CRA Construction Industry Audit 2025 — Protect Your Contracts, Defend Your Deductions, and Stop CRA Penalties

The construction industry is one of CRA’s top audit targets for 2025. With billions in undeclared cash transactions and subcontractor payments, CRA has intensified its focus on contractors, builders, and tradespeople. Using data-sharing programs with Revenu Québec, banks, and suppliers, CRA now cross-checks payroll, GST/HST, and subcontractor T5018 filings automatically. Even honest construction companies can face crippling reassessments for “unreported income,” “invalid expenses,” or “employee misclassification.” At Mackisen CPA Auditors Montreal, we defend construction businesses from these aggressive audits. Our CPA auditors and tax lawyers understand the industry’s complexity — we organize your records, justify every expense, and negotiate directly with CRA to reduce or eliminate penalties. We don’t let CRA pour the foundation for your downfall — we build your defense stronger.

Legal and Regulatory Framework

Income Tax Act (Canada)

• Section 153(1): Governs tax withholding for contractors and subcontractors.

• Section 230(1): Requires businesses to maintain six years of supporting records.

• Section 162(1): Imposes penalties for late T5018 or GST/HST filings.

• Section 227.1: Holds directors personally liable for unremitted payroll deductions.
  Excise Tax Act (Canada)

• Section 286: Requires detailed GST/HST records for construction projects.

• Section 296: Allows CRA to reassess ITCs — which can be appealed or defended.
  Tax Administration Act (Quebec)
  Revenu Québec conducts parallel QST and payroll audits in collaboration with CRA. Mackisen manages both agencies to prevent overlap and duplication.

Key Court Decisions

Thibault v. The Queen (2022): Proper documentation and due diligence protect contractors from reassessments.
Buckingham v. The Queen (2011 FCA 142): Directors are not automatically liable for corporate tax debts if due diligence is proven.
Les Entreprises XY v. The Queen (2020): CRA cannot deny Input Tax Credits (ITCs) if the work was completed by legitimate subcontractors.
Guindon v. Canada (2015): Penalties may be removed if compliance efforts were reasonable and honest.
These rulings make it clear: CRA’s assumptions can be overturned — strong documentation and expert defense win every time.

Why CRA Targets the Construction Sector

CRA audits the construction industry aggressively because it involves high cash flow and complex subcontractor networks. Common 2025 audit triggers include:

• Missing or inconsistent T5018 contractor payments.

• GST/HST or QST discrepancies across multiple projects.

• Unreported subcontractor or labor costs.

• Payroll audits for misclassified “employees.”

• Expense claims for unverified materials or tools.
  CRA assumes errors — Mackisen proves compliance.

Mackisen’s Construction Audit Defense Strategy

1. Audit Review: Analyze CRA’s audit scope and identify key exposure areas.

2. Documentation Reconstruction: Gather contracts, invoices, supplier receipts, and payroll records.

3. Subcontractor Verification: Confirm all T5018 and GST/QST data for accuracy.

4. Legal Representation: Handle all CRA and Revenu Québec communications to avoid misinterpretation.

5. Penalty Relief: File Taxpayer Relief Program applications to reduce or cancel penalties and interest.
   Our construction audit defense ensures that your records, contracts, and tax filings withstand the most rigorous CRA review.

Real Client Experience

A Montreal roofing contractor was reassessed $218,000 for “unreported subcontractor expenses.” Mackisen proved all payments were legitimate and reversed 100% of the reassessment.
A Quebec construction company was fined $94,000 for “unremitted GST/QST.” Mackisen demonstrated accounting errors and secured full penalty cancellation.

Common Questions

Why was my construction company audited? CRA’s system detects discrepancies in payroll, T5018, or GST/HST filings. Mackisen identifies the trigger and neutralizes it.
Can CRA audit subcontractors and suppliers too? Yes, but Mackisen ensures all parties are coordinated to avoid double assessments.
What happens if I don’t have full records? We reconstruct evidence through bank statements, contracts, and supplier confirmations.
Can CRA freeze my accounts during the audit? Yes, but Mackisen can request suspension and negotiate immediate release.

Why Mackisen

At Mackisen CPA Auditors Montreal, we’ve built a national reputation defending construction companies from CRA’s toughest audits. Our dual CPA and tax law expertise allows us to dismantle CRA’s findings, protect directors from liability, and preserve your profit margins. We act fast, argue hard, and deliver results — because your business was built with hard work, not errors. When CRA audits your construction, Mackisen builds your defense.
Call Mackisen CPA Auditors Montreal today for your 2025 Construction Audit Defense Consultation. The first meeting is free, and your protection begins immediately.
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