CRA Family Audit – Vehicle Expense Defense
Case Overview
Multi-year CRA family audit disputing vehicle expense deductions across a sole proprietorship and five family members. Vehicle costs were material, and three adult children's tax returns were also drawn into the reassessment.
Challenge
A CRA audit of a family involving five members: two parents and three adult children, covering over 5 years of tax returns. Three vehicles were disallowed as business expenses (including all related vehicle expenses) due to lack of business records — a material amount for this sole proprietorship business. Three adult children were also negatively affected by the reassessment.
Result
CRA agreed to allow the total audited vehicle amounts as tax deductible. All three children's tax returns were kept at their initial amounts without any adjustments.
The Challenge
Five family members faced CRA audit of 5+ year returns. Three vehicles’ expenses denied as business expenses, impacting sole proprietorship and three adult children.
Our Approach
Demonstrated reasonableness of all vehicle expenses per ITA and accounting standards with comprehensive documentation.
The Resolution
CRA approved all vehicle expenses as tax-deductible. Three children’s tax returns remained unadjusted with no negative impact.