Insight
Nov 24, 2025
Mackisen
CRA GAAR / Aggressive Tax Planning Audit — Montreal CPA Firm Near You: Substance-Over-Form Defense
A CRA GAAR (General Anti-Avoidance Rule) or Aggressive Tax Planning Audit is launched when the Canada Revenue Agency believes a transaction — even if technically legal — was structured primarily to obtain a tax benefit rather than to achieve a genuine business purpose.
Mackisen CPA Montreal defends businesses, family trusts, holding companies, and high-net-worth individuals against GAAR reassessments by proving commercial substance, economic purpose, and compliance with both the letter and the spirit of the Income Tax Act.
GAAR audits are among the most sophisticated and potentially costly CRA reviews. Without a structured defense, CRA can recharacterize your transactions, deny tax benefits, and impose penalties retroactively.
Legal Foundation
Income Tax Act s.245 — empowers CRA to deny tax benefits arising from avoidance transactions considered abusive.
CRA Information Circular IC88-2R — provides CRA’s administrative interpretation of GAAR.
Jurisprudence: Canada Trustco Mortgage Co. v. Canada (2005 SCC) — established the three elements CRA must prove before applying GAAR:
A tax benefit occurred.
The transaction was primarily tax-motivated.
The result misused or abused the object, spirit, or purpose of the Act.
Learning insight: GAAR is about intention. If your documentation reflects business purpose, CRA cannot meet its burden.
Why CRA Initiates GAAR / ATP Audits
CRA’s Aggressive Tax Planning Division flags transactions involving:
• corporate reorganizations designed to strip surplus
• pipelines and “estate freezes” lacking documented succession purpose
• share transfers that convert dividends into capital gains
• artificial capital losses or debt-forgiveness strategies
• hybrid loans or circular arrangements
• cross-border structures that shift profits artificially
• aggressive trust or holding-company structures with no real activity
Learning insight: CRA does not attack complexity — it attacks unexplained complexity.
CRA’s GAAR Audit Process
CRA requests contracts, agreements, resolutions, and legal opinions.
CRA performs a purpose analysis to evaluate business intent.
CRA issues a GAAR Proposal if it believes transactions are abusive.
The file is reviewed by CRA’s National GAAR Committee in Ottawa.
CRA issues a GAAR reassessment or withdraws its position depending on the strength of your defense.
Mackisen CPA prepares a detailed objection and evidentiary package if reassessed.
Learning insight: GAAR cases are won on documentation, not debate. A well-constructed fact pattern beats CRA theory.
Mackisen CPA’s GAAR Defense Strategy
• recreate full transactional flowcharts showing commercial necessity
• prepare “purpose documentation” — minutes, valuations, internal memos, business plans
• build economic-substance reports linking structure to operational reality
• benchmark transactions against industry norms
• collaborate with tax lawyers to support legal interpretation
• draft comprehensive CPA-level technical responses to CRA proposals
• prepare T2057, T2058, or section-85 rollover files supporting legal compliance
Learning insight: CRA cannot attack what is properly documented. We document everything to the highest standard.
Common CRA GAAR Allegations
• dividend-to-capital-gain conversions under s.84.1
• misuse of s.55 to avoid taxable dividends
• superficial loss or artificial loss transactions
• non-arm’s-length reorganizations without real business purpose
• tax deferral through holding-company layering
• transactions that begin and end in the same economic position
Learning insight: GAAR attacks form without substance. Mackisen CPA proves substance, purpose, and economic impact.
Real-World Results
• A holding company avoided a $1.2M GAAR reassessment after Mackisen CPA proved genuine succession-planning purpose supported by valuations and minutes.
• A manufacturing group reversed CRA’s GAAR proposal by documenting commercial reasons for intercompany financing.
• A professional corporation eliminated a GAAR penalty when our team demonstrated board-approved restructuring for creditor protection, not avoidance.
Learning insight: CRA steps back when the economic logic is stronger than the tax theory.
SEO Optimization and Educational Value
Primary keywords: CRA GAAR audit, aggressive tax planning Canada, Mackisen CPA Montreal, CPA firm near you, s.245 defense, corporate reorganization audit
Secondary keywords: surplus stripping audit, abusive transaction CRA, GAAR proposal defense, tax planning compliance Montreal, business-purpose documentation
Learning insight: GAAR audits demand authority — your CPA must show mastery of law, accounting, and economic purpose.
Why Mackisen CPA Montreal
With 35+ years of experience in complex corporate reorganizations, estate freezes, holding-company planning, and GAAR defense, Mackisen CPA Montreal is one of Québec’s leading authorities on aggressive-tax-planning audits.
We merge tax law, financial analysis, valuation logic, and commercial reality into one defensible narrative that CRA understands and respects.
Learning insight: GAAR is not about avoiding tax — it’s about proving that tax was not the primary motive. We document the motive.
Call to Action
If CRA has questioned your reorganization, issued a GAAR Proposal, or contacted you about aggressive tax planning, respond strategically — never alone.
