CRA Net-Worth / Lifestyle Audit — Montreal CPA Firm Near You: Defend Indirect Income Tests

A CRA Net-Worth or Lifestyle Audit is one of the most complex and intrusive forms of tax verification. The CRA reconstructs your income based on assets, liabilities, cash flow, and living expenses to determine whether your reported income matches your lifestyle. Mackisen CPA Montreal defends your position by rebuilding accurate statements of income and expenditures, reconciling asset movements, and challenging assumptions that overstate undeclared income.

Law:
Income Tax Act (ITA) s.152(4) — allows the Minister to reassess income based on indirect or alternative methods when records appear incomplete.
ITA s.163(2) — imposes gross-negligence penalties for false or misleading statements but requires proof of intent.

Jurisprudence:
R. v. Wray (Tax Court of Canada, 1983) — recognized the limits of net-worth methodology and emphasized the need for credible, consistent supporting data.
Hickman Motors Ltd. v. Canada (Supreme Court of Canada, 1997) — reaffirmed the presumption of correctness of an assessment until rebutted with substantive evidence.

Why it matters:
Lifestyle audits often arise when CRA believes spending exceeds declared income. These cases can trigger years of reassessments, penalties, and interest. A Mackisen CPA Montreal defense demonstrates where funds originated — such as savings, inheritances, loans, or non-taxable sources — and provides documented reconciliation to protect you from unjustified assumptions or penalties.

Ideal for:
Self-employed individuals, business owners, professionals, and investors facing CRA or Revenu Québec lifestyle or net-worth audits requiring proof of income sources and asset movement.

Contact:
Mackisen CPA Montreal — 514-276-0808

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