The Canada Revenue Agency (CRA) is increasing its audit activity in 2025, with a stronger focus on small and medium-sized businesses. If you haven’t reviewed your books recently, now is a good time to get audit-ready.
CRA Audits: What’s Changing in 2025?
The CRA will be utilizing more funding and new enforcement tools to complete audits in 2025. Key updates include:
- More small business audits, especially in sectors like construction, digital services, and hospitality
- AI-driven audit selection, flagging unusual deductions or income patterns
- Notices of Non-Compliance, which may result in daily penalties of up to $25,000 for delayed or incomplete responses
Learn more in CRA’s 2024–25 Departmental Plan.
What Triggers an Audit in 2025?
Your business may be selected for an audit based on:
- Inconsistent or unusual income or expenses
- Discrepancies between GST/HST filings and reported income
- Claims that don’t align with industry benchmarks
- Random selection or tips from third parties
Check out our blog post on Navigating a CRA Audit for a step-by-step look at the full audit process.
How to Prepare for an Audit
- Keep digital records organized and easily accessible
- Reconcile accounts regularly to catch issues early
- Respond to CRA promptly to avoid penalties
- Work with a professional who understands current CRA practices
What If You Disagree with the CRA’s Assessment?
If you receive a reassessment and disagree with it, you have 90 days to file a Notice of Objection. You may request an extension if needed, but it’s best to act quickly to avoid delays.
Accounting and Advisory Support for Canadian Business Owners
At KWB, we help business owners stay compliant, organized, and confident when it comes to your business’s finances. Book an introduction meeting with us today to learn more about how we can help you simplify your accounting, improve your profit, and achieve your goals.
