CRA Audits Are Getting Tougher — Why Strong Corporate Records Are a Necessary Defense

The Canada Revenue Agency (CRA) has proposed new powers that make audits more aggressive than ever. As PwC explains, the draft law would let the CRA “require that answers be provided under oath, affirmation or affidavit” and even issue a “notice of non-compliance… with daily penalties up to $25,000.” Miller Thomson notes that under these compliance orders, taxpayers may face “penalties equal to 10% of the tax owing if more than $50,000 is in dispute.” Canadian Lawyer warns this shift is making audits “adversarial from the outset” and creating much higher risks for businesses.

For businesses, that means audits are no longer routine checks. They’re adversarial processes from the very beginning. The good news? Careful planning and strong corporate records can dramatically reduce your audit risk — and protect you if CRA comes knocking.

Why Planning Matters

When your records are complete, consistent, and compliant, CRA auditors have less room to question your business practices. Many disputes begin not because of wrongdoing, but because of gaps in documentation or inconsistencies in record-keeping.

That’s where proactive legal advice makes a real difference.

How We Help Clients Prepare

At Johnston Franklin Bishop, we assist business owners with:

• Building proper corporate records: ensuring minute books, resolutions, and share registers are accurate and audit-ready.

• Coordinating with accountants to align tax planning with legal compliance.

• Designing audit playbooks so requests are escalated to the right people immediately.

• Reviewing transactions like reorganizations, tax planning, business sales and purchases with an eye on how CRA might review them later.

Early Preparation is a Necessary Defense

By having systems in place now, your business is less likely to face penalties later. And if CRA does initiate an audit, you’ll be in a stronger position to respond, with a clear record that supports your case.

If you’d like to reduce your audit risk and strengthen your corporate records, we can help.

References

• PwC – Finance releases draft legislative proposals to enhance CRA audit powers (August 2025)

• Miller Thomson – What you missed in Budget 2024: Expanded CRA audit powers and penalties

• Canadian Lawyer – Canadian businesses face adversarial audits as CRA expands powers (September 2025)

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