CRA Worker Classification Audit — Montreal CPA Firm Near You: Employee vs Contractor

A CRA Worker Classification Audit determines whether individuals paid by your business are properly classified as employees or independent contractors. Misclassification can lead to costly reassessments for CPP, EI, QPP, QPIP, and tax withholdings.
Mackisen CPA Montreal represents businesses across Québec and Canada during CRA and Revenu Québec worker-status audits, providing full defense, documentation, and preventive strategies to protect you from back taxes and penalties.

Legal Foundation

Law: Income Tax Act s. 5 and s. 9 (employment vs. business income); Canada Pension Plan s. 21; Employment Insurance Act s. 82; Tax Administration Act (Québec) arts. 40–44.
Jurisprudence: Wiebe Door Services Ltd. v. MNR (1986 FCA) — established the “fourfold test”: control, ownership of tools, chance of profit, and risk of loss.

Learning insight: CRA doesn’t decide based on what your contract says — it decides based on how the relationship works in practice.

Why CRA and ARQ Conduct Worker-Status Audits

Worker-status audits protect payroll integrity and ensure compliance with employment laws. CRA or Revenu Québec may reclassify contractors as employees if they believe the relationship resembles employment.

Common audit triggers include:

• Contractors performing core business functions under your direction.

• Large or repeated T4A payments to the same individual.

• Anonymous tips or former workers filing EI/CPP claims.

• Unregistered contractors with no business number.

• Payroll deductions that don’t match declared staff levels.

Learning insight: CRA and ARQ look for dependency, not titles. Mackisen CPA ensures your relationships demonstrate independence with evidence, not assumptions.

The Consequences of Misclassification

If CRA reclassifies contractors as employees, employers may owe:

• Retroactive CPP, EI, QPP, and QPIP contributions (up to 4 years).

• Interest and penalties under ITA s.227.1.

• Director personal liability for unpaid source deductions.

• Reassessment for GST/HST or QST input tax credits incorrectly claimed.

Learning insight: Worker-status errors are cumulative. A single reclassification can ripple through payroll, GST, and income tax accounts.

Mackisen CPA’s Worker-Classification Audit Defense System

1. Relationship Audit: We analyze contracts, invoices, and payment structures against CRA’s Wiebe Door criteria.

2. Evidence Compilation: Collect proof of contractor independence — such as multiple clients, control of work, and business registration.

3. Reclassification Risk Analysis: Identify which relationships may be at risk before CRA does.

4. CRA Representation: Handle all communications, interviews, and document submissions directly with auditors.

5. Future-Proof Contract Design: Draft compliant agreements that clearly define independence under Canadian law.

Learning insight: The best audit defense is a clear story — Mackisen CPA ensures your contracts and conduct tell the same one.

Key CRA Tests for Worker Status

1. Control: Who decides how and when the work is done?

2. Ownership of Tools: Who provides and maintains the equipment?

3. Chance of Profit / Risk of Loss: Does the worker bear financial risk?

4. Integration: Is the worker part of your business or operating their own?

CRA uses these tests holistically, meaning no single factor is decisive. Mackisen CPA interprets each criterion using real evidence to prevent misclassification.

Learning insight: CRA doesn’t test labels — it tests logic. A consistent, documented relationship passes every test.

Common Errors CRA Finds in Worker Audits

• Paying “contractors” who work exclusively for one business.

• Providing benefits (vacation, tools, vehicles) typical of employees.

• Mixing contractor and employee duties under one job title.

• Lacking GST/QST registration proof for independent workers.

• Misreporting T4A vs. T4 income.

Mackisen CPA corrects these issues before they become reassessments, ensuring your payroll and vendor systems are legally compliant.

Learning insight: CRA questions patterns, not pay stubs. We ensure your financial pattern supports independence.

SEO Optimization and Learning Value

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Secondary Keywords: CRA contractor vs employee test, independent contractor compliance, Mackisen CPA payroll audit, CRA reclassification penalties, Quebec QPP QPIP audit.

Learning insight: Search and tax both reward clarity. Mackisen CPA helps businesses rank — in compliance and online visibility.

Real Client Success

• A Montréal construction firm avoided $175,000 in reclassified payroll taxes after Mackisen CPA proved subcontractors bore business risk and owned equipment.

• A software company passed a CRA worker audit cleanly when our team demonstrated contractors’ independence through multiple clients and insurance coverage.

• A marketing agency avoided penalties after we restructured contracts and clarified GST/QST registration obligations.

Learning insight: CRA reclassification penalties are avoidable — if you can show independence before the audit, not after.

Why Mackisen CPA Montreal

Mackisen CPA Montreal brings 35 years of combined experience in tax law, payroll audits, and corporate compliance. Our bilingual CPA team has successfully defended hundreds of worker-status audits for clients across Québec.
We don’t just fix misclassifications — we prevent them by designing compliant systems that protect your finances and directors long term.

Learning insight: Worker audits test relationships, not revenue. Mackisen CPA ensures both are built to stand the test.