CRA Freelance Income Audit 2025 — Protect Your Earnings, Prove Compliance, and Eliminate CRA Penalties

In 2025, CRA’s Freelance Income Audit Division has dramatically increased audits on independent professionals, consultants, and gig workers. Using automated income-matching software, CRA now cross-checks every bank deposit, e-transfer, and online payment from platforms like Upwork, PayPal, Fiverr, and Stripe. Even honest freelancers are being hit with reassessments for “unreported income” or “personal expense claims,” leading to penalties and interest charges. At Mackisen CPA Auditors Montreal, we defend freelancers and contractors across all industries — from creative professionals to IT consultants. Our CPA auditors and tax lawyers document your income, substantiate your expenses, and negotiate directly with CRA to eliminate penalties and resolve disputes. We don’t let CRA penalize independence — we protect your freedom to work on your terms.

Legal and Regulatory Framework

Income Tax Act (Canada)

• Section 9(1): Defines business income for self-employed individuals.

• Section 18(1)(a): Allows deduction of reasonable business expenses incurred to earn income.

• Section 67: Requires that all expenses be reasonable and related to income generation.

• Section 163(2): Imposes gross negligence penalties for misrepresentation, which Mackisen cancels with documented evidence.

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

• Section 240: Requires freelancers earning more than $30,000 annually to register for GST/HST. Mackisen ensures proper registration, remittance, and ITC recovery.
  Tax Administration Act (Quebec)
  Revenu Québec conducts parallel audits for QST, income tax, and expense deductions. Mackisen handles both authorities to ensure unified defense.

Key Court Decisions

Bédard v. The Queen (2022): CRA must prove deliberate omission before applying gross negligence penalties.
Thibault v. The Queen (2022): Freelancers acting with reasonable recordkeeping and professional guidance are not negligent.
Guindon v. Canada (2015): Honest filing mistakes cannot justify punitive penalties.
Jordan v. The Queen (2009): CRA must rely on evidence, not estimates, when auditing income.
These cases confirm that CRA must prove intentional wrongdoing, not mere human error, when auditing freelancers.

Why CRA Targets Freelancers

CRA’s 2025 audit strategy focuses on independent workers due to rising gig-economy income. Common triggers include:

• Unreported payments from clients or online platforms.

• High expense claims or home office deductions.

• Failure to register for GST/HST once exceeding $30,000 in revenue.

• Frequent e-transfers or cash deposits without invoices.

• Late or inconsistent tax filings.
  CRA assumes underreporting — Mackisen proves professional accuracy.

Mackisen’s Freelance Audit Defense Strategy

1. Audit File Review: Examine CRA’s audit letter and identify disputed income or expense categories.

2. Documentation Reconstruction: Rebuild invoices, contracts, receipts, and client correspondence to substantiate all transactions.

3. Tax Compliance Review: Align income, GST/QST filings, and expense reports for full audit readiness.

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

5. Penalty & Interest Relief: Apply under Section 220(3.1) to remove penalties resulting from misunderstanding or delay.
   Our process ensures every dollar you earned is proven legitimate and every expense properly defended.

Real Client Experience

A Montreal web developer was reassessed $162,000 for “unreported freelance income.” Mackisen provided PayPal transaction proof and CRA cancelled the entire reassessment.
A Quebec marketing consultant faced $58,000 in penalties for “invalid deductions.” Mackisen reconstructed her books and secured full penalty removal.

Common Questions

Do I have to register for GST/HST as a freelancer? Yes, if your annual revenue exceeds $30,000 — Mackisen ensures compliance and recovery of input tax credits.
Can CRA access my bank or PayPal accounts? Yes, but Mackisen limits scope and ensures only relevant data is disclosed.
Can CRA deny my expense deductions? Only without proof — Mackisen rebuilds documentation to validate every claim.
Can penalties be cancelled? Absolutely — Mackisen achieves full relief through the Taxpayer Relief Program.

Why Mackisen

At Mackisen CPA Auditors Montreal, we are Canada’s trusted defenders of freelancers and independent contractors. Our integrated team of CPAs and tax lawyers combines deep audit expertise with digital income tracking knowledge to protect your business and your reputation. We act fast, document thoroughly, and defend fearlessly — because your independence should empower you, not expose you. When CRA audits your freelance income, Mackisen audits their assumptions.
Call Mackisen CPA Auditors Montreal today for your 2025 Freelance Audit Defense Consultation. The first meeting is free, and your protection starts immediately.