Question

the canadian government has been cracking down for small entrepreneur at tax time, looking for more receipts and documentation? What are the pros and cons of such a strategy?

Answer 1

Below are the pros of such a strategy:

1. More documentation and receipts means that better validation of processes and procedures of small entrepreneurs is achieved which results in better control and better management of these entrepreneurs by the Canadian government.

2. Through documentation, the chances of errors reduce significantly and rationality is achieved. This also results in processes getting streamlined and tax structure rationalization.

Below are the cons of such a strategy:

1. There are chances that the small entrepreneurs have to pay more taxes since the documentation and receipts availability increase more transparency in the process and tax which could have been avoided by the entrepreneurs has to be paid now.

2. Small entrepreneurs have to hire manpower to manage the documentation process and maintain the records with them since these can be audited anytime by the concerned authorities. Hence it increases additional liability on the entrepreneurs to maintain the documentation process.