The Canada Revenue Agency’s 2025–26 planning cycle signals one of the most significant shifts in compliance strategy in over a decade. With draft legislation released in 2025 proposing expanded audit powers, accelerated information‑gathering mechanisms, and a renewed focus on tax transparency, advisors should expect a more assertive and data‑driven CRA in the coming filing seasons.

This article provides a technical, advisor‑focused analysis of the CRA’s evolving compliance posture, the legislative underpinnings driving these changes, and the practical implications for tax practitioners supporting individuals, corporations, and cross‑border clients.

A New Era of CRA Enforcement

The federal government’s 2025 draft legislative proposals introduce a suite of measures designed to strengthen the CRA’s ability to obtain information, escalate non‑compliance, and intervene earlier in the audit cycle. These proposals build on previously announced measures from the 2024 federal budget and reflect a broader policy objective: improving tax transparency and combating aggressive tax planning.

The CRA’s 2025–26 Departmental Plan reinforces this direction, identifying enhanced enforcement, improved risk‑based audit selection, and increased scrutiny of high‑risk sectors as core priorities.

Expanded Information‑Gathering Powers

Shorter response timelines and stronger penalties

One of the most consequential changes for advisors is the proposed tightening of information‑gathering rules. The draft legislation introduces:

  • Shorter, more rigid deadlines for responding to CRA requests
  • New penalties for failing to provide information within prescribed timelines
  • Broader authority for the CRA to compel information from taxpayers and third parties

These measures are designed to reduce delays in audits and ensure the CRA can access relevant records quickly. For advisors, this means clients must maintain more robust documentation and be prepared to respond to CRA inquiries on accelerated timelines.

Enhanced ability to issue compliance orders

The CRA will have expanded authority to escalate non‑compliance through:

  • Faster issuance of Notices of Non‑Compliance
  • Increased use of compliance orders under the Income Tax Act
  • More aggressive follow‑up when taxpayers fail to respond

This shift reflects a broader trend toward early intervention and reduced tolerance for administrative delays.

Strengthened Audit and Enforcement Measures

Broader audit scope

The CRA is increasingly targeting:

  • Cross‑border transactions
  • Aggressive tax planning structures
  • Complex corporate arrangements
  • High‑risk sectors, including real estate and digital commerce

The 2025 draft legislation expands the CRA’s ability to examine records beyond traditional tax filings, enabling deeper reviews of business operations, related‑party transactions, and beneficial ownership structures.

Increased use of data analytics

The CRA continues to invest in advanced analytics to identify anomalies and risk indicators. This includes:

  • Automated cross‑matching of third‑party data
  • Enhanced detection of unreported income
  • Improved risk scoring for corporate taxpayers

For advisors, this means that even minor discrepancies may trigger automated reviews or targeted audits.

Focus Areas for 2025 Filers

1. Corporate and Cross‑Border Taxpayers

Corporate taxpayers—particularly those with international operations—remain a primary focus. The CRA is scrutinizing:

  • Transfer pricing documentation
  • Withholding tax compliance
  • Hybrid arrangements
  • Cross‑border financing structures

The CRA’s enhanced audit powers will make it easier to obtain foreign‑based records and compel information from multinational groups.

2. Small Businesses and Incorporated Professionals

The CRA is increasing compliance reviews related to:

  • Payroll remittances
  • Worker classification (employee vs. contractor)
  • GST/HST reporting
  • Reasonableness of expenses

Advisors should ensure clients maintain contemporaneous documentation for home office claims, vehicle expenses, and meals/entertainment deductions.

3. Real Estate Transactions

Real estate continues to be a high‑risk audit area. The CRA is focusing on:

  • Property flipping
  • Unreported rental income
  • Principal residence exemption claims
  • Capital gains reporting accuracy

With ongoing housing market volatility, the CRA is using land registry data, third‑party disclosures, and analytics to identify non‑compliance.

4. Trusts and Beneficial Ownership Transparency

Although bare trust filing requirements have been deferred to 2026, the CRA’s long‑term direction is clear: increased transparency around beneficial ownership.

Advisors should prepare clients for:

  • Expanded trust reporting
  • More detailed beneficial ownership disclosures
  • Increased scrutiny of nominee arrangements

Implications for Tax Advisors

Greater need for proactive documentation

Given the CRA’s accelerated timelines and enhanced powers, advisors should encourage clients to:

  • Maintain real‑time financial records
  • Document tax positions contemporaneously
  • Prepare supporting schedules before filing deadlines

This is especially important for corporate groups, cross‑border taxpayers, and clients with complex transactions.

Increased audit preparedness

Advisors should consider:

  • Conducting pre‑audit risk assessments
  • Reviewing historical filings for exposure
  • Ensuring transfer pricing documentation is up to date
  • Preparing clients for faster CRA response expectations

The CRA’s new tools mean that audits may begin earlier and progress more quickly.

More emphasis on tax governance

Larger organizations should strengthen internal tax governance frameworks, including:

  • Documented tax policies
  • Internal controls over tax reporting
  • Regular compliance reviews
  • Board‑level oversight of tax risk

These measures reduce exposure and demonstrate good‑faith compliance during audits.

Strategic Opportunities for Advisors

Advisory services beyond compliance

The CRA’s evolving enforcement landscape creates opportunities for advisors to expand service offerings, including:

  • Audit readiness assessments
  • Tax risk management frameworks
  • Real‑time bookkeeping and cloud‑based reporting
  • Cross‑border tax planning
  • Beneficial ownership compliance

Client education and communication

Advisors can add value by helping clients understand:

  • New CRA expectations
  • Documentation requirements
  • Audit triggers
  • Industry‑specific risks

Proactive communication reduces surprises and strengthens client relationships.

Conclusion: Preparing for a More Assertive CRA

The CRA’s 2025 compliance trends reflect a clear policy direction: faster enforcement, greater transparency, and more sophisticated audit tools. For tax advisors, this means shifting from reactive compliance to proactive risk management.

By strengthening documentation practices, enhancing audit preparedness, and educating clients on emerging risks, advisors can help taxpayers navigate a more demanding compliance environment while identifying new opportunities for strategic tax planning.

Photo by Scott Graham on Unsplash

Disclaimer

The information discussed in this article is general in nature and should not be construed as any sort of advice. If you have any particular questions regarding your personal tax situation, please reach out to sandeep@multanitax.ca.