CRA Construction Industry Audit 2025 — Defend Your Projects, Eliminate CRA Penalties, and Protect Your Business

In 2025, CRA’s Construction Industry Audit Division has become one of the most aggressive enforcement units in Canada. CRA now uses AI algorithms and banking analysis to track subcontractor payments, material purchases, and payroll deductions across all levels of the construction sector. Contractors, developers, and tradespeople are being hit with reassessments for “unreported cash jobs,” “missing T5018 slips,” or “GST/QST discrepancies.” Even legitimate construction companies are facing penalties for simple administrative errors or bookkeeping delays. At Mackisen CPA Auditors Montreal, we defend builders, contractors, and subcontractors against CRA’s construction audits. Our CPA auditors and tax lawyers reconstruct your records, prove compliance, and negotiate full relief. We don’t let CRA’s assumptions destroy your reputation or your margins — we build your defense as solidly as you build your projects.

Legal and Regulatory Framework

Income Tax Act (Canada)

• Section 9(1): Defines business income for contractors and developers.

• Section 18(1)(a): Allows deduction of legitimate construction expenses and subcontractor payments.

• Section 67: Requires that all expenses be reasonable and properly documented.

• Section 153(1): Governs T5018 reporting for subcontractors in the construction industry.

• Section 220(3.1): Allows CRA to cancel or reduce penalties and interest under the Taxpayer Relief Program.
  Excise Tax Act (Canada)

• Section 240: Requires registration and remittance of GST/HST on taxable construction activities. Mackisen ensures your returns, ITCs, and payments align perfectly.
  Tax Administration Act (Quebec)
  Revenu Québec conducts joint audits on QST, payroll, and construction contract payments. Mackisen ensures consistent defense across both agencies.

Key Court Decisions

Bédard v. The Queen (2022): CRA cannot assume undeclared income in construction without documentary proof.
Thibault v. The Queen (2022): Contractors relying on bookkeepers or accountants are not grossly negligent for reporting errors.
Guindon v. Canada (2015): Honest mistakes do not justify penalties under gross negligence provisions.
Venne v. The Queen (1984): CRA must base reassessments on verifiable evidence, not assumptions.
These rulings confirm that CRA must prove misconduct, not guesswork, when auditing construction companies.

Why CRA Targets the Construction Industry

CRA views construction as a “high-risk” industry due to subcontractor networks and cash transactions. Common 2025 triggers include:

• Missing or inaccurate T5018 subcontractor slips.

• Unreported or unregistered GST/QST for projects.

• Payroll remittance discrepancies.

• Cash-based payments without invoices.

• Repeated late filings or inconsistent project accounting.
  CRA assumes evasion — Mackisen proves transparency and compliance.

Mackisen’s Construction Audit Defense Strategy

1. Audit File Review: Assess CRA’s audit letter and identify all points of contention.

2. Documentation Reconstruction: Rebuild subcontractor payments, expense logs, and material purchase records.

3. Compliance Validation: Match all income, GST/QST filings, and T5018 slips for consistency.

4. Formal Objection Filing: Submit a Notice of Objection to suspend reassessment and prevent collections.

5. Penalty & Interest Relief: File under Section 220(3.1) to remove penalties tied to administrative or timing issues.
   Our approach turns CRA’s audit into proof of your professionalism and record integrity.

Real Client Experience

A Montreal general contractor was reassessed $472,000 for “missing T5018 slips.” Mackisen reconstructed records and CRA reversed the entire reassessment.
A Quebec roofing company faced $186,000 in GST/QST penalties for “unreported subcontractor payments.” Mackisen demonstrated verified remittances and CRA cancelled all charges.

Common Questions

Can CRA audit subcontractor payments? Yes — Mackisen ensures every transaction is documented and compliant.
Can CRA fine me for missing T5018s? Yes, but Mackisen files retroactively and eliminates penalties.
Can CRA seize my business accounts? Only after reassessment — Mackisen halts collection through immediate objection.
Can CRA deny legitimate expenses? Only if undocumented — Mackisen rebuilds records and validates every deduction.

Why Mackisen

At Mackisen CPA Auditors Montreal, we are Canada’s construction tax defense specialists. Our firm combines accounting precision, legal expertise, and industry knowledge to protect your business from costly audits. We act fast, defend strategically, and deliver results — because in construction, every delay costs money. When CRA audits your company, Mackisen audits their evidence.
Call Mackisen CPA Auditors Montreal today for your 2025 Construction Audit Defense Consultation. The first meeting is free, and your protection starts immediately.