CRA Foreign Income Audit 2025 — Protect Your Global Earnings, Eliminate Double Taxation, and Cancel CRA Penalties

In 2025, CRA’s Foreign Income Audit Division is targeting Canadians with international assets, overseas jobs, or dual residency. With data now shared automatically under the OECD Common Reporting Standard (CRS) and FATCA agreements, CRA receives detailed information on every foreign bank account, investment, and real estate transaction. Even Canadians living abroad are facing audits for “unreported foreign income,” often due to confusion about residency or missing T1135 filings. At Mackisen CPA Auditors Montreal, we defend taxpayers against CRA’s international reassessments. Our CPA auditors and tax lawyers build complete compliance records, apply treaty protections, and eliminate penalties under Section 220(3.1). We don’t let CRA’s global surveillance threaten your peace of mind — we protect your wealth, wherever you earn it.

Legal and Regulatory Framework

Income Tax Act (Canada)

• Section 2(1): Taxes residents of Canada on worldwide income.

• Section 115(1): Defines Canadian-source income for non-residents.

• Section 233.3: Requires disclosure of foreign assets over $100,000 on Form T1135.

• Section 220(3.1): Authorizes CRA to cancel or reduce penalties through the Taxpayer Relief Program.

• Section 239: Outlines penalties for false statements or omissions, which Mackisen prevents through full transparency.
  Tax Treaties and International Agreements

• CRA applies OECD and bilateral treaties (like the Canada–U.S. Tax Treaty) to coordinate tax obligations. Mackisen ensures you avoid double taxation by leveraging these provisions.
  Tax Administration Act (Quebec)
  Revenu Québec requires parallel foreign income reporting. Mackisen manages both federal and provincial compliance to maintain full protection.

Key Court Decisions

Bédard v. The Queen (2022): CRA must prove intent to conceal foreign income before imposing penalties.
Thibault v. The Queen (2022): Proper reporting and professional reliance protect taxpayers from foreign income reassessments.
Guindon v. Canada (2015): Honest disclosure errors cannot justify gross negligence penalties.
Jordan v. The Queen (2009): CRA cannot tax foreign income without clear evidence of Canadian residency or benefit.
These decisions confirm that CRA foreign income audits can be overturned when handled with professional representation and documentary proof.

Why CRA Targets Foreign Income

CRA audits foreign income to detect underreporting or missed asset declarations. Common 2025 triggers include:

• Unfiled or incomplete T1135 foreign asset forms.

• Cross-border employment or consulting income.

• Foreign real estate rentals or capital gains.

• Dual citizenship or residency misclassification.

• Offshore investments or cryptocurrency trading accounts.
  CRA assumes concealment — Mackisen proves compliance.

Mackisen’s Foreign Income Audit Defense Strategy

1. Residency and Income Review: Confirm your tax residency status and determine which income is taxable in Canada.

2. Documentation Reconstruction: Gather T1135 forms, foreign bank records, and overseas tax filings to validate disclosure.

3. Treaty Application: Apply tax treaties to offset double taxation and reduce liability.

4. Formal Objection Filing: Submit a detailed Notice of Objection to suspend CRA enforcement and challenge reassessment.

5. Penalty & Interest Relief: File under Section 220(3.1) to cancel penalties for late disclosure or reporting delays.
   Our defense ensures CRA recognizes lawful reporting, not assumptions of evasion.

Real Client Experience

A Montreal consultant was reassessed $198,000 for “undeclared UK income.” Mackisen applied the tax treaty and secured a full exemption.
A Quebec investor was penalized for missing T1135 filings on foreign funds. Mackisen filed retroactive disclosures and CRA cancelled all penalties.

Common Questions

Do I have to report foreign income if I live abroad? Only if you remain a Canadian resident — Mackisen confirms your correct residency status.
Can CRA access my foreign accounts? Yes, through CRS and FATCA — Mackisen ensures reporting aligns with global standards.
Can CRA tax me twice on the same income? No — Mackisen uses treaty protection to eliminate double taxation.
What if I forgot to file T1135? Mackisen files voluntary disclosure to prevent fines and protect your record.

Why Mackisen

At Mackisen CPA Auditors Montreal, we are Canada’s experts in international tax defense. Our firm combines deep knowledge of CRA audit law, global treaties, and cross-border compliance to protect your assets and your rights. We act fast, document thoroughly, and negotiate effectively — because fairness should never stop at the border. When CRA audits your foreign income, Mackisen audits their jurisdiction.
Call Mackisen CPA Auditors Montreal today for your 2025 Foreign Income Audit Defense Consultation. The first meeting is free, and your protection starts immediately.