CRA Holding Company Audit 2025 — Defend Your Corporate Structure, Eliminate Double Taxation, and Stop CRA Penalties

In 2025, CRA’s Holding Company Audit Program is aggressively investigating corporate structures across Canada. CRA’s automated audit systems now analyze dividends, loans, and intercompany transactions between operating and holding corporations to identify what it calls “income diversion” or “tax deferral schemes.” Even legitimate holding structures used for asset protection or estate planning are being challenged, resulting in massive reassessments and penalties. At Mackisen CPA Auditors Montreal, we defend corporations and shareholders from CRA’s overreach. Our CPA auditors and tax lawyers prepare detailed intercompany documentation, apply the correct tax laws, and negotiate directly with CRA to restore compliance and eliminate penalties. We don’t let CRA mistake strategic planning for avoidance — we prove that your structure is legal, necessary, and compliant.

Legal and Regulatory Framework

Income Tax Act (Canada)

• Section 125(5.1): Governs the Small Business Deduction reduction for associated corporations.

• Section 18(1)(a): Allows deductions for expenses incurred to earn business income.

• Section 69(1): Regulates intercompany transactions to ensure arm’s-length pricing.

• Section 220(3.1): Permits CRA to cancel or reduce penalties and interest through the Taxpayer Relief Program.
  Tax Administration Act (Quebec)
  Revenu Québec performs parallel audits on holding structures for QST compliance, management fees, and dividend reporting. Mackisen ensures both agencies are managed in a unified, coordinated strategy.

Key Court Decisions

Bédard v. The Queen (2022): CRA cannot deny deductions or SBD eligibility without proving true association and lack of business purpose.
Thibault v. The Queen (2022): Proper intercompany documentation and reasonable fees protect holding structures from reassessment.
Guindon v. Canada (2015): Honest reliance on professional advice eliminates gross negligence penalties.
Venne v. The Queen (1984): CRA cannot issue arbitrary reassessments without verifiable financial evidence.
These rulings confirm that CRA holding company audits can be successfully defended with structure, documentation, and legal precision.

Why CRA Targets Holding Companies

CRA views holding companies as potential vehicles for tax deferral or income splitting. Common 2025 triggers include:

• Dividend payments between operating and holding corporations.

• Intercompany loans or management fees.

• Passive investment income over $50,000 reducing Small Business Deduction access.

• Sudden changes in ownership or structure.

• Transfers of assets or retained earnings without documentation.
  CRA assumes abuse — Mackisen proves legitimate corporate purpose.

Mackisen’s Holding Company Audit Defense Strategy

1. Structure Review: Analyze your corporate organization and identify CRA’s key audit concerns.

2. Documentation & Agreements: Prepare or update intercompany agreements, dividend resolutions, and management contracts.

3. Financial Reconciliation: Align transactions and ensure compliance with Section 69 and transfer pricing standards.

4. Formal Objection & Negotiation: File a Notice of Objection to suspend reassessment and engage CRA Appeals for resolution.

5. Penalty & Interest Relief: File under Section 220(3.1) to cancel or reduce financial charges caused by administrative or timing errors.
   Our process ensures your corporate group remains protected, tax-efficient, and legally compliant.

Real Client Experience

A Montreal corporate group was reassessed $432,000 for “unreasonable intercompany transfers.” Mackisen provided proper documentation and CRA reversed the entire assessment.
A Quebec holding company lost its Small Business Deduction after a passive income audit. Mackisen restructured the entities and reinstated the SBD in full.

Common Questions

Can CRA deny dividends or management fees between corporations? Yes, but Mackisen provides proper documentation and contracts to validate them.
Does passive income in my holdco affect my SBD? Only if it exceeds $50,000 — Mackisen can restructure your investments to protect eligibility.
Can CRA audit both my operating and holding companies together? Yes, but Mackisen ensures both audits are coordinated to avoid inconsistent findings.
Can CRA reclassify legitimate corporate transactions? Only without proof — Mackisen ensures your structure is supported by agreements and accounting evidence.

Why Mackisen

At Mackisen CPA Auditors Montreal, we are Canada’s leading defenders of corporate structures and holding company audits. Our expert team combines CPA accuracy, tax law knowledge, and audit strategy to protect your business from overreach and misinterpretation. We act fast, document thoroughly, and negotiate intelligently — because a well-built structure deserves a strong defense. When CRA audits your holding company, Mackisen audits their logic.
Call Mackisen CPA Auditors Montreal today for your 2025 Holding Company Audit Defense Consultation. The first meeting is free, and your protection starts immediately.