CRA Small Business Audit 2025 — Defend Your Company, Eliminate CRA Penalties, and Restore Financial Control

In 2025, CRA’s Small Business Audit Program is expanding faster than ever, targeting entrepreneurs, consultants, and incorporated professionals across Canada. Using AI-based data matching, CRA cross-checks every business return, expense claim, and bank deposit against supplier invoices and payroll filings. Even legitimate small businesses are being flagged for “unreasonable expenses” or “undisclosed income.” Many honest owners are now facing six-figure reassessments, frozen refunds, and 50% gross negligence penalties for simple bookkeeping mistakes. At Mackisen CPA Auditors Montreal, we protect small business owners from CRA’s overreach. Our CPA auditors and tax lawyers manage every step of your audit, build a compliant defense, and negotiate directly with CRA to close your file without disruption. We don’t let CRA’s technology intimidate entrepreneurs — we use experience and evidence to protect your hard-earned success.

Legal and Regulatory Framework

Income Tax Act (Canada)

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

• Section 67: Requires business expenses to be reasonable in amount and purpose.

• Section 163(2): Applies gross negligence penalties, which Mackisen removes through documented compliance.

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

• Governs GST/HST reporting and input tax credit eligibility for small business owners.
  Tax Administration Act (Quebec)
  Revenu Québec runs coordinated audits for QST, payroll, and income tax. Mackisen handles both agencies simultaneously to maintain one unified strategy.

Key Court Decisions

Bédard v. The Queen (2022): CRA cannot deny legitimate expenses without full factual proof.
Thibault v. The Queen (2022): Documentation and consistency across records shield small businesses from penalties.
Guindon v. Canada (2015): Honest administrative mistakes are not gross negligence.
Jordan v. The Queen (2009): CRA must base reassessments on evidence, not estimates.
These precedents confirm that CRA small business audits can be successfully challenged with strong documentation and legal defense.

Why CRA Targets Small Businesses

CRA audits small business owners to uncover tax gaps and increase compliance revenue. Common 2025 triggers include:

• Large write-offs relative to reported income.

• Cash-heavy operations or e-transfer transactions.

• Inconsistent GST/HST filings or missing invoices.

• Home office and vehicle expenses without detailed logs.

• Late filings or unreported subcontractor payments.
  CRA assumes error — Mackisen proves compliance.

Mackisen’s Small Business Audit Defense Strategy

1. Audit File Review: Examine CRA’s audit letter, focus areas, and supporting data.

2. Documentation Reconstruction: Rebuild receipts, ledgers, and financial statements to prove accuracy.

3. Expense and Income Verification: Align business operations with tax filings to remove audit discrepancies.

4. Objection and Negotiation: File a Notice of Objection with legal and accounting arguments to suspend CRA action.

5. Penalty and Interest Relief: Apply under Section 220(3.1) to cancel penalties caused by clerical or procedural delays.
   Our method turns CRA’s assumptions into verified compliance.

Real Client Experience

A Montreal contractor faced a $284,000 reassessment for “cash underreporting.” Mackisen reconstructed records and CRA dropped the entire case.
A Quebec consultant was penalized $64,000 for “invalid deductions.” Mackisen provided full expense substantiation and secured full reversal.

Common Questions

Can CRA audit me for multiple years? Yes — usually three, longer for suspected misrepresentation. Mackisen ensures limits are respected.
Do I need to meet CRA in person? No — Mackisen handles all CRA communication and document submission.
Can CRA freeze my business account? Yes, but Mackisen prevents this through timely objection and representation.
Can CRA deny legitimate deductions? Only if undocumented — Mackisen reconstructs evidence to restore full claims.

Why Mackisen

At Mackisen CPA Auditors Montreal, we are the frontline defense for small business owners across Canada. Our firm combines accounting accuracy, tax law expertise, and audit negotiation skill to protect your business from unnecessary risk. We act fast, document thoroughly, and negotiate strategically — because your business deserves protection as strong as your ambition. When CRA audits your small business, Mackisen audits their process.
Call Mackisen CPA Auditors Montreal today for your 2025 Small Business Audit Defense Consultation. The first meeting is free, and your protection starts immediately.