Tax season stress can be alleviated with legal expense insurance

Tax season stress can be alleviated with legal expense insurance | Insurance Business Canada

Tax season stress can be alleviated with legal expense insurance

With tax season around the corner, business owners don’t just have to worry about collecting their records and filing by the deadline, but also potentially being audited by the Canada Revenue Agency (CRA) or learning that their tax return has been reassessed after the fact.

“One of the issues that definitely affects smooth business operations is a tax audit. It’s stressful and time-consuming as the CRA has been known to tie businesses in knots for up to 18 to 24 months, not to mention the costs to the business owner for related accounting and professional fees to reach a resolution,” said Katherine Ferrante, vice president of sales and business development at ARAG Canada. “These situations can cause significant stress and even prevent business owners from generating revenue as they deal with audit or reassessment issues.”

However, through its Business Legal Solutions policy, ARAG will pay the costs of bringing in the required professionals to resolve an audit or appeal a reassessment.

“We will open a claim to provide accounting specialists to work with insureds on a dispute or tax appeal relating to GST, PST, HST, income tax or payroll tax deductions,” said Ferrante.

ARAG’s Business Legal Solutions policy does not assist with filing taxes, but it does allow insureds to use its telephone legal advice (TLA) line to speak to a lawyer 24/7, and gain more insight into tax law.

“Many insureds are reluctant to call the CRA directly to gain clarification as they are of the opinion that the CRA may flag their file. When calling ARAG, TLA calls are confidential. Our insureds may call this line knowing they’re speaking with lawyers well-versed in federal and provincial tax law,” explained Ferrante. “They may use the service as many times as required – since calls are not considered as claims, using the service will not affect their policy premium, and there’s unlimited access to the service.”

While any and all businesses are susceptible to an audit, the CRA tends to target those that operate in a cash environment – think restaurants, salons or contractors, according to Ferrante. Businesses that show a significant change in their revenue or expense reporting from one year to the next can also be targeted. Even though it’s likely that information has been accurately reported and the eventual outcome that is reached is mutually agreeable, she added, the road to reach a resolution can be costly in both time and resources to the business owner.

Read more: Businesses sensitive to legal issues can find refuge in legal expense insurance

“With an ARAG Business Legal Solutions policy, we remove the stress and aggravation of dealing with the audit or reassessment appeal from the business owner,” Ferrante told Insurance Business. “For accepted claims, we will appoint whatever level of professional accounting and legal services are required to investigate, assess, and resolve the issue on behalf of the insured. During the course of the claim the CRA has no direct contact with the insured thus alleviating further stress.  The business owner can get on with running their business and taking care of day-to-day operations knowing that the situation with the CRA is being handled by the best.” 

Let us carry the burden, so you can live your life.