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

A CRA Worker Classification Audit determines whether individuals working for your business are truly independent contractors or should legally be treated as employees. This distinction affects CPP, EI, QPP, QPIP, income-tax withholdings, GST/QST obligations, and even director liability.
Mackisen CPA Montreal defends businesses during these audits by analyzing work relationships, reconstructing evidence of independence, correcting documentation gaps, and preventing expensive retroactive payroll reassessments.

Worker-classification audits often arise suddenly — usually after a worker applies for EI benefits, a contractor files taxes inconsistently, or CRA’s system detects mismatch between income declarations and T4A/T4 filings.

Legal Foundation

Income Tax Act ss.5 and 9 — distinguish employment income from business income.
CPP Act s.21 and EI Act s.5 — outline employer obligations for employee-insurable earnings.
Québec Tax Administration Act ss.40–44 — establishes personal liability for unremitted source deductions.
Jurisprudence: Wiebe Door (1986 FCA) — established the four key tests:
• control
• ownership of tools
• chance of profit
• risk of loss
Sagaz (2001 SCC) — emphasizes the “total relationship” between the parties.

Learning insight: CRA does not evaluate job titles — it evaluates behaviour, dependence, and economic reality.

Why CRA Conducts Worker Classification Audits

CRA and Revenu Québec initiate worker-status audits when they observe risk indicators such as:
• repeated payments to the same contractor
• contractors working full-time hours exclusively for one payer
• missing GST/QST registration for subcontractors
• EI claims that contradict “contractor” status
• payroll levels inconsistent with business size
• industry patterns where misclassification is common (construction, IT, sales, trucking)
• whistleblower tips from ex-workers or competitors

Learning insight: If CRA suspects dependency, they presume employment — unless your CPA proves independence.

CRA Worker Classification Audit Process

1. CRA issues an audit letter requesting contracts, invoices, and payment records.

2. CRA interviews the business owner and sometimes the worker.

3. CRA applies the four Wiebe Door factors and the Sagaz total-relationship test.

4. CRA decides if the relationship is employment or business.

5. CRA reassesses CPP/EI/QPP/QPIP, penalties, and interest — unless your CPA disproves the finding.

Learning insight: Worker audits are won through fact patterns — not arguments. Documentation determines the outcome.

Mackisen CPA’s Worker Classification Defense Strategy

• review all contracts for independence clauses, ownership of tools, and control terms
• gather invoices, proof of multiple clients, business numbers, and tax registrations
• document entrepreneurial risk (insurance, advertising, subcontracting)
• reconcile payments to ensure contractor-style billing patterns
• prepare CPA-certified worker-status analysis aligned with CRA tests
• defend employer decisions using legal precedent and compliance evidence
• implement stronger classification policies to prevent future audits

Learning insight: Every independent contractor must look, act, invoice, and operate like a business — we prove that to CRA.

Common CRA Findings

• contractor treated as employee due to full-time schedules or on-site supervision
• unregistered subcontractors issuing invoices without GST/QST
• contract terms contradicting actual work behaviour
• lack of business risk or profit opportunity for the worker
• employer reimbursement patterns resembling payroll
• lack of invoices, quotes, or business identity for contractors

Learning insight: Most CRA findings are preventable when the relationship is clarified and documented early.

Real-World Results

• A renovation company avoided $240,000 in reassessments after Mackisen CPA proved subcontractor independence using tools, insurance, and multiple-client evidence.
• A Montreal IT firm passed a worker-status audit after we rebuilt all contractor agreements and documented proof of entrepreneurial risk.
• A logistics business reversed a CRA reclassification after we demonstrated that drivers controlled schedules, routes, and equipment — key independence indicators.

Learning insight: CRA respects independence when independence is proven, not assumed.

SEO Optimization and Educational Value

Primary keywords: CRA worker classification audit, employee vs contractor Canada, Mackisen CPA Montreal, contractor audit defense, CPA firm near you
Secondary keywords: CPP EI QPP QPIP reassessment, subcontractor audit, CRA employment test, contractor compliance Quebec, independent contractor rules

Learning insight: Clear classification guidance builds stronger compliance — and stronger SEO authority.

Why Mackisen CPA Montreal

With more than 35 years of combined tax, payroll, and CRA audit-defense experience, Mackisen CPA Montreal is a leader in worker-classification defense. Our bilingual CPAs build evidence, reconstruct contracts, and develop robust classification frameworks that withstand audit scrutiny and protect employers from significant financial exposure.

Learning insight: Worker classification is not about labels — it’s about legal structure. We ensure your structure is defendable and compliant.

Call to Action

If CRA or Revenu Québec has questioned your contractor relationships or requested payroll documentation, time is critical.
Contact Mackisen CPA Montreal for a complete worker-classification audit defense.
Phone: 514-276-0808 | Email: info@mackisen.com | Website: mackisen.com

Learning conclusion: CRA Worker Classification Audits test independence, control, and economic reality. Mackisen CPA Montreal ensures your contractors are properly classified, legally documented, and fully defensible — protecting your business from penalties and reclassification risk.