CRA Payroll Reassessment 2025 — Stop Retroactive Penalties, Correct Misclassifications, and Protect Your Business

When the Canada Revenue Agency (CRA) or Revenu Québec issues a Payroll Reassessment, it means they believe your business failed to meet its payroll tax obligations — and they intend to collect. In 2025, CRA’s payroll compliance unit uses data matching, AI algorithms, and inter-agency reporting to detect payroll inconsistencies faster than ever. Even a small mistake—like misclassifying an employee as a contractor or missing a CPP/EI deduction—can lead to massive penalties, backdated interest, and director’s personal liability.

A payroll reassessment can destroy cash flow, damage staff morale, and put your business reputation at risk. But with the right defense, you can challenge CRA’s conclusions, correct genuine errors, and avoid penalties altogether. At Mackisen CPA Auditors Montreal, we specialize in reversing payroll reassessments through detailed evidence, compliance reconciliation, and strong legal advocacy. We protect not only your payroll—but your leadership and legacy.

Legal and Regulatory Framework

Income Tax Act (Canada)

• Section 153(1): Requires employers to withhold and remit income tax, CPP, and EI.

• Section 227.1: Makes directors personally liable for unremitted source deductions.

• Section 162(1): Applies late-filing penalties on remittances or T4/T4A slips.

• Section 163(2): Imposes gross-negligence penalties for incorrect or incomplete reporting.

Employment Insurance Act / Canada Pension Plan (CPP) Act
Gives CRA authority to reassess unpaid employer and employee contributions retroactively up to four years—or longer in cases of negligence.

Tax Administration Act (Quebec)
Authorizes Revenu Québec to reassess employers for QPP, QPIP, and CNESST obligations, often mirroring CRA reassessments.

Mackisen ensures your payroll reassessment defense covers both federal and Quebec exposure to avoid duplicate liability.

Key Court Decisions

Buckingham v. The Queen (2011 FCA 142): Directors remain liable for unremitted payroll deductions without due diligence.
McMillan v. The Queen (2021): CRA must consider employer intent and available records before issuing penalties.
Guindon v. Canada (2015): Penalties are valid unless successfully reduced through relief or appeal.
Thibault v. The Queen (2022): Contractor vs. employee classification must be determined based on actual working relationship, not just contract wording.

These cases show that proper documentation and active defense can overturn CRA reassessments.

Why CRA Issues Payroll Reassessments

Payroll reassessments occur when CRA finds inconsistencies between your filings, T4s, or remittances. Common 2025 triggers include:

• Employee misclassification (contractor treated as staff).

• Late or missing CPP/EI deductions.

• Unfiled or incorrect T4/T4A slips.

• Failure to remit withheld amounts.

• Differences between GST/HST and payroll reporting.

Even small bookkeeping mistakes can lead to multi-year reassessments and steep penalties.

Mackisen’s Payroll Reassessment Defense Strategy

1. Reassessment Analysis: Review CRA’s findings and identify calculation or procedural errors.

2. Classification Review: Examine employee/contractor relationships under CRA’s “control and integration” test.

3. Evidence Compilation: Reconcile payroll registers, T4/T4A summaries, and source deduction records.

4. Formal Objection Filing: Submit a detailed Notice of Objection within 90 days to suspend collection and begin appeal.

5. Negotiation and Settlement: Engage directly with CRA or Revenu Québec auditors to adjust or cancel the reassessment.

Our method ensures CRA’s assumptions are challenged with facts, compliance documentation, and legal authority.

Real Client Experience

A Montreal software company faced a $162,000 CRA payroll reassessment for misclassified contractors. Mackisen built a due diligence defense proving contractual independence—CRA withdrew all penalties.
A Quebec construction business was reassessed $48,000 for missing CPP deductions. Mackisen identified CRA miscalculations and achieved a full cancellation of the reassessment.

Common Questions

Can CRA reclassify my contractors as employees? Yes, but Mackisen can prove independent status using work control and financial independence tests.
How long can CRA reassess payroll? Normally four years, but up to ten in negligence cases.
What if I can’t afford the reassessed balance? Mackisen can negotiate payment plans and file for penalty relief under Section 220(3.1).
Can Revenu Québec issue a separate reassessment? Yes, but we coordinate both agencies to avoid double taxation.

Why Mackisen

At Mackisen CPA Auditors Montreal, we defend businesses from payroll reassessments with skill, speed, and accuracy. Our dual CPA–tax lawyer team understands every rule, every defense, and every negotiation path that can protect your company from penalties and personal liability.

We don’t just manage audits—we resolve them permanently. With Mackisen, your payroll stays compliant, your leadership stays protected, and your business stays strong.

Call Mackisen CPA Auditors Montreal today for your 2025 Payroll Reassessment Defense Consultation. The first meeting is free, and your protection begins immediately