CRA Audits Are on the Rise in 2025 — What Small Businesses Need to Know

The Canada Revenue Agency (CRA) has ramped up audit activity in 2025, putting more focus on small and medium-sized businesses across the country. If it’s been a while since you reviewed your books or reconciled your accounts, now is a great time to get audit-ready.

🚨 What’s Changing with CRA Audits This Year?

CRA has received additional funding and is using enhanced enforcement tools this year — including artificial intelligence — to identify businesses that may need closer scrutiny. Here’s what’s new in 2025:

• Increased audits targeting small and medium-sized businesses, especially in construction, hospitality, digital services, and cash-based industries

• Use of AI to detect unusual patterns in deductions, income reporting, or GST/HST filings

• Non-compliance penalties for delayed or incomplete responses — in some cases up to $25,000 per day

This means that even honest businesses can get flagged if their records look inconsistent or if they’re behind on filing.

What Could Trigger an Audit?

Your business may be selected for review or audit if:

• There are large or unusual expenses that don’t align with your reported income

• Your GST/HST filings don’t match up with what you’ve reported on your tax return

• Your claims or deductions are outside the industry norm

• You’ve been selected randomly or reported by a third party

How to Be Audit-Ready

Here are a few things every business owner should do regularly:

• Keep your records organized (digital is best — CRA accepts scanned receipts and cloud-based backups)

• Reconcile accounts monthly or quarterly to catch problems early

• Respond to CRA quickly if you receive any notices or review requests

• Work with a professional who understands how CRA audits work — we know what they look for and how to avoid unnecessary penalties

If You Disagree With a CRA Assessment

If you receive a reassessment and don’t agree with it, you have 90 days to file a Notice of Objection. You can request an extension, but it’s best not to delay — the sooner you respond, the more options you have.

Need Help?

At Covured Inc., we help small businesses stay organized, audit-ready, and stress-free. Whether you're behind on your books, unsure if you’ve filed correctly, or just want peace of mind — we’ve got you Covured.

Reach out today to book a free discovery call or ask us how we can review your records before the CRA does.