CRA Small-Business Audit — Montreal CPA Firm Near You: Cash, COGS and Owner-Draws Defense

A CRA Small-Business Audit is one of the most common and financially sensitive reviews conducted by the Canada Revenue Agency. Unlike limited-scope reviews, these audits are holistic — examining your entire business operation, including sales, cost of goods sold (COGS), cash management, payroll, and personal lifestyle consistency.
Mackisen CPA Montreal helps small-business owners prepare, defend, and document every transaction before the CRA can misinterpret it. Our approach ensures full transparency, lawful compliance, and complete peace of mind.

Legal Foundation

Law: Income Tax Act s.231.1 – 231.2 (audit and inspection powers); Excise Tax Act s.289 (GST/HST verification authority).
Jurisprudence: Hickman Motors Ltd. v. Canada (1997 SCC) — a taxpayer’s books are presumed correct until the CRA proves otherwise, but records must be complete and verifiable.

Learning insight: CRA auditors don’t attack numbers — they attack gaps. Mackisen CPA closes those gaps with evidence.

Why CRA Targets Small Businesses

CRA’s Audit Division focuses on owner-managed enterprises because these businesses handle cash, have mixed personal and business expenses, and often lack full bookkeeping controls.
Frequent audit triggers include:

• Large cash deposits or withdrawals unmatched to sales.

• High COGS ratios compared to industry averages.

• Missing or unfiled GST/QST returns.

• Personal expenses booked as business deductions.

• Lifestyle spending that exceeds reported income.

Learning insight: CRA flags inconsistencies, not success. Mackisen CPA shows how your results make sense in the real world.

CRA’s Small-Business Audit Process

1. Pre-Audit Notice: CRA requests books, bank statements, and source records for specific years.

2. Interview Stage: Auditors question owners about business operations, cash handling, and recordkeeping.

3. Data Testing: CRA performs bank-deposit, COGS, and gross-profit analyses.

4. Third-Party Verification: Suppliers and customers may be contacted to confirm transactions.

5. Audit Proposal & Final Reassessment: CRA issues adjustments and penalties unless defended with evidence.

Learning insight: An audit is not a discussion — it’s a document test. Mackisen CPA makes your documents speak for you.

Mackisen CPA’s Defense Framework for Small Businesses

1. Cash-Flow Reconciliation: Match sales, deposits, and supplier purchases to prove accurate income reporting.

2. COGS and Inventory Proof: Prepare supplier confirmations and purchase invoices to defend gross-profit ratios.

3. Owner-Draws Analysis: Document how personal withdrawals relate to business profits and capital accounts.

4. Expense Validation: Classify capital vs. current items and attach proof of business use.

5. Tax and GST/QST Cross-Check: Align sales declared for income tax and sales-tax filings to ensure consistency.

Learning insight: CRA doesn’t need to see every invoice — it needs to see that every invoice exists. Mackisen CPA builds a complete audit binder ready for presentation.

Frequent CRA Adjustments for Small Businesses

• Disallowed vehicle, travel, and meal expenses for lack of logs.

• Unreported cash sales found through bank deposits or POS records.

• Personal use of business assets reclassified as taxable benefits.

• Payroll errors or contractors reclassified as employees.

• GST/QST refunds denied for invalid invoices or supplier numbers.

Mackisen CPA mitigates each risk by reconstructing audit-ready evidence and providing clear, bilingual CPA explanations backed by case law.

Learning insight: In every CRA audit, proof beats policy. We turn your books into a legal defense file — not just a ledger.

Real-World Success Stories

• A Montreal restaurant avoided a $260 000 assessment after Mackisen CPA reconciled POS data, supplier invoices, and bank records to prove cash control.

• A self-employed contractor kept $48 000 in deductions when we substantiated tool and vehicle expenses with photographic logs.

• A family-owned boutique passed a CRA COGS audit after our CPA team explained COVID-era supply-chain variances and temporary losses.

Learning insight: CRA may audit numbers — but we audit reality. When reality matches evidence, you win.

SEO Optimization and Educational Value

Primary Keywords: CRA Small Business Audit, Small Business Tax Audit Canada, Mackisen CPA Montreal, CPA Firm Near You, CRA Audit Defense, Cash and COGS Audit.
Secondary Keywords: CRA restaurant audit, CRA self-employed audit, Mackisen CPA audit help, CRA owner-draws analysis, CRA COGS ratio review.

Learning insight: In both audits and SEO, the rule is the same — credibility wins. Mackisen CPA builds digital and financial credibility for every client.

Why Mackisen CPA Montreal

With over 35 years of combined experience in small-business tax representation, Mackisen CPA Montreal knows how to translate your day-to-day operations into a language the CRA understands — evidence. Our bilingual CPAs and tax law specialists rebuild financial files to withstand any CRA scrutiny and keep you focused on growth.

Learning insight: Small-business audits test your systems, not your honesty. Mackisen CPA proves both.

Call to Action

If CRA or Revenu Québec has requested your books or called for a small-business audit meeting, time matters. Get ahead of it with CPA-certified representation.
Contact Mackisen CPA Montreal today for professional audit defense and documentation review.
Phone 514-276-0808 | Email info@mackisen.com | Website mackisen.com

Learning conclusion: CRA Small-Business Audits aren’t about fear — they’re about facts. Mackisen CPA Montreal turns those facts into your best defense — accurate, auditable, and CRA-proof.