CRA Third-Party / Related-Entity Audit — Montreal CPA Firm Near You: Control the Network Risk

A CRA Third-Party or Related-Entity Audit is one of the most sophisticated and far-reaching types of tax investigations. It focuses not only on your company but also on your network—business partners, family members, subcontractors, suppliers, and affiliated corporations. The Canada Revenue Agency (CRA) and Revenue Québec use this type of audit to identify hidden transactions, cross-invoicing schemes, and shared income sources. Mackisen CPA Montreal provides the professional oversight needed to protect you and your related entities from cascading reassessments.

Legal Foundation

Law: Income Tax Act s.231.2 — empowers CRA to compel information and documentation from third parties directly connected to the taxpayer under audit.
Jurisprudence: Coopers & Lybrand v. Canada (1979 SCC) — confirms that CRA’s authority to demand third-party information must respect fairness and relevance to the taxpayer’s case.

Why You Need a CPA for a Third-Party or Related-Entity Audit

Third-party audits are among the most complex because CRA and ARQ exchange data across multiple tax accounts. A variance in one company’s return can trigger a review of another related file. Without proper CPA coordination, you risk exposing sensitive inter-company transactions to misinterpretation.

Mackisen CPA Montreal’s role is to centralize communication, ensure legal compliance, and prevent unnecessary information disclosure that could expand the audit scope.

Learning insight: In a third-party audit, over-disclosure can be as dangerous as under-disclosure. Every document must be relevant, factual, and legally admissible.

What Mackisen CPA’s Third-Party Audit Representation Includes

• Comprehensive mapping of related entities, shareholders, and business relationships.

• Review of all inter-company loans, management fees, and cross-invoices.

• Coordination of responses between multiple parties to ensure consistency.

• Drafting of correspondence to CRA and ARQ ensuring only required information is released.

• Preparation of legal memos referencing confidentiality, privilege, and scope limitations.

Learning insight: The most effective defense in a third-party audit is unified messaging. When all parties respond under CPA supervision, audit exposure drops dramatically.

Common Triggers for Third-Party / Related-Entity Audits

• Frequent transactions between family members or related corporations.

• Management fees or subcontractor payments with no written agreement.

• Repeated shareholder loans across entities.

• Inter-company transfers of assets or real estate.

• Use of the same address, accountant, or payroll between entities.

• Suspicion of undeclared income or expense duplication.

CRA and ARQ view networked businesses as one ecosystem. Mackisen CPA ensures each entity’s independence is legally documented and defensible.

How Mackisen CPA Manages the Audit

1. Conducts a relationship-risk assessment to identify all linked parties.

2. Creates a unified data binder consolidating financial and tax information from each entity.

3. Reviews inter-company pricing for compliance with s.247 transfer-pricing and s.69 reasonableness rules.

4. Prepares coordinated written responses for all related taxpayers.

5. Engages with CRA and ARQ auditors to clarify intent and limit unnecessary document production.

Learning insight: CRA often assumes that control equals income attribution. Mackisen CPA proves otherwise by demonstrating independence through contracts, bank records, and accounting entries.

Benefits of Professional Representation

• Protects your network from expanded audit exposure.

• Prevents misinterpretation of inter-company transactions.

• Ensures documentation is consistent and audit-proof.

• Strengthens compliance credibility for all entities.

• Minimizes risk of cascading reassessments.

Learning insight: Third-party audits can turn one small variance into multiple reassessments across an entire group. A coordinated CPA defense stops that chain reaction.

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Learning insight: Mackisen CPA transforms complex multi-entity audits into controlled, evidence-based reviews—protecting relationships, reputations, and financial integrity.

Real Client Success

• A construction group with five entities avoided $180,000 in combined reassessments after Mackisen CPA reconciled inter-company management fees and shareholder loans.

• A family-owned restaurant chain successfully proved operational independence of each location under our legal-accounting defense model.

• A holding company cleared a CRA information-demand penalty after Mackisen CPA demonstrated limited scope and confidentiality compliance.

Why Mackisen CPA Montreal

Our bilingual audit team has over 35 years of combined experience handling inter-company and related-entity audits. Located minutes from CRA and Revenue Québec offices, Mackisen CPA ensures every response is coordinated, defensible, and documented under CPA and legal standards.

Learning insight: Third-party audits are designed to find inconsistencies—but CPA supervision ensures consistency becomes your greatest defense.

Learning conclusion: A third-party audit isn’t just about one taxpayer—it’s about the entire network. Mackisen CPA Montreal safeguards your circle by turning fragmented data into a unified, transparent compliance story that withstands any level of government scrutiny.