Contact Mackisen CPA Montreal for a complete GAAR defense package.
Phone: 514-276-0808 | Email: info@mackisen.com | Website: mackisen.com
Learning conclusion: GAAR audits test intent, transparency, and economic logic. Mackisen CPA Montreal ensures your structure stands firm — documented, rational, compliant, and immune to CRA recharacterization.
#145. CRA Charities Audit — Montreal CPA Firm Near You: Protect Your Registration and Donor Trust
A CRA Charities Audit examines whether your registered charity continues to meet all legal requirements under the Income Tax Act, including proper donation receipting, allowable activities, recordkeeping, and use of charitable resources. Mackisen CPA Montreal defends charities during these audits by rebuilding compliance files, correcting receipting errors, documenting charitable purpose, and ensuring your registration remains secure.
A charities audit is not only a financial review — it is a governance test. CRA evaluates whether your organization remains transparent, mission-driven, and compliant with all administrative obligations.
Legal Foundation
Income Tax Act s.149.1 — defines allowable charitable activities, prohibitions, and registration rules.
Income Tax Act s.188.1 — outlines sanctions, penalties, and deregistration conditions.
CRA Guidance CG-002 — sets expectations for books, records, and governance.
Jurisprudence: Human Life International (1998 FCA) — CRA may revoke registration if a charity does not devote all resources to charitable purposes or lacks control over its funds.
Learning insight: CRA protects the public interest. Your charity must prove its activities match its mission — in writing.
Why CRA Conducts Charities Audits
CRA audits charities when risk indicators appear, such as:
• incorrect or missing donation receipts
• high administrative or fundraising costs
• foreign transfers without proof of direction and control
• political or advocacy activity above allowable levels
• incomplete or late T3010 returns
• related-party transactions or private benefits
• unexplained surpluses or fund balances
• complaints from donors or whistleblowers
Learning insight: CRA is not questioning generosity — it is questioning governance. Documentation protects both.
CRA Charities Audit Process
CRA sends an audit notice identifying years and records requested.
CRA reviews governing documents, minutes, T3010s, program descriptions, and books.
CRA tests donation receipts for accuracy and statutory compliance.
CRA evaluates whether expenditures support charitable purposes.
CRA analyzes foreign activities to ensure direction and control.
CRA issues a proposal listing concerns; your CPA provides rebuttals and evidence.
CRA finalizes sanctions, requires corrective measures, or clears the file.
Learning insight: A charities audit is won with governance proof — not explanations.
Mackisen CPA’s Charities Audit Defense Strategy
• rebuild compliant donation receipts and ledgers
• verify direction-and-control documentation for foreign programs
• reconcile administrative vs. program spending
• prepare missing T3010 schedules and disclosure notes
• validate related-party transactions with fair-market-value proof
• establish internal controls for receipting and fund management
• prepare CPA-certified audit-response binders tailored to CRA requirements
Learning insight: CRA responds to structure. A well-organized defense reduces sanctions dramatically.
Common CRA Findings in Charity Audits
• receipts missing mandatory fields (name, BN, amt paid, date, serial number)
• personal benefits to directors or related individuals
• foreign transfers without agency agreements
• political activity exceeding limits
• inadequate recordkeeping for donor gifts
• fundraising contracts with excessive fees
• misallocated charitable vs. administrative costs
Learning insight: Most issues result from weak systems — not intentional misconduct. Strong controls solve both.
Real-World Results
• A Montreal cultural charity avoided deregistration after Mackisen CPA documented complete direction-and-control arrangements for overseas programs.
• A faith-based charity reversed a receipting penalty when we rebuilt compliant receipt templates and donor ledgers.
• A health-services charity avoided an expensive sanction after we demonstrated that high fundraising ratios were temporary and pandemic-related.
Learning insight: CRA closes files when evidence is stronger than concern — and we build that evidence.
SEO Optimization and Educational Value
Primary keywords: CRA charities audit, charity compliance Canada, Mackisen CPA Montreal, donation receipt audit, CPA firm near you
Secondary keywords: CRA T3010 audit, foreign activity compliance, direction and control CRA, charity governance Montreal, CRA charity registration defense
Learning insight: Compliance clarity builds both audit success and donor confidence.
Why Mackisen CPA Montreal
Mackisen CPA Montreal brings over 35 years of audit, governance, and charity-compliance experience. We help charities maintain full legal compliance, strengthen operational controls, and preserve their most important assets — their registration, their credibility, and the trust of their donors.
Learning insight: Charities thrive on mission — but survive on compliance. We protect both.
Call to Action
If CRA has contacted your charity or you suspect a compliance weakness, act quickly. Corrective action taken early prevents penalties and protects registration.
Contact Mackisen CPA Montreal for full charity-audit defense and compliance restoration.
Phone: 514-276-0808 | Email: info@mackisen.com | Website: mackisen.com
Learning conclusion: A CRA Charities Audit tests accountability, transparency, and governance. Mackisen CPA Montreal ensures your charity meets all three — confidently, professionally, and fully compliant.
