Deadline check-in: Self-employed individuals have until June 15 to file their 2024 income-tax and GST/HST returns. File late or overlook a key rule and the Canada Revenue Agency (CRA) could flag your return for a review—sometimes within weeks. Below are seven common hot-spots the CRA scrutinizes and practical ways to stay audit-proof.

1. GST/HST Returns with Only Foreign Clients

If all—or nearly all—of your customers are outside Canada, you generally zero-rate those sales and remit no GST/HST. That makes your return stand out. Be ready to prove two things:

1. Place of supply: Document that every client is a true non-resident and that the service is consumed abroad.
2. Input-tax credits (ITCs): Keep receipts showing GST/HST paid on Canadian expenses that generated the refund.

Keep copies of contracts, invoices with foreign addresses, and bank wires to foreign accounts. The CRA’s import-export guidance spells out when GST/HST is chargeable and when it is not.

2. Vehicle Mileage That Looks “Too Perfect”

Claiming 100 % business use of a car is almost always a red flag. The CRA expects a full-year logbook (or an accepted three-month sample logbook tied to a base year) that records date, destination, purpose, and kilometres for each trip. Without it, deductions can be denied.

Stay compliant: Record odometer readings on January 1 and December 31 and keep fuel, insurance, lease or depreciation records in the same folder as your logbook.

3. Meals & Entertainment Beyond 50 %

Wining and dining clients may be central to your sales strategy, but the CRA caps the deduction at 50 % of the reasonable cost and disallows solo meals. Always note on the receipt who attended and the business purpose.

4. Home-Office Deductions That Don’t Match Reality

You can deduct only the pro-rated square footage used “exclusively and regularly” for work. If you collect supplies from a client site every morning or rent co-working space, the CRA may conclude your home is not your primary place of business. Use floor plans or photos to substantiate the percentage claimed.

5. Chronic Business Losses (or Tiny Profