allowances
Employers are paying flat-rate vehicle allowances but not reporting them as a taxable benefit.
Misrepresenting Salary Expenses
Bonuses, commissions and cash payments are not being reported as taxable income.
Employee and Shareholder Personal and Living Expenses
Payments for personal and living expenses of an employee or shareholder are not being reported.
Reclassifying Employment Status
Employers are treating individuals as sub-contractors when they are actually employees.
Unreported Shareholder Benefits
Shareholder benefits are not being reported.
Payments for parking are not reported correctly as a taxable benefit.
Neglecting to report a taxable benefit when stock options are exercised.
Subsidized Housing Benefits
Taxable benefits relating to free or subsidized housing are not included as taxable income.