CRA Estate Tax Audit 2025 — Protect Your Inheritance, Prevent Double Taxation, and Eliminate CRA Penalties

In 2025, CRA’s Estate Tax Audit Program is aggressively reviewing estates, executors, and beneficiaries across Canada. CRA’s enhanced audit algorithms now cross-check death records, property transfers, trust filings, and investment statements to ensure full compliance. Even families who followed professional advice are being hit with unexpected reassessments, capital gains tax on deemed dispositions, and penalties for late T3 or final T1 filings. Many executors are unknowingly held personally liable for unpaid taxes before distributions. At Mackisen CPA Auditors Montreal, we defend estates and families from CRA’s overreach. Our CPA auditors and tax lawyers reconstruct estate records, correct filings, and negotiate directly with CRA to close files permanently. We don’t let CRA complicate your loss — we bring closure, compliance, and compassion.

Legal and Regulatory Framework

Income Tax Act (Canada)

• Section 70(5): Deems all capital property disposed of at fair market value upon death.

• Section 104(13): Governs income allocation between estate and beneficiaries.

• Section 164(6): Allows losses on estate property to offset prior gains on the deceased’s final return.

• Section 220(3.1): Enables CRA to cancel or reduce penalties and interest through the Taxpayer Relief Program.
  Tax Administration Act (Quebec)
  Revenu Québec conducts similar estate audits for provincial filings and QST adjustments on real property transfers. Mackisen coordinates both agencies to ensure unified compliance and timely clearance certificates.

Key Court Decisions

Bédard v. The Queen (2022): CRA must respect fair market valuations supported by professional appraisals.
Thibault v. The Queen (2022): Executors acting in good faith cannot be held personally liable if they followed professional guidance.
Guindon v. Canada (2015): Penalties cannot apply to honest administrative or timing errors.
Jordan v. The Queen (2009): CRA cannot reassess without verifiable evidence of unreported estate assets.
These rulings confirm that CRA estate audits can be successfully defended through documentation, due diligence, and professional advocacy.

Why CRA Targets Estates

CRA audits estates to ensure all capital gains, registered accounts, and property transfers are fully reported. Common 2025 triggers include:

• Missing or undervalued real estate and investment assets.

• Late or incomplete final T1 or T3 filings.

• Capital gains on cottage or secondary properties.

• Unreported RRSP, RRIF, or TFSA income after death.

• Beneficiary distributions before obtaining a clearance certificate.
  CRA assumes omission — Mackisen proves compliance and fairness.

Mackisen’s Estate Audit Defense Strategy

1. File Review: Examine CRA’s reassessment, estate filings, and property valuations.

2. Asset Verification: Rebuild the estate inventory using appraisals, investment records, and legal documents.

3. Executor Protection: Prepare documentation proving reasonable diligence and reliance on professional advice.

4. Formal Objection Filing: Submit a Notice of Objection to halt collection and challenge CRA’s reassessment.

5. Penalty and Interest Relief: Apply under Section 220(3.1) to remove all penalties caused by timing, appraisal, or filing delays.
   Our defense ensures CRA recognizes your estate’s compliance, not its assumptions.

Real Client Experience

A Montreal estate was reassessed $512,000 for “undeclared capital gains” on inherited property. Mackisen obtained appraisals and secured full reassessment reversal.
A Quebec executor faced personal liability for $184,000 in estate taxes. Mackisen proved due diligence and CRA cancelled all penalties.

Common Questions

Can CRA audit an estate years after death? Yes, typically up to 10 years if they allege omission — Mackisen enforces statutory limits and closes files permanently.
Can executors be personally liable? Only if negligent — Mackisen proves diligence and protects executor assets.
Do I need to file a clearance certificate? Yes — Mackisen ensures clearance before distributing assets to avoid future liability.
What happens if valuations were missing or late? Mackisen secures professional appraisals and files relief applications to eliminate penalties.

Why Mackisen

At Mackisen CPA Auditors Montreal, we are Canada’s trusted defense team for estate taxation and family wealth preservation. Our accountants, auditors, and lawyers work together to protect executors, beneficiaries, and family estates from CRA’s complex rules. We act fast, defend thoroughly, and negotiate compassionately — because closure after loss should never include financial chaos. When CRA audits your estate, Mackisen audits their evidence.
Call Mackisen CPA Auditors Montreal today for your 2025 Estate Audit Defense Consultation. The first meeting is free, and your protection starts immediately.