What Restaurant Owners Need to Know About CRA Audits in 2025

The restaurant industry has been on the CRA’s (Canada Revenue Agency) close-monitoring list in recent years — and in 2025, this trend is becoming even more pronounced. From cash revenue to tip management, the CRA is stepping up audits to ensure transparency and compliance.

If you own a restaurant in Canada, understanding the CRA audit process, common risk areas, and how to prepare proper accounting records can help you avoid hefty fines — and even serious legal trouble.

1. Why Restaurants Are Audit Targets

The CRA recognizes that the restaurant sector has certain characteristics that can easily lead to errors or fraud, including:

• High cash revenue → difficult to track if not recorded properly.

• Tips → often under-reported.

• High deductible expenses → many items are prone to “over-claiming.”

• Use of temporary or undeclared workers.

As a result, restaurants are considered a high-risk industry, and the CRA is now using AI and data analytics to dig deeper into each transaction.

2. What Does the CRA Review?

Here are the areas the CRA typically examines during an audit:

• Accounting records & sales reports

• GST/HST tax returns

• Business expenses (food, equipment, rent, staff wages, etc.)

• Tips – were they reported? Who received them? How much?

• Payroll and T4A/T4 slips for employees

• Cash transactions, POS (Point of Sale) data, credit/debit card terminals

• Logbooks, paper receipts, timesheets

If there’s a discrepancy between reported revenue and actual figures, or if expense ratios look unreasonable compared to industry standards, you risk reassessments and penalties.

3. CRA Audit Trends in 2025

In 2025, the CRA is rolling out more advanced audit measures:

• AI & Big Data: Automatically cross-checking POS data, bank statements, and tax filings.

• Cross-business comparisons: The CRA knows how similar-sized restaurants in your area perform.

• Industry expense & profit analysis to detect anomalies.

• Surprise audits: The CRA can access business records without notice if fraud is suspected.

4. How to Prepare for an Audit

✅ Maintain transparent, up-to-date books (monthly):
This isn’t just a legal requirement — it prevents costly filing errors.

✅ Report all tips and staff wages:
Ideally use a tip-management system or specialized POS software.

✅ Reconcile regularly between books – POS – bank accounts:
The CRA will do this if you don’t.

✅ Review deductible expenses:
Only claim costs with valid receipts directly related to the business.

✅ Work with an accountant experienced in the F&B industry:
They’ll set up proper processes from the start and assist during audits.

5. What to Do If You’re Audited

You’ll receive an official CRA audit notice. First steps:

• Stay calm & do not alter records (this may be seen as “concealment”).

• Contact your accountant/tax advisor immediately.

• Provide CRA-requested documents on time.

• Cooperate and be truthful — but don’t overshare without understanding legal implications.

If you’re concerned about your current records, it’s best to review and correct them before the CRA does.

Conclusion

The CRA will continue to tighten audits in the restaurant industry — especially in the post-pandemic economic recovery and with the rapid growth of payment technology. As a business owner, you can’t afford to be complacent — but you also don’t need to panic.

TikiTax.ca has a team of accountants and tax advisors specializing in restaurants, cafés, and small F&B businesses in Canada. We help you:

• Review tax & accounting records.

• Optimize expenses while staying compliant.

• Be fully prepared for any audit risks.

Book a free consultation today to protect your business against the CRA.