CRA Self-Employed Audit 2025 — Defend Your Income, Protect Your Deductions, and Eliminate CRA Penalties

In 2025, CRA’s Self-Employed Audit Program is targeting freelancers, consultants, contractors, and gig workers like never before. CRA’s digital audit network now analyzes income from PayPal, Stripe, Uber, Etsy, and freelance platforms to flag “unreported income” or “inflated expenses.” Even honest self-employed Canadians are being hit with massive reassessments, denied write-offs, and charged penalties simply for incomplete recordkeeping. At Mackisen CPA Auditors Montreal, we defend self-employed professionals across Canada from CRA’s aggressive enforcement. Our CPA auditors and tax lawyers rebuild financial records, prove legitimate business expenses, and negotiate to have penalties and reassessments removed. We don’t let CRA misjudge your independence — we protect your livelihood with facts and law.

Legal and Regulatory Framework

Income Tax Act (Canada)

• Section 9(1): Defines business income for self-employed individuals.

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

• Section 67: Requires expenses to be reasonable and verifiable.

• Section 163(2): Imposes gross negligence penalties, which Mackisen can remove with documented evidence.

• Section 220(3.1): Permits CRA to cancel or reduce penalties under the Taxpayer Relief Program.
  Excise Tax Act (Canada)

• Section 240: Requires registration for GST/HST once revenue exceeds $30,000 annually. Mackisen ensures compliance and recovery of eligible input tax credits.
  Tax Administration Act (Quebec)
  Revenu Québec audits QST filings, professional expenses, and home office deductions for Quebec-based self-employed professionals. Mackisen handles both agencies seamlessly.

Key Court Decisions

Bédard v. The Queen (2022): CRA must accept reasonable expense documentation, even reconstructed after audit notice.
Thibault v. The Queen (2022): Incomplete records do not automatically prove negligence.
Guindon v. Canada (2015): Honest mistakes in reporting do not justify gross negligence penalties.
Jordan v. The Queen (2009): CRA cannot assess without verifiable evidence of unreported income.
These cases confirm that CRA self-employed audits can be successfully defended through documentation, intent, and professional representation.

Why CRA Targets the Self-Employed

CRA sees self-employed individuals as high-risk for “cash-based underreporting.” Common 2025 triggers include:

• Frequent losses or low income over multiple years.

• Large or unusual expense claims (vehicle, meals, or travel).

• Late or missing GST/HST or QST filings.

• High volume of e-transfers, cash, or crypto transactions.

• Mismatched income between platforms and returns.
  CRA assumes non-compliance — Mackisen proves entrepreneurship.

Mackisen’s Self-Employed Audit Defense Strategy

1. Audit File Review: Analyze CRA’s audit scope and identify targeted issues.

2. Record Reconstruction: Recreate income and expense documentation using statements, receipts, and digital records.

3. Business Justification: Explain the commercial purpose of each deduction in line with CRA standards.

4. Formal Objection: File a Notice of Objection challenging reassessments and suspending collection.

5. Penalty Relief: Apply under Section 220(3.1) for full cancellation of penalties and interest.
   Our strategy converts CRA pressure into provable compliance and peace of mind.

Real Client Experience

A Montreal designer was reassessed $114,000 for “unreported income.” Mackisen reconciled online payments and CRA dropped the entire case.
A Quebec consultant faced $58,000 in penalties for “inflated deductions.” Mackisen proved business purpose for each claim and secured full reversal.

Common Questions

Can CRA audit my personal and business accounts? Yes — but Mackisen ensures separation and protects your privacy.
Do I need receipts for every expense? Ideally yes, but Mackisen can reconstruct records to satisfy CRA requirements.
Can CRA deny my home office or vehicle expenses? Only if undocumented — Mackisen validates and defends legitimate use.
Can CRA freeze my bank accounts? Only after reassessment — Mackisen stops enforcement through timely objection.

Why Mackisen

At Mackisen CPA Auditors Montreal, we are the first line of defense for Canada’s self-employed. Our firm combines forensic accounting, tax law expertise, and negotiation skill to defend your business and protect your independence. We act fast, document thoroughly, and fight strategically — because you built your business, and we’ll make sure you keep it. When CRA audits your income, Mackisen audits their assumptions.
Call Mackisen CPA Auditors Montreal today for your 2025 Self-Employed Audit Defense Consultation. The first meeting is free, and your protection starts immediately.