Contributed by Vicky White
www.LifeDesignStrategies.com

It was just another one of those brown envelopes from Revenue Canada (the Canadian equivalent of the IRS)…until I read the fine print and realized I was being audited.

Predictably, I did what most people would do; I panicked!

Then I reviewed the facts: the letter wasn’t very friendly, telling me that most likely I owed them a huge amount of money; they listed a whole load of documents they wanted from me, going back over three years of my business, as well as the precise format of how they wanted them presented; and they told me that I had 30 days to get the materials together! The letter was signed by a Mr. Chan.

Of course, the brown envelope arrived one week before I was to fly to New Zealand to visit my family for a month! I bravely contacted Mr. Chan, told him I was off to New Zealand, and received an extension.

Meanwhile, everyone I spoke to told me horror stories about Revenue Canada, along the lines of “they’re out to get you”, “you can’t win”, and “they’re a law unto themselves.”

I did stress out for a couple of weeks before I remembered what I teach the clients I work with: there was a reason this was happening, and most likely I had a lot more control over the outcome than others were predicting. It further occurred to me that this audit was actually a gift – Revenue Canada was going to help me get my accounts in order and create a system that would enable me to grow my business!

The fact that I’d started a relationship with a former accountant a few months earlier just had to be some kind of divine timing! There definitely seemed to be a plan afoot and I felt that, whatever happened, I was being supported.

I made a decision to refer to “my friend Mr. Chan” whenever I mentioned his name or spoke about my tax audit. My financially experienced friend didn’t quite see it the same way, but he did spend countless hours with me over the next few months getting my accounts in order, documenting where I had made mistakes in my addition (huh?), where I had claimed things that were not claimable, and where I had neglected to claim things I could have!

The truth was, it wasn’t that I was trying to get away with anything. I’d been in Canada for just a few years, I’d been doing my own monthly accounts, and I’d been making assumptions about what I could claim. Definitely a case of a little knowledge being a dangerous thing! I did have someone complete my tax return each year, without realizing she was just transferring the figures I gave her onto my tax form without questioning anything. I could have done that myself! I was sending in tax returns that made no sense – no wonder they flicked up a red flag in Revenue Canada.

I learned several things in the process: I learned that renovating my new condo was not actually something I could claim; and that credit card statements are not receipts (after all, those expenses could be for anything). I learned a lot of things that were probably silly enough to show Revenue Canada I wasn’t trying to rip them off.

I convinced myself that Revenue Canada was there to help me. And I was convinced that my friend Mr. Chan was there to see that I was helped. He and I became buddies (in my mind, anyway) and I eventually delivered a box with the information they wanted, including a whole lot of receipts I had managed to get from coaches and service providers from past years. My friend Mr. Chan and I then had a little to and fro process with letters as he asked more questions and I explained what my business was all about and what my intentions for it were.

This whole process took six months and I can’t say it was fun, but in the end I felt I had been well treated. There was one expense I really think they should have allowed but I was more than happy with the $5000 tax refund I received a few weeks later plus the tax credit I was granted for the following year. I came away feeling as if I probably wouldn’t have had the same outcome had I gone through this process with the belief they were out to get me.

I now have a system I still use, I know how Revenue Canada likes things to be organized, and I know that if I was ever in a similar situation, it would take me half a day to get everything together to present to them. Revenue Canada did support me in creating the foundation for a strong business, for which I’m very grateful.

Questions for reflection:

  • Do you think Vicky’s early shift in attitude about her predicament – before the full audit process was underway – made a difference in her outcome? How?
  • Do you believe it’s possible to apply an “Upside perspective” to just about any situation in life? What exceptions would you make and why?

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