CRA Payroll Tax Audit 2025 — Protect Your Business, Correct Errors, and Avoid Personal Liability with Mackisen CPA Auditors Montreal

A CRA Payroll Tax Audit is one of the most serious reviews your company can face. In 2025, CRA’s payroll compliance algorithms automatically cross-check your remittances, T4s, and GST/HST filings. One missed payment, classification error, or incorrect deduction can trigger a full audit and lead to massive penalties. If unaddressed, directors and owners can even become personally liable under Section 227.1 of the Income Tax Act. But with proper representation, payroll audits can be managed, corrected, and resolved before they become disasters. At Mackisen CPA Auditors Montreal, our team of CPA auditors and tax lawyers defend businesses against CRA payroll audits. We identify errors, negotiate directly with CRA, and protect both your business and personal assets from enforcement. We don’t wait for CRA to control the outcome — we lead the defense.

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: Holds directors personally responsible for unremitted payroll deductions.

• Section 162(1): Imposes penalties for late or incorrect remittances.

• Section 163(2): Adds 50% gross negligence penalties for repeated non-compliance.
  Employment Insurance Act & Canada Pension Plan (CPP) Act
  Provide CRA with audit authority to reassess unpaid employer and employee contributions.
  Tax Administration Act (Quebec)
  Gives Revenu Québec matching audit powers for QPP, QPIP, and CNESST compliance. Mackisen handles both federal and Quebec audits simultaneously to protect you from double assessments.

Key Court Decisions

Buckingham v. The Queen (2011 FCA 142): Directors may be personally liable for payroll tax arrears if due diligence is not proven.
Jordan v. The Queen (2009): CRA reassessments must be evidence-based, not speculative.
Thibault v. The Queen (2022): Documentation and proactive representation significantly reduce penalties.
Guindon v. Canada (2015): Relief may be available for errors caused by advisors or administrative oversight.
These precedents confirm that CRA payroll audits can be fought successfully when handled by experts who understand both tax law and accounting.

Why CRA Conducts Payroll Tax Audits

CRA payroll audits are triggered when reported payroll data doesn’t match remittance or income declarations. Common 2025 triggers include:

• Late or missing source deduction remittances.

• Inconsistencies between T4, T4A, and GST/HST filings.

• Misclassification of employees as contractors.

• Incorrect CPP/EI calculations.

• Unfiled or amended payroll returns.
  When CRA suspects non-compliance, they move fast — but Mackisen moves faster.

Mackisen’s Payroll Tax Audit Defense Strategy

1. File Review: Obtain CRA’s audit plan and identify potential issues early.

2. Classification Analysis: Determine correct worker status and payroll compliance structure.

3. Documentation Reconciliation: Prepare and verify remittance, T4/T4A, and source deduction records.

4. Negotiation and Representation: Communicate directly with CRA auditors and legal officers.

5. Relief and Resolution: File Taxpayer Relief applications to reduce or eliminate penalties and interest.
   Our comprehensive defense ensures CRA reviews your evidence — not their assumptions.

Real Client Experience

A Montreal manufacturer faced a $186,000 CRA reassessment after misclassifying contractors. Mackisen built a due diligence defense proving independent status — CRA cancelled all penalties.
A Quebec staffing firm was audited for $94,000 in alleged unremitted CPP/EI. Mackisen proved timely payments and secured a full audit withdrawal within 30 days.

Common Questions

Can CRA audit my payroll from prior years? Yes, up to 4 years — or 10 if CRA alleges negligence. Mackisen ensures limits are enforced.
Can CRA hold me personally responsible? Yes, but only if due diligence isn’t proven. Mackisen prepares full legal defenses for directors.
What if my accountant made an error? CRA may still assess you — but Mackisen can obtain relief under the fairness provisions.
Can CRA freeze accounts during a payroll audit? Yes, but Mackisen can negotiate to pause enforcement and protect operations.

Why Mackisen

At Mackisen CPA Auditors Montreal, we defend employers from payroll audits with unmatched precision and authority. Our experts know CRA’s process inside out — and how to expose weaknesses in their claims. We fight for accuracy, fairness, and your right to run your business without fear. When CRA audits your payroll, Mackisen audits their process.
Call Mackisen CPA Auditors Montreal today for your 2025 Payroll Tax Audit Consultation. The first meeting is free, and your defense begins immediately.