CRA Family Trust Audit 2025 — Protect Your Estate, Defend Your Beneficiaries, and Eliminate CRA Penalties

In 2025, CRA’s Family Trust Audit Program has intensified its scrutiny of intergenerational wealth transfers, holding structures, and private company shares. CRA’s digital audit system now flags all trusts that distribute income to family members, especially minors, or that hold investments in private corporations. Many legitimate trusts are being reassessed for “income attribution,” “unreported beneficiary income,” or “invalid trust documentation.” These audits often result in double taxation, frozen assets, and penalties for alleged mismanagement. At Mackisen CPA Auditors Montreal, we defend families, estates, and trustees from CRA’s overreach. Our CPA auditors and tax lawyers reconstruct trust records, ensure compliance with Section 104 of the Income Tax Act, and negotiate directly with CRA to restore fairness. We don’t let CRA rewrite your legacy — we protect it with expertise and integrity.

Legal and Regulatory Framework

Income Tax Act (Canada)

• Section 104(2): Defines trusts as separate taxpayers for income tax purposes.

• Section 104(13): Governs income inclusion for beneficiaries.

• Section 75(2): Applies attribution rules when settlors retain control or benefit from trust property.

• Section 220(3.1): Authorizes CRA to cancel or reduce penalties and interest under the Taxpayer Relief Program.
  Tax Administration Act (Quebec)
  Revenu Québec enforces identical rules for Quebec-based family trusts and beneficiary allocations. Mackisen ensures consistency across both tax jurisdictions to prevent duplicate assessments.

Key Court Decisions

Bédard v. The Queen (2022): CRA must provide evidence of improper distribution before reclassifying trust income.
Thibault v. The Queen (2022): Proper trust documentation and resolutions protect beneficiaries from CRA reassessment.
Guindon v. Canada (2015): Penalties cannot apply when trustees act on professional advice in good faith.
Jordan v. The Queen (2009): CRA cannot attribute income without proof of control or benefit by the settlor.
These rulings confirm that CRA family trust audits can be successfully defended with proper documentation, legal structure, and professional representation.

Why CRA Targets Family Trusts

CRA audits trusts to uncover income shifting and capital gains deferral strategies. Common 2025 triggers include:

• Distributions to minors or non-resident beneficiaries.

• Attribution under Section 75(2) where settlors retain control.

• Undocumented trustee resolutions or missing trust deeds.

• Trusts owning private company shares or holding passive income assets.

• Late or missing T3 trust returns.
  CRA assumes manipulation — Mackisen proves compliance and intent.

Mackisen’s Family Trust Audit Defense Strategy

1. Audit File Review: Evaluate CRA’s audit letter, trust documentation, and financial transactions.

2. Trust Reconstruction: Rebuild missing records, deeds, and annual resolutions to reestablish compliance.

3. Attribution Analysis: Prove independence between settlors, trustees, and beneficiaries to remove CRA challenges.

4. Formal Objection Filing: Submit a Notice of Objection to suspend reassessment and initiate legal defense.

5. Penalty & Interest Relief: Apply under Section 220(3.1) to remove financial penalties and interest tied to documentation delays.
   Our defense restores confidence in your trust structure and protects your family’s financial legacy.

Real Client Experience

A Montreal estate was reassessed $276,000 after CRA alleged “income attribution.” Mackisen reconstructed trust deeds and secured a full reversal.
A Quebec family trust faced penalties for missing T3 filings. Mackisen filed retroactive documentation and CRA cancelled 100% of the penalties.

Common Questions

Can CRA audit a trust from years ago? Yes — CRA can go back up to 10 years if it alleges misrepresentation. Mackisen ensures legal limits are enforced.
Can beneficiaries be taxed twice? Not if the trust is documented correctly — Mackisen ensures income is reported once under proper allocation.
Can CRA dissolve my trust? Only in extreme cases — Mackisen proves valid intent, governance, and compliance.
Do I need to file trust returns annually? Yes — Mackisen ensures all filings are current and compliant to prevent reassessment.

Why Mackisen

At Mackisen CPA Auditors Montreal, we are Canada’s trusted defenders of estate planning and family wealth preservation. Our integrated CPA and legal team combines deep tax knowledge with strong advocacy to safeguard families from CRA’s overreach. We act fast, prepare comprehensively, and defend relentlessly — because your trust deserves protection built on trust itself. When CRA audits your family trust, Mackisen audits their assumptions.
Call Mackisen CPA Auditors Montreal today for your 2025 Family Trust Audit Defense Consultation. The first meeting is free, and your protection starts immediately.