Insights
Oct 24, 2025
Mackisen
Responding To a CRA Audit Proposal Letter 2025 — Protect Your Rights, Challenge the Findings, and Prevent Reassessment
Few moments in business are as stressful as receiving a CRA Audit Proposal Letter. It means the CRA has completed their audit and intends to reassess your tax filings. But here’s the crucial fact most taxpayers don’t know: this is your last and best opportunity to stop a costly reassessment before it’s finalized. In 2025, CRA’s automated audit and reassessment systems move faster than ever, often issuing new tax bills within weeks if you fail to respond with evidence or legal arguments.
A weak or late reply can lead to penalties, interest, and multi-year reassessments. A strong, professionally prepared response, on the other hand, can reverse CRA’s findings entirely. At Mackisen CPA Auditors Montreal, we specialize in crafting evidence-based, legally sound replies that stop reassessments before they happen. Our auditors and tax lawyers dissect every detail of CRA’s proposal, identify errors, and deliver a strategic response that protects your rights and your balance sheet.
We don’t react—we take control.
Legal and Regulatory Framework
Income Tax Act (Canada)
Section 152(1): Allows CRA to assess or reassess based on audit results.
Section 165(1): Grants taxpayers the right to dispute a notice of reassessment through objection.
Section 163(2): Defines penalties for gross negligence if errors are not properly defended.
Section 230(1): Requires taxpayers to maintain all records supporting filed returns.
Tax Administration Act (Quebec)
Revenu Québec issues equivalent “Proposition de cotisation” letters following audits, giving taxpayers the right to reply before reassessment.
Mackisen coordinates both federal and Quebec responses, ensuring your audit proposal reply is synchronized and compliant under both systems.
Key Court Decisions
Venne v. The Queen (1984): Failure to respond to CRA audit proposals allows reassessments to stand uncontested.
Guindon v. Canada (2015): Penalties are enforceable even for unintentional errors unless properly defended.
Jordan v. The Queen (2009): CRA must consider all relevant evidence submitted before finalizing reassessment.
Bédard v. The Queen (2022): Professional submissions and legal reasoning improve outcomes in CRA audit reviews.
These cases prove one thing: you can win before reassessment—but only if you act decisively and with evidence.
Why Responding to CRA’s Proposal Letter Matters
A CRA Audit Proposal Letter outlines the audit findings and potential changes to your taxes. This is your last opportunity to influence the outcome before the CRA issues a binding reassessment. Failure to respond effectively can result in:
Immediate tax debt and daily interest accrual.
50% gross negligence penalties under Section 163(2).
Loss of legitimate deductions or credits.
Multi-year reassessments and extended audits.
With Mackisen on your side, your response is professional, documented, and designed to stop reassessment cold.
Mackisen’s CRA Audit Proposal Response Strategy
Detailed Audit Review: Dissect CRA’s proposal to identify factual or legal inaccuracies.
Evidence Compilation: Reconstruct missing or incomplete records, invoices, or tax schedules.
Legal Argumentation: Prepare a professional written reply citing the Income Tax Act and relevant case law.
Negotiation and Representation: Engage CRA auditors directly to correct errors or settle disputed amounts.
Pre-Objection Safeguard: Prepare documentation to support a future Notice of Objection if CRA proceeds with reassessment.
Our approach converts uncertainty into structure, ensuring your rights are preserved at every stage.
Real Client Experience
A Montreal manufacturer received a CRA proposal to disallow $92,000 in expense deductions. Mackisen prepared a detailed legal reply with reconciled records—CRA reversed 100% of the adjustments before reassessment.
A small marketing firm was issued a $45,000 audit proposal for “unreported income.” Mackisen proved the income had already been taxed in a related return—CRA dropped the case in full.
Common Questions
How long do I have to reply to CRA’s audit proposal? Typically 30 days—but Mackisen can request extensions where justified.
Can I negotiate before reassessment? Yes. Mackisen negotiates directly with CRA to correct or reduce adjustments before they become final.
What happens if CRA ignores my response? We escalate to CRA Appeals or Tax Court if necessary to ensure fair review.
Can Revenu Québec issue similar letters? Yes—and we handle both agencies in tandem to ensure consistency and protection.
Why Mackisen
At Mackisen CPA Auditors Montreal, we specialize in protecting taxpayers from unfair reassessments. Our dual team of CPAs and tax lawyers combines technical expertise, negotiation skill, and legal precision to dismantle weak CRA cases before they become tax debts.
We act fast, professionally, and with full commitment—because when CRA comes with a proposal, we come with proof.
Call Mackisen CPA Auditors Montreal today for your 2025 CRA Audit Proposal Defense Consultation. The first meeting is free, and your protection begins immediately.
