Common Canada Revenue Agency (CRA) Payroll Audit Adjustments

March 13, 2017 Published by
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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.

  1. Failing to Report Payments to an Independent Contractor

    Employers are not completing Form T4A concerning payments for services to independent contractors.

  2. Standby and Operating Expenses for Automobiles

    Employers are not properly calculating the automobile standby charge and operating expense benefit on employer-owned vehicles.

  3. Unreported Vehicle Allowances

    Employers are paying flat-rate vehicle allowances but not reporting them as a taxable benefit.

  4. Misrepresenting Salary Expenses

    Bonuses, commissions and cash payments are not being reported as taxable income.

  5. Employee and Shareholder Personal and Living Expenses

    Payments for personal and living expenses of an employee or shareholder are not being reported.

  6. Reclassifying Employment Status

    Employers are treating individuals as sub-contractors when they are actually employees.

  7. Unreported Shareholder Benefits

    Shareholder benefits are not being reported.

  8. Parking

    Payments for parking are not reported correctly as a taxable benefit.

  9. Stock Options

    Neglecting to report a taxable benefit when stock options are exercised.

  10. Subsidized Housing Benefits

    Taxable benefits relating to free or subsidized housing are not included as taxable income.

For more information regarding tax accounting, auditing and tax services, contact the professional accounting team at Hogg, Shain & Scheck.