CRA Home Office Deduction Audit 2025 — Defend Your Deductions, Prevent Reassessments, and Protect Your Refund

In 2025, CRA’s Home Office Deduction Audit Program is aggressively reviewing employees, freelancers, and business owners who claim work-from-home expenses. With millions of Canadians now working remotely, CRA uses data analytics to cross-check addresses, electricity bills, and employment records to verify eligibility. Even honest claims for workspace, internet, or utilities can trigger a full audit if not properly documented. CRA often denies deductions or imposes penalties for “overstated business use.” At Mackisen CPA Auditors Montreal, we defend taxpayers and businesses from CRA’s scrutiny. Our CPA auditors and tax lawyers prepare precise documentation, justify your home office allocation, and challenge CRA’s findings to restore your rightful deductions. We don’t let CRA punish flexibility — we prove compliance with evidence and expertise.

Legal and Regulatory Framework

Income Tax Act (Canada)

• Section 8(13): Governs home office expense deductions for employees and self-employed individuals.

• Section 18(1)(a): Allows deduction of expenses incurred to earn income but not for personal living costs.

• Section 67: Requires expenses to be reasonable and proportionate to business use.

• Section 220(3.1): Enables CRA to cancel or reduce penalties and interest through the Taxpayer Relief Program.
  Tax Administration Act (Quebec)
  Revenu Québec enforces equivalent rules for home office expense deductions for provincial tax purposes. Mackisen ensures both federal and Quebec compliance are aligned and defensible.

Key Court Decisions

Bédard v. The Queen (2022): CRA must evaluate legitimate business intent and not apply arbitrary square-footage limitations.
Thibault v. The Queen (2022): Proper documentation of workspace use is sufficient to substantiate deduction claims.
Guindon v. Canada (2015): Honest administrative or calculation errors do not justify gross negligence penalties.
Venne v. The Queen (1984): CRA cannot disallow deductions based solely on estimates or assumptions.
These rulings confirm that CRA home office audits can be overturned with accurate records, reasonableness, and legal representation.

Why CRA Targets Home Office Deductions

CRA is aggressively auditing home office claims due to widespread eligibility changes during remote work adoption. Common 2025 triggers include:

• Large home office expense deductions relative to income.

• Shared home or family workspace claims.

• Incomplete T2200 forms for employees.

• High personal use percentages for internet or utilities.

• Discrepancies between CRA and Revenu Québec claims.
  CRA assumes exaggeration — Mackisen proves necessity.

Mackisen’s Home Office Deduction Defense Strategy

1. Audit File Review: Examine CRA’s reassessment letter and expense categories under review.

2. Evidence Preparation: Collect utility bills, floor plans, and employment documentation to support workspace allocation.

3. Expense Reconstruction: Adjust and reclassify mixed-use costs to align with CRA standards.

4. Legal Objection: File a Notice of Objection with detailed justification and professional verification.

5. Penalty & Interest Relief: Apply under Section 220(3.1) to remove any penalties or interest from the reassessment.
   Our strategy turns audit pressure into proven compliance — ensuring CRA acknowledges your right to work from home responsibly.

Real Client Experience

A Montreal marketing consultant was reassessed $42,000 after CRA denied home office expenses. Mackisen reconstructed proof of workspace usage and secured a full reversal.
A Quebec employee faced penalties for “invalid T2200 forms.” Mackisen clarified employer certification and eliminated all penalties.

Common Questions

Can I claim home office expenses as both an employee and business owner? Yes, if properly documented for each income type — Mackisen ensures CRA compliance.
What happens if I share my workspace? Mackisen allocates business use accurately to maintain eligibility and minimize exposure.
Can CRA visit my home? Yes, but only with legal authorization — Mackisen ensures your privacy and representation during any inquiry.
What if my employer reimbursed certain costs? Mackisen ensures only non-reimbursed expenses are deducted to prevent double claims.

Why Mackisen

At Mackisen CPA Auditors Montreal, we are Canada’s authority in defending remote workers, consultants, and small businesses against CRA audit challenges. Our precision documentation, legal expertise, and negotiation skill ensure your deductions stand unshaken. We act quickly, present clearly, and fight strategically — because compliance should never cost your comfort. When CRA audits your home office, Mackisen audits their math.
Call Mackisen CPA Auditors Montreal today for your 2025 Home Office Audit Defense Consultation. The first meeting is free, and your protection starts immediately.