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

If you’re self-employed in Canada, you are on CRA’s radar. In 2025, CRA’s AI-driven audit systems automatically flag freelancers, consultants, contractors, and small business owners for “income-risk analysis.” The smallest inconsistency between your tax return, invoices, or lifestyle spending can trigger a full audit. CRA frequently questions legitimate business expenses, denies deductions, and reassesses income without understanding how self-employed professionals operate. One letter can turn into a massive tax bill with penalties and compounded interest — unless you’re prepared. At Mackisen CPA Auditors Montreal, we protect self-employed Canadians from unfair CRA audits. Our CPA auditors and tax lawyers handle every step — reviewing CRA’s audit request, compiling airtight documentation, and defending every legitimate expense or deduction with legal precision. We don’t just protect your return — we protect your livelihood.

Legal and Regulatory Framework

Income Tax Act (Canada)

• Section 9(1): Governs business income and expense deductions for self-employed individuals.

• Section 18(1)(a): Allows expenses incurred to earn income to be deducted.

• Section 152(4): Permits CRA to reassess within three years — longer if alleging negligence.

• Section 163(2): Applies 50% gross negligence penalties for perceived errors or omissions.
  Tax Administration Act (Quebec)
  Revenu Québec audits self-employed professionals under similar provisions for QST, income tax, and business expenses. Mackisen manages both audits simultaneously, ensuring unified strategy and protection.

Key Court Decisions

Venne v. The Queen (1984): CRA cannot arbitrarily reassess self-employed income without credible evidence.
Guindon v. Canada (2015): Penalties must reflect intent — honest mistakes or reliance on professionals qualify for relief.
Thibault v. The Queen (2022): Detailed bookkeeping and professional representation reduce audit penalties substantially.
Jordan v. The Queen (2009): CRA must respect procedural fairness when auditing self-employed taxpayers.
These precedents confirm that CRA’s assumptions can be dismantled through documentation, professionalism, and persistence.

Why CRA Audits the Self-Employed

CRA targets self-employed taxpayers because their income isn’t subject to payroll withholding. Common 2025 triggers include:

• Repeated business losses or low declared income.

• High deductions for meals, travel, or home office.

• Inconsistent or missing invoices and receipts.

• Large year-over-year income changes.

• Lifestyle spending that appears higher than reported earnings.
  CRA assumes risk — Mackisen proves compliance.

Mackisen’s Self-Employed Audit Defense Strategy

1. Risk Assessment: Review CRA’s audit letter and determine what triggered the review.

2. Documentation Reconstruction: Rebuild missing invoices, receipts, and income records.

3. Expense Validation: Organize and justify every business deduction using CRA-approved criteria.

4. Direct Representation: Handle all communication with CRA auditors to prevent misstatements.

5. Reassessment Defense: File objections and taxpayer relief applications to eliminate penalties and reduce interest.
   Our team combines tax law, accounting precision, and negotiation experience to stop audits from escalating into financial crises.

Real Client Experience

A Montreal photographer faced a $47,000 CRA reassessment after disallowed home office and travel deductions. Mackisen provided detailed proof and contracts — CRA cancelled all penalties and accepted every claim.
A Quebec marketing consultant was audited for “unreported income.” Mackisen reconstructed missing client records and reduced CRA’s claim by 93%.

Common Questions

Can CRA audit self-employed taxpayers every year? Yes, but Mackisen ensures proper documentation to prevent repeated reviews.
How many years can CRA audit back? Generally 3, but up to 10 if CRA alleges negligence.
Can CRA deny legitimate expenses? Yes — unless properly documented. Mackisen prepares legal justification for every deduction.
Can I handle a CRA audit myself? You can, but CRA auditors are experts — Mackisen ensures professional defense and negotiation.

Why Mackisen

At Mackisen CPA Auditors Montreal, we understand how self-employed Canadians work — because we’ve defended thousands of them successfully. Our team merges deep tax knowledge with strategic representation to safeguard your income, eliminate penalties, and restore peace of mind. We act fast, think ahead, and fight smart — because self-employed doesn’t mean unprotected. When CRA audits your income, Mackisen audits their process.
Call Mackisen CPA Auditors Montreal today for your 2025 Self-Employed Audit Defense Consultation. The first meeting is free, and your protection begins immediately.