Reduce Your Chances of an Audit with Schedule 50

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Reduce Your Chances of an Audit with Schedule 50

Feb 20 2025

With tax season around the corner, the fear of a potential audit is creeping in for many business owners. That unease can be squashed with just a few steps designed to reduce the chances of being flagged by the CRA. One of those steps is ensuring that your tax return includes a completed Schedule 50.

We’ll take a closer look at how the CRA assesses a Schedule 50, why it matters, and how completing it correctly can actually help lower your chances of an audit.

What is Schedule 50 and Why Does the CRA Care About It?

Schedule 50, also known as the “Shareholder Information” form, is a key document for corporations filing their tax returns. This form provides the CRA with a clear picture of the ownership structure of your corporation by listing the names and details of all shareholders who hold 10% or more of the company’s shares.

This includes their percentage of ownership, the type of shares they hold, and other relevant details about their interest in the corporation.

The CRA requires this information to ensure businesses are following the rules when it comes to dividend distribution, shareholder loans, and other related tax obligations. It helps the CRA confirm that corporations aren’t taking advantage of tax loopholes or improperly shifting income among shareholders to minimize their taxes.

How Does Schedule 50 Affect Your Audit Risk?

Many businesses overlook the importance of accurately completing and submitting their Schedule 50. Incomplete or inaccurate information can lead to an increased chance of an audit because it signals a potential issue in your corporate structure or tax filings.

When properly filled out, a Schedule 50 demonstrates transparency in your corporate structure, showing the CRA that you are compliant with regulations. The CRA compares the information you provide year-over-year and submitting a well-organized and complete Schedule 50 shows that your business is properly managed, making it less likely that the CRA will need to audit your tax return.

Best Practices for Completing Schedule 50

To make sure you’re using Schedule 50 to its full potential, here are a few best practices to keep in mind:

Provide Complete Information: Double-check the shareholder names, their percentage of shares, and the class of shares they hold.

Update Shareholder Changes: If there have been any changes in ownership during the year, make sure to reflect those changes on Schedule 50.

Consult Your Accountant: If you’re unsure about any aspect of the form, don’t hesitate to consult with your accountant.
Include Accurate Shareholder Details: Include detailed information about any shareholder who holds 10% or more of the corporation’s shares.

We’re Here to Help You

If you need help navigating the complexities of your tax filings, we’re here to assist. Our team of chartered professional accountants specializes in corporate tax planning and can guide you through the process of completing Schedule 50 and other essential tax forms.

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