Insights
Nov 24, 2025
MACKISEN
. CRA Payroll Source-Deduction Audit — Montreal CPA Firm Near You: CPP/EI/Tax Remitted
A CRA Payroll Source-Deduction Audit is one of the most common and impactful reviews faced by employers in Canada. The Canada Revenue Agency (CRA) and Revenu Québec ensure that businesses are correctly withholding, remitting, and reporting payroll deductions such as CPP, EI, federal/provincial income tax, and QPP/QPIP in Québec.
Mackisen CPA Montreal helps businesses prepare, defend, and optimize payroll compliance through expert reconciliation, documentation, and proactive audit representation — ensuring no unexpected penalties or reassessments.
Legal Foundation
Law: Income Tax Act s.153 — governs withholding and remittance of tax at source; Canada Pension Plan s.21; Employment Insurance Act s.82; Tax Administration Act (Québec) arts.40–44.
Jurisprudence: Soper v. Canada (1997 FCA) — established director liability for unremitted source deductions and emphasized the importance of reasonable diligence and control.
Learning insight: Payroll compliance is not optional — it’s a fiduciary duty. Every payroll remittance represents trust money owed to the government.
Why CRA and ARQ Conduct Payroll Audits
Payroll audits are initiated when discrepancies appear between:
T4 and RL-1 slips versus actual remittances.
CRA/ARQ payroll summaries and corporate expense accounts.
Missed or late remittances detected by system matching.
Industry benchmarks suggesting underreported payroll or cash payments.
These audits ensure all required deductions were made and remitted on time for:
Canada Pension Plan (CPP) / Québec Pension Plan (QPP).
Employment Insurance (EI) / Québec Parental Insurance Plan (QPIP).
Federal and provincial income-tax withholdings.
Learning insight: CRA’s payroll systems cross-match every T4, RL-1, and bank deposit — even one inconsistency can trigger a multi-year audit.
Common Payroll Audit Triggers
Repeated late or missed remittances.
Discrepancies between T4/RL-1 filings and general-ledger accounts.
Payments to contractors that appear to be employees.
Bonuses, allowances, or benefits not included in taxable income.
Director withdrawals misclassified as shareholder loans.
Employer-provided vehicle or housing benefits not reported.
Mackisen CPA Montreal identifies these red flags before the audit and prepares reconciliation proofs to eliminate risk.
Learning insight: CRA payroll audits focus less on errors and more on patterns — one mistake repeated over time becomes an exposure.
What Mackisen CPA Payroll Audit Defense Includes
Remittance Reconciliation — Confirming every source deduction (CPP, EI, income tax, QPP/QPIP) was remitted properly and matched to bank transactions.
T4 / RL-1 Verification — Ensuring slips, summaries, and remittances align with corporate records.
Contractor vs Employee Analysis — Applying Wiebe Door (FCA, 1986) control and integration tests to defend independent-contractor classifications.
Taxable-Benefit Audit — Reviewing auto, housing, travel, and medical benefits for correct inclusion.
Director-Liability Prevention — Building due-diligence documentation to protect directors personally.
Negotiation & Representation — Communicating directly with CRA/ARQ auditors, submitting evidence, and resolving disputes efficiently.
Learning insight: CRA payroll auditors look for “control without compliance.” Mackisen CPA restores both — structure and proof.
CRA and ARQ Penalties for Non-Compliance
Late Remittance Penalties: 3%–10% of the unpaid amount (depending on recurrence).
Interest: Compounded daily on outstanding balances.
Director Liability: Under ITA s.227.1, corporate directors can be held personally liable for unremitted deductions.
Trust Fund Recovery: CRA treats unremitted payroll as funds held in trust, making them non-dischargeable in bankruptcy.
Learning insight: Payroll tax is the only tax that follows the director home. Mackisen CPA builds the file that proves reasonable diligence.
Mackisen CPA’s Payroll Audit Prevention Program
Quarterly Payroll Health Check: Review of remittance accuracy, benefit inclusion, and form compliance.
Employee vs Contractor Review: Prevents reclassification exposure.
Cross-Agency Alignment: Ensures CRA and ARQ submissions (T4/RL-1, QPP/QPIP, HSF) match exactly.
Automation Advisory: Integration of payroll software with CRA/ARQ e-filing to reduce manual errors.
Learning insight: Payroll compliance is the heartbeat of your company’s tax file — one missed remittance can stop the flow.
SEO Optimization and Learning Value
Primary Keywords: CRA Payroll Audit, Payroll Source Deduction Audit, Mackisen CPA Montreal, CPA Firm Near You, CPP/EI Audit, T4 RL-1 Reconciliation.
Secondary Keywords: CRA late payroll remittance penalties, Revenu Québec payroll source deductions, Mackisen CPA audit defense, contractor vs employee classification, CRA director liability audit.
Learning insight: Payroll audits aren’t about mistrust — they’re about stewardship. Mackisen CPA helps you prove that your organization treats compliance as part of integrity.
Real Client Success
A Montréal construction firm avoided $95,000 in payroll penalties after Mackisen CPA corrected a T4/RL-1 mismatch discovered mid-audit.
A retail chain eliminated $42,000 in reclassified contractor assessments when we demonstrated contractual independence under Wiebe Door.
A tech company successfully defended against a director-liability claim after our CPAs proved due diligence and documented timely remittance instructions.
Learning insight: The most expensive payroll audit is the one you thought would never happen. Mackisen CPA ensures it never has to.
Why Mackisen CPA Montreal
Mackisen CPA Montreal brings 35 years of combined expertise in tax law, payroll accounting, and CRA/ARQ audit representation. Our bilingual team understands Québec-specific payroll rules, CNESST integration, and inter-agency reconciliation — ensuring that every remittance is defensible and every record is audit-ready.
Learning insight: Payroll compliance isn’t about paying taxes — it’s about proving control. Mackisen CPA builds that proof line by line.
