The ORST Audits Have Started
I have heard from two clients this week that I have not spoken to in about 3 years. They both have informed me that they have been contacted by the Ontario Ministry of Finance, which has informed them that they are conducting a retail sales tax (ORST) audit. They are being audited for the period 2006-2010 (a 4 year period).
Both clients had a prior audit experience. Both clients asked me if they are being targeted. I answered - the auditors are doing their jobs and that audits are a normal part of the HST plans. Most Ontario vendors will be visited by ORST auditors in the next two years.
The good news for these two clients is that we implemented improved compliance procedures since the last audit and that we are comfortable that the audit will be quicker and less painful than the last time.
My advice to companies that have been audited (for ORST) in the past is to expect an ORST audit in the future. Check your compliance procedures. Test a month of documents to ensure that the problems previously discovered by the auditor have been corrected (have not reoccurred). If errors have occurred, determine what you can do to bring yourself into compliance. Take control over the audit experience by being prepared and ready. Make sure your documents are in order. Make sure your accounting records are in order. Make sure you paid ORST where required on your purchases and you collected and remitted ORST where required on your sales.
A good audit is one that results in the auditor walking away without levying an assessment. It is possible.
Cyndee Todgham Cherniak is counsel to and in affiliation with the International Trade Law and the Tax Law (Commodity Tax
