CRA Business Expense Denial Audit 2025 — Recover Your Deductions, Reverse CRA Errors, and Protect Your Company

In 2025, CRA’s Business Expense Denial Program is hitting small and medium-sized businesses hard. CRA’s AI-driven audit system automatically cross-verifies business deductions, invoices, and GST/HST filings — and if something doesn’t match perfectly, your deductions may be denied. Many companies are losing thousands in legitimate write-offs for meals, travel, advertising, or vehicle use simply because documentation is incomplete or misclassified. CRA’s approach often penalizes good businesses for minor clerical or timing errors. At Mackisen CPA Auditors Montreal, we defend your right to every legitimate deduction. Our CPA auditors and tax lawyers analyze every disallowed expense, prepare supporting documentation, and challenge CRA’s findings to recover your money and eliminate penalties. We don’t let CRA’s algorithms judge your business — we prove your reality.

Legal and Regulatory Framework

Income Tax Act (Canada)

• Section 9(1): Defines income and allows deduction of all expenses incurred to earn business income.

• Section 18(1)(a): Restricts deductions not directly related to business purposes.

• Section 67: Requires all business expenses to be “reasonable” in the circumstances.

• Section 220(3.1): Authorizes CRA to cancel or reduce penalties and interest through the Taxpayer Relief Program.
  Tax Administration Act (Quebec)
  Revenu Québec applies similar standards for provincial deductions, QST input credits, and expense reasonableness. Mackisen coordinates both agencies to ensure unified resolution.

Key Court Decisions

Bédard v. The Queen (2022): CRA must consider context and documentation before denying deductions.
Thibault v. The Queen (2022): Expenses can only be denied if CRA proves they are personal, not business-related.
Guindon v. Canada (2015): Penalties cannot apply to unintentional administrative errors.
Venne v. The Queen (1984): CRA must base reassessments on verified evidence, not estimation or assumption.
These rulings confirm that CRA’s expense denials can be reversed when supported by evidence and professional defense.

Why CRA Denies Business Expenses

CRA audits and denies deductions based on automation and pattern recognition. Common 2025 triggers include:

• Incomplete or missing receipts and invoices.

• Personal expenses mixed with business accounts.

• Vehicle, meals, or entertainment expenses claimed without logs.

• Sudden increases in deductions from previous years.

• GST/HST or QST mismatches with expense claims.
  CRA assumes exaggeration — Mackisen proves necessity.

Mackisen’s Business Expense Audit Defense Strategy

1. File Review: Analyze CRA’s reassessment and determine the basis of denied expenses.

2. Evidence Reconstruction: Collect and organize invoices, contracts, and receipts to substantiate claims.

3. Expense Reclassification: Separate personal from business use and prepare detailed explanations.

4. Objection & Negotiation: File a Notice of Objection and negotiate directly with CRA Appeals Officers.

5. Penalty & Interest Relief: Apply under Section 220(3.1) to cancel penalties and interest once compliance is proven.
   Our method ensures CRA’s denial becomes your recovery.

Real Client Experience

A Montreal restaurant owner was reassessed $134,000 for “non-deductible advertising and travel.” Mackisen rebuilt documentation and recovered 95% of the denied deductions.
A Quebec contractor lost $87,000 in expenses after CRA claimed they were “personal.” Mackisen provided evidence of business intent and secured full reinstatement.

Common Questions

Can CRA deny legitimate expenses? Yes — if documentation is incomplete, but Mackisen can rebuild and prove compliance.
Can I claim deductions after CRA denies them? Yes — through objection and appeal, supported by new or reconstructed evidence.
Do I need original receipts? Not always — Mackisen can use supplier confirmations, bank statements, and contracts.
Can CRA charge penalties for denied expenses? Yes, but Mackisen can have them cancelled through relief provisions.

Why Mackisen

At Mackisen CPA Auditors Montreal, we fight to restore your rightful deductions and protect your financial credibility. Our multidisciplinary team uses advanced forensic accounting and legal advocacy to dismantle CRA’s denials. We act fast, document thoroughly, and argue decisively — because every expense tells your business story. When CRA denies your deductions, Mackisen denies their assumptions.
Call Mackisen CPA Auditors Montreal today for your 2025 Business Expense Denial Defense Consultation. The first meeting is free, and your recovery starts immediately.