CRA Professional Corporation Audit 2025 — Defend Your Practice, Reduce Tax Exposure, and Eliminate CRA Penalties

In 2025, CRA’s Professional Corporation Audit Program is tightening its grip on doctors, dentists, lawyers, and other incorporated professionals. CRA’s advanced audit analytics now cross-match payroll, management fees, dividends, and expense claims against provincial licensing data and practice revenues. Even legitimate professional structures are being questioned, with CRA alleging “income diversion” or “personal benefit.” These audits can lead to massive reassessments, denied deductions, and 50% gross negligence penalties. At Mackisen CPA Auditors Montreal, we defend professional corporations from CRA’s overreach. Our CPA auditors and tax lawyers provide full audit representation, rebuild financial evidence, and apply tax law to preserve every legitimate corporate advantage. We don’t let CRA mistake compliance for abuse — we make them see the law through your reality.

Legal and Regulatory Framework

Income Tax Act (Canada)

• Section 18(1)(a): Allows deduction of business expenses incurred to earn income.

• Section 125(1): Grants the Small Business Deduction (SBD) on active income up to $500,000.

• Section 18(1)(p): Restricts certain deductions, such as personal-use or ineligible professional expenses.

• Section 163(2): Imposes gross negligence penalties for false statements or omissions, which Mackisen can have cancelled.

• Section 220(3.1): Enables penalty and interest relief under the Taxpayer Relief Program.
  Tax Administration Act (Quebec)
  Revenu Québec conducts parallel audits for professional corporations and payroll, applying the same standards. Mackisen coordinates both jurisdictions to ensure one coherent defense strategy.

Key Court Decisions

Thibault v. The Queen (2022): CRA cannot reclassify legitimate professional expenses without factual evidence of misuse.
Bédard v. The Queen (2022): CRA must respect documented business structures and professional compensation arrangements.
Guindon v. Canada (2015): Gross negligence penalties cannot apply to good-faith or professional accounting errors.
Jordan v. The Queen (2009): CRA’s reassessments must rely on provable evidence, not speculative assumptions.
These precedents confirm that CRA’s audits of professional corporations can be successfully defended through documentation, structure, and expert advocacy.

Why CRA Targets Professional Corporations

CRA views professional corporations as high-yield audits due to the combination of personal and business expenses. Common 2025 triggers include:

• Management fees or salaries paid to family members.

• Home office or vehicle expense claims.

• Retained earnings used for personal investments.

• Inconsistent payroll and T4 reporting.

• Aggressive income splitting or SBD allocation strategies.
  CRA assumes avoidance — Mackisen proves compliance.

Mackisen’s Professional Corporation Audit Defense Strategy

1. Pre-Audit Analysis: Review CRA’s audit letter and identify scope, years, and potential exposure.

2. Financial Reconstruction: Rebuild records for professional income, expenses, and retained earnings.

3. Legal Defense Preparation: Document shareholder agreements, resolutions, and payroll structures to validate compliance.

4. Negotiation & Objection: File a detailed Notice of Objection and negotiate with CRA Appeals Officers to reverse unjust reassessments.

5. Penalty & Interest Relief: Apply under Section 220(3.1) to eliminate financial penalties and restore professional standing.
   Our method ensures CRA recognizes your corporation as a legitimate business — not a tax avoidance scheme.

Real Client Experience

A Montreal dental corporation was reassessed $296,000 for “unreasonable management fees.” Mackisen demonstrated fair market value compensation and secured full reversal.
A Quebec physician faced $112,000 in penalties for “income diversion.” Mackisen proved legitimate corporate distribution and achieved 100% penalty cancellation.

Common Questions

Can CRA audit my professional corporation and personal return together? Yes — but Mackisen manages both to prevent double taxation or inconsistent findings.
Are family salaries or dividends allowed? Yes, if reasonable and properly documented. Mackisen ensures full compliance.
Can CRA deny my Small Business Deduction? Only if income is passive or non-active — Mackisen protects your SBD eligibility.
Can CRA access my patient or client files? Only under strict legal limits; Mackisen ensures privacy compliance during audits.

Why Mackisen

At Mackisen CPA Auditors Montreal, we defend professionals who serve their communities — doctors, dentists, lawyers, and consultants — against unfair CRA treatment. Our integrated legal and accounting expertise ensures your professional corporation remains compliant, respected, and financially protected. We act fast, argue intelligently, and deliver results that restore peace of mind. When CRA audits your practice, Mackisen audits their methods.
Call Mackisen CPA Auditors Montreal today for your 2025 Professional Corporation Audit Defense Consultation. The first meeting is free, and your protection starts immediately