What Mississauga Entrepreneurs Should Know About CRA Audits
As a business owner, just hearing the word “audit” might make your stomach drop. But here’s the thing—CRA audits aren’t random, and in most cases, they’re totally manageable if you’re prepared.
Whether you’re running a trucking company, a service-based business, or a growing eCommerce brand in Mississauga, the Canada Revenue Agency has specific red flags they watch for. The good news? With the right bookkeeping habits and a local accountant by your side, you can stay audit-ready year-round—and avoid most issues altogether.
Let’s take a closer look at what you really need to know about CRA audits.
What Triggers a CRA Audit?
CRA doesn’t audit businesses just for fun—they’re usually responding to inconsistencies, unusual claims, or missing information. Some of the most common audit triggers include:
Large or unusual deductions (especially if they don’t align with your industry)
Frequent losses year after year
Unreported income
Mismatch between GST/HST returns and income tax filings
Random selection (it happens, but rarely)
In Mississauga, we’ve seen local audits triggered by things like overly generous vehicle write-offs, large home office claims, or lack of payroll compliance. Often, it’s not about fraud—it’s about lack of documentation or honest mistakes that raise questions.
How to Prepare Before You’re Contacted
The best time to prepare for an audit? Long before you’re contacted. Here are a few habits that will save you time, stress, and possibly money:
Keep digital copies of all receipts, invoices, and bank statements
Use cloud-based bookkeeping software to track income and expenses in real-time
Separate business and personal finances completely
Reconcile your bank accounts monthly
Keep logs for mileage, meals, and home office expenses
If you’re still relying on spreadsheets and shoeboxes, an audit becomes a lot harder to defend—and more expensive to fix.
What Do CRA Auditors Look For?
Auditors aren’t looking to punish you. Their job is to make sure your records match what you claimed on your return. They’ll want to see:
Proof of income (bank deposits, invoices)
Receipts for claimed expenses
Employee records (if you run payroll)
GST/HST filings and supporting records
Mileage logs and home office calculations (if applicable)
If you can’t provide documentation, CRA may disallow deductions, reassess your tax return, or even apply penalties and interest. Read more this article: Does the CRA have access to my bank account?
Real-World Scenarios From Mississauga Clients
At M7, we’ve worked with multiple Mississauga-based businesses during CRA audits. Here are a few common situations:
A local trucking owner-operator was audited for claiming 100% of their vehicle expenses. They didn’t keep a logbook, and CRA reduced their deduction by 40%.
A home renovation contractor was selected for review after reporting high meal and entertainment costs. After a review of receipts and client logs, most of the claims were approved—but it took time and back-and-forth.
A health & wellness coach didn’t report all their PayPal income. CRA cross-checked deposits and issued a reassessment with penalties.
The lesson? If your bookkeeping isn’t clean or complete, even honest mistakes can become costly.
Why You Should Have an Accountant in Your Corner
A good accountant does more than file your taxes—they’re your first line of defense in an audit. Here’s how a CPA can help:
Communicate directly with the CRA so you don’t have to
Gather and submit all necessary documentation
Explain your deductions clearly and professionally
Negotiate on your behalf if penalties are proposed
Fix prior-year issues to reduce the chance of future audits
At M7, we offer Audit Protection, which includes full CRA representation and peace of mind for up to 7 years. See pricing.
Want to Avoid a CRA Audit Altogether?
While no one can guarantee you’ll never be audited, the right systems and support can make a huge difference. The goal isn’t just to avoid penalties—it’s to run a business that’s financially strong, organized, and audit-ready 365 days a year. If you’re not sure whether your current bookkeeping or tax filings would hold up under CRA review, don’t wait until you get a notice.
Schedule a free consultation today and let’s take a look together. We’ll help you identify risk areas, clean up your books, and give you a plan for staying one step ahead.
