CRA Limited-Scope Audit — Montreal CPA Firm Near You: Focus on One High-Risk Area

A CRA Limited-Scope Audit (Targeted Audit) focuses on a specific risk area in your tax return — such as a particular deduction, income source, or GST/HST credit. Unlike full audits, limited-scope audits are faster but can expand if inconsistencies are found. Mackisen CPA Montreal provides precise documentation and strategic representation to address the issue quickly, ensuring it remains limited in both scope and duration.

Legal Foundation

Law: Income Tax Act s.231.1 (CRA’s audit and inspection powers); Excise Tax Act s.289 (CRA authority for targeted GST/HST reviews).
Jurisprudence: Canderel Ltd. v. Canada (1998 SCC) — confirmed that tax reporting must reflect true commercial reality, supported by verifiable evidence.

Learning insight: CRA’s focus may be narrow, but the consequences of mishandling it are wide. A limited audit can turn into a full audit overnight — unless managed professionally.

Why CRA Conducts Limited-Scope Audits

Limited-scope audits are typically triggered by automated risk reviews or discrepancies between filings. Common audit targets include:

• Specific deductions (vehicle, home office, or meals and entertainment).

• High input-tax credits (ITCs) or GST/QST refund claims.

• Related-party transactions or management fees.

• Unreported T-slips or investment income mismatches.

• Unusual variances compared to prior-year filings.

Learning insight: CRA doesn’t look for mistakes — it looks for explanations. A strong CPA ensures the explanations are backed by documents, not assumptions.

What Happens During a Limited-Scope Audit

1. Initial Contact: CRA sends an audit notice identifying the targeted issue.

2. Information Request: Auditors request documentation for specific transactions or accounts.

3. Document Review: CRA analyzes receipts, contracts, or invoices to verify accuracy.

4. Follow-Up Questions: Additional queries may arise based on supporting evidence.

5. Audit Conclusion: CRA closes the file, issues a reassessment, or expands the audit if discrepancies persist.

Learning insight: How you respond to a limited-scope audit determines whether it stays small or grows large.

Mackisen CPA’s Limited-Audit Defense Strategy

1. Issue Identification: Pinpoint the CRA’s exact concern using the audit letter.

2. Proof Compilation: Collect precise documentation supporting the claimed deduction or credit.

3. Variance Analysis: Compare audited items with industry benchmarks to justify differences.

4. CRA Communication: Provide organized, CPA-certified responses to satisfy audit requirements early.

5. Preventive Audit Shield: Implement internal controls to prevent similar queries in future returns.

Learning insight: The best way to keep a limited audit small is to deliver large amounts of organized proof.

Common Triggers for Limited-Scope Audits

• Expense claims inconsistent with income levels.

• Missing or incomplete documentation.

• Frequent refund or credit filings.

• Prior-year adjustments or late filings.

• CRA’s automated “risk scoring” system flagging outliers.

Mackisen CPA Montreal reviews each potential trigger and crafts a targeted defense file, ensuring the auditor receives everything needed — and nothing more.

Learning insight: CRA asks narrow questions. Mackisen CPA answers them precisely — no less, no more.

Potential Outcomes and Risk Management

• Accepted Return: CRA confirms your filing and closes the file.

• Minor Adjustment: Small correction made without penalties.

• Expanded Audit: Broader review initiated if inconsistencies remain.

• Penalty Reassessment: CRA applies interest or negligence penalties if records are incomplete.

Learning insight: Speed, accuracy, and transparency are the three currencies of audit success. Mackisen CPA ensures all three are fully paid.

SEO Optimization and Learning Value

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Learning insight: Online visibility builds credibility. CRA and Google both trust those who explain clearly and prove completely.

Real Client Success

• A Montréal contractor cleared a vehicle-expense audit in 10 days after Mackisen CPA provided CPA-certified mileage logs.

• A retail business avoided escalation when our team documented GST refunds using supplier registrations and proof of payment.

• A self-employed consultant passed a targeted audit for travel deductions when we linked all receipts to client projects.

Learning insight: CRA closes files faster when every document tells a consistent financial story — Mackisen CPA writes that story for you.

Why Mackisen CPA Montreal

With over 35 years of combined audit and tax-law experience, Mackisen CPA Montreal specializes in resolving limited-scope and targeted audits before they escalate. Our bilingual team provides accurate, professional, and legally grounded responses that maintain compliance and protect client peace of mind.

Learning insight: A limited-scope audit isn’t a threat — it’s a test of organization. Mackisen CPA makes sure you pass it with distinction.