CRA Audit Protection for IT Consultants in Canada
Excludes additional tax, penalties, interest, bookkeeping, or litigation.
Stay Compliant. Stay Protected. Sleep Better.
You write world-class code. The CRA writes world-class audits. Even perfectly compliant IT consultants can face months-long reviews, stalled projects, and tens of thousands in fees. Dexado’s ex-CRA team offers proactive risk management plus affordable audit protection—so you keep shipping value, not stress.
Why IT Consultants Are on the CRA’s Radar
Tech engagements often cross borders, span multiple clients, and involve significant gear and software costs. These characteristics trigger CRA reviews, including:
- Large or Unusual Expense Claims (hardware, SaaS subscriptions, travel)
- GST/HST Errors on cross-border services
- Personal Services Business (PSB) Risk for incorporated contractors
- Aggressive Compensation Structures (dividends vs. salary, related-party payments)
- Lifestyle vs. Income Mismatches when spending outpaces reported revenue
The CRA conducts audits not only to catch wrongdoing but as a routine compliance check. A single audit can derail delivery schedules and rack up professional fees.
What Is CRA Audit Protection?
Audit Protection covers representation and professional fees if the CRA reviews your filings during the normal reassessment period (three years for income tax; four years for GSTHST). Dexado’s plan includes:
- Flat, Tax-Deductible Annual Fee that “pre-buys” defense time
- Initial Block of Included Hours at no extra cost
- Deeply Discounted Rate on additional hours (often 50% below market)
Example (illustrative):
A typical audit requires 50–100 hours at $370/hr ($18,500–$37,000). Under our plan, you pay $350/year for three years ($1,050 total), receive 5 free hours (a $1,850 value), and pay just $185/hr for any extra work—saving you thousands. Exact terms are detailed in your engagement letter.
Coverage Includes
- T1/T2 Income-Tax Audits & Reviews
- GST/HST Reviews & Audits
- Payroll Reviews
- Notice of Objection Support (pre-appeal preparation & liaison)
- Provincial Inquiries
- Past-Return Reviews & Document Packages
Excludes additional tax, penalties, interest, bookkeeping, or litigation (quoted separately if needed).
How Dexado’s Ex-CRA Approach Works
1. Before an Audit: Proactive “CRA-Proofing”
- Review contracts, statements of work, and PSB risk
- Map place-of-supply and evidence files for zero-rated services
- Implement receipt capture, mileage logs, and approval workflows
- Integrate your cash-flow system (see Cash Flow Management for IT Companies)
2. If the CRA Calls: Rapid Response
- Intake & Scope: Log the audit letter, deadlines, and issue list.
- Shield & Triage: Act as your representative-CRA deals with us first.
- Evidence File: Compile ledgers, contracts, and logs to meet CRA expectations.
- Issue Resolution: Respond on-time; file objections if needed.
Top IT Consultant Audit Risks & Defenses
| Risk | Defense Strategy |
| PSB Reclassification | Strengthen independent-contractor profile: multiple clients, clear SOWs, control over methods. |
| GST/HST on Cross-Border Services | Classify services by place-of-supply; build export evidence packages. |
| Unsubstantiated Expense Claims | Automate receipt capture; tag costs to projects; maintain approval logs. |
| Compensation & Family Involvement (TOSI) | Draft written policies; use timesheets for related parties; document real work. |
FAQ
Q: When can the CRA audit me?
A: Most reassessments occur within three years for CCPCs and four years for non-CCPCs from your Notice of Assessment date.
Q: How long does an audit typically take?
A: On average, 50 – 100 billable hours often spread over several months.
Q: What if the CRA finds additional tax owing?
A: Audit Protection covers professional fees only. Any extra tax, interest, or penalties are billed separately.
Why Dexado? The Ex-CRA Advantage
Led by Boris Davidkov, CPA (ex-CRA auditor), Dexado anticipates CRA questions before they arise. Our IT-specific advisory (billing discipline, cash-conversion cycle optimization) not only reduces audit exposure but also improves your bottom-line efficiency. Learn more in our Tax Planning & Advisory service.
Fast Wins to Lower Your Risk Today
- Keep at least two active clients and refresh your SOWs to emphasize control and deliverables.
- Confirm place-of-supply for each service SKU and archive zero-rating evidence.
- Automate receipt and mileage logs; integrate with your invoicing system.
- Lock in audit protection now to avoid fee negotiations under pressure.
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