Risks Of Credit Card Financing For Your Business

Credit cards can help bridge short-term gaps—but used carelessly, they create long-term debt traps. CRA and banks view high credit card usage as risk signals. Mackisen CPA Auditors Montreal helps businesses replace credit card dependency with structured financing, improving cash flow and compliance.

Legal and Regulatory Framework
Bank Act (Canada) Section 462: Governs credit lending and repayment obligations.
Income Tax Act (Canada) Section 20(1)(c): Allows interest deductions if used for business income.
Taxation Act (Quebec) Section 34: Requires reporting of credit-based business expenses.
CPA Canada Handbook Section 3856: Defines short-term liability reporting.
Consumer Protection Act (Quebec): Regulates credit card disclosure and limits.

Key Court Decisions
Beaudoin v. The Queen (2020): Denied deductions for undocumented credit card expenses.
Lincora Group v. Quebec (2019): Penalized interest overclaims.
Simard Beaudry Construction v. Canada (2019): Accepted CPA-verified statements for compliance.
Royal Bank v. Canada (2019): Recognized high card utilization as risk factor.
Tremblay Holdings v. The Queen (2021): Highlighted importance of proper expense classification.

Why CRA Monitors Credit Card Use
CRA reviews credit card statements to confirm expense legitimacy. Personal and business charges mixed together trigger reassessments. Mackisen CPA Auditors Montreal builds systems that separate transactions and monitor usage safely.

Mackisen Strategy
Expense Separation — Establish dedicated business cards only for work expenses.
Interest Tracking — Ensure deductibility through CPA documentation.
Alternative Financing — Replace revolving credit with structured bank or CSBFP loans.
Debt Reduction Plan — Consolidate and refinance high-interest debt.
CPA Oversight — Monitor compliance and prevent reclassification issues.

Powering Client Needs and Financial Control
A Montreal retailer reduced interest costs by 40 percent by refinancing card debt with Mackisen’s guidance. A Quebec freelancer avoided reassessment by separating business and personal spending. A Toronto company improved its credit rating after implementing CPA-supervised controls.
How Mackisen Clients Benefit

• Lower debt and interest expenses

• CRA-approved expense documentation

• Better business credit profile

• Stronger financing eligibility

• CPA-managed oversight and planning

Common Questions
Can I claim credit card interest? Yes, if used exclusively for business.
Does CRA audit card usage? Frequently.
Should I use credit cards for equipment purchases? No—prefer structured financing.
Can Mackisen help consolidate debt? Yes, we manage full refinancing plans.
Are prepaid cards safer? Only when properly recorded in your books.

Why Mackisen
Mackisen CPA Auditors Montreal helps businesses escape the debt cycle and regain control. We design financing strategies that reduce risk, improve compliance, and strengthen long-term stability.