CRA Small Business Audit 2025 — Protect Your Company, Defend Your Deductions, and Eliminate CRA Penalties

In 2025, CRA’s Small Business Audit Program has reached unprecedented levels of intensity. CRA’s artificial intelligence audit software now cross-verifies business expenses, GST filings, and bank transactions to flag “high-risk” small businesses. Many owners are being audited simply for claiming home office expenses, vehicle deductions, or paying family members — all legitimate if done correctly. Once CRA issues an audit notice, they can reassess several years, freeze refunds, and impose 10%–50% penalties for “misreporting.” At Mackisen CPA Auditors Montreal, we protect small business owners and entrepreneurs from CRA overreach. Our CPA auditors and tax lawyers handle every step — from CRA communication to objection and appeal — ensuring your business remains compliant, defended, and penalty-free. We don’t let CRA define your success as a risk — we turn their audit into your defense.

Legal and Regulatory Framework

Income Tax Act (Canada)

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

• Section 67: Requires all expenses to be “reasonable in the circumstances.”

• Section 163(2): Imposes gross negligence penalties, which Mackisen can remove through documentation and defense.

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

• Section 225(1): Permits Input Tax Credits (ITCs) for business-related GST/HST.
  Tax Administration Act (Quebec)
  Revenu Québec performs parallel small business audits on QST, payroll, and income filings. Mackisen coordinates both audits for unified protection and relief.

Key Court Decisions

Bédard v. The Queen (2022): CRA must base assessments on documented evidence, not assumptions.
Thibault v. The Queen (2022): Businesses with proper records cannot be penalized for administrative errors.
Guindon v. Canada (2015): Penalties cannot apply where taxpayers act in good faith or rely on professional advice.
Venne v. The Queen (1984): CRA cannot estimate income without factual support.
These rulings confirm that CRA small business audits can be overturned through professional representation and record accuracy.

Why CRA Targets Small Businesses

CRA views small businesses as audit-prone due to cash flow, deductions, and owner-managed operations. Common 2025 triggers include:

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

• Paying family members through salary or dividends.

• Cash or e-transfer transactions without receipts.

• Mismatch between income tax and GST/QST filings.

• Frequent losses reported over several years.
  CRA assumes abuse — Mackisen proves legitimacy.

Mackisen’s Small Business Audit Defense Strategy

1. Audit File Review: Analyze CRA’s audit scope, documentation requests, and alleged discrepancies.

2. Evidence Preparation: Collect invoices, receipts, contracts, and statements to substantiate every deduction.

3. Representation: Communicate directly with CRA on your behalf to protect you from audit missteps.

4. Formal Objection Filing: Submit a detailed Notice of Objection to suspend reassessment and initiate appeal.

5. Penalty & Interest Relief: File under Section 220(3.1) for full cancellation once compliance is demonstrated.
   Our strategy converts CRA pressure into a clear, documented defense for your business.

Real Client Experience

A Montreal marketing consultant was reassessed $137,000 for “unreasonable expenses.” Mackisen documented all client work and secured full reversal.
A Quebec contractor faced $94,000 in penalties for “cash transactions.” Mackisen proved legitimate records and CRA dropped every penalty.

Common Questions

Can CRA audit multiple years? Yes, typically three — but Mackisen enforces reassessment limits to prevent overreach.
Can I be audited for home office or vehicle deductions? Yes — Mackisen ensures these are substantiated and legally compliant.
Can CRA deny my family’s salaries? Not if reasonable and documented — Mackisen prepares full payroll justifications.
Do I need to meet CRA in person? No — Mackisen represents you directly for complete peace of mind.

Why Mackisen

At Mackisen CPA Auditors Montreal, we specialize in defending Canada’s small business community. Our integrated legal and accounting team ensures your rights, records, and reputation are protected at every step. We act fast, document flawlessly, and negotiate decisively — because your business deserves to thrive, not survive audits. When CRA audits your small business, Mackisen audits their conclusions.
Call Mackisen CPA Auditors Montreal today for your 2025 Small Business Audit Defense Consultation. The first meeting is free, and your protection starts immediately.