CRA Business Expense Deduction Audit 2025 — Defend Your Deductions, Prevent Reassessments, and Protect Your Business

CRA’s Business Expense Audit Program is aggressively reviewing corporate and self-employed taxpayers for unverified or excessive deductions. CRA’s automated audit algorithms cross-check your expense claims against industry averages and red-flag any outlier spending. Business owners are being reassessed for travel, meals, entertainment, vehicle, and advertising expenses simply because their records are incomplete or categorized incorrectly. At Mackisen CPA Auditors Montreal, we defend your deductions, rebuild your documentation, and stop CRA from penalizing legitimate business spending. Our CPA auditors and tax lawyers prepare detailed, evidence-backed responses that prove your expenses are valid and fully compliant. We don’t let CRA’s system question your operations — we defend every dollar you earned and invested.

Legal and Regulatory Framework

Income Tax Act (Canada) Section 18(1)(a): Allows deduction of expenses incurred to earn business income. Section 67: Requires that all claimed expenses be reasonable and directly related to business activity. Section 230(1): Obligates taxpayers to keep and maintain records supporting all deductions for at least six years. Section 152(4): Governs CRA’s right to reassess taxpayers, which Mackisen limits to legal timeframes. Section 220(3.1): Authorizes CRA to cancel or reduce penalties and interest through the Taxpayer Relief Program.
Tax Administration Act (Quebec) Revenu Québec conducts parallel audits for provincial expenses, especially vehicle, home office, and subcontractor costs. Mackisen ensures both CRA and Revenu Québec are handled simultaneously for full alignment and protection.

Key Court Decisions

Bédard v. The Queen (2022): Reasonable expenses cannot be disallowed solely because they exceed industry averages. Thibault v. The Queen (2022): Proper documentation is sufficient proof of deductibility, regardless of CRA estimates. Guindon v. Canada (2015): Penalties for gross negligence require proof of intent, not simple error. Jordan v. The Queen (2009): CRA must apply fairness and transparency during all reassessment procedures. These decisions confirm that properly documented business expenses are legitimate, even when challenged.

Why CRA Targets Business Expenses

CRA’s 2025 compliance programs identify high-expense categories like travel, meals, auto use, subcontractor fees, and home office deductions. Common triggers include large deductions relative to income, recurring losses, or claims without receipts. CRA assumes exaggeration — Mackisen proves necessity and compliance.

Mackisen’s Expense Audit Defense Strategy

1. Audit File Analysis: Examine CRA’s expense review letter and determine the scope and rationale of the audit. 2. Evidence Reconstruction: Collect, recreate, and organize missing receipts, invoices, and supporting records. 3. Legal Justification: Apply the Income Tax Act and relevant jurisprudence to prove each deduction’s business purpose. 4. Negotiation and Representation: Communicate directly with CRA auditors to resolve disputes and secure deductions. 5. Penalty and Interest Relief: File under Section 220(3.1) for cancellation of financial penalties linked to documentation issues. Mackisen’s defense ensures CRA respects legitimate business operations and allows lawful deductions.

Real Client Experience

A Montreal consulting firm was reassessed $184,000 for “unreasonable travel expenses.” Mackisen submitted proper documentation and CRA reinstated 100 percent of the claims. A Quebec construction company was penalized $76,000 for missing vehicle logbooks. Mackisen reconstructed the records and CRA cancelled all penalties.

Common Questions

Can CRA deny my deductions without proof? Only if you fail to provide records — Mackisen ensures full documentation. Can I claim expenses without receipts? Yes, if verifiable through bank statements and contracts. Will CRA penalize me for large expense claims? Only if they appear unreasonable — Mackisen proves reason and intent. Can CRA remove penalties and interest? Absolutely, through the Taxpayer Relief Program.

Why Mackisen

At Mackisen CPA Auditors Montreal, we are Canada’s experts in business expense audit defense. Our CPA auditors and tax lawyers combine financial accuracy with legal authority to protect every valid deduction and restore your business’s financial integrity. We act quickly, document precisely, and defend completely — because every legitimate expense deserves recognition. When CRA audits your deductions, Mackisen audits their fairness. Call Mackisen CPA Auditors Montreal today for your 2025 Business Expense Audit Defense Consultation. The first meeting is free, and your protection starts immediately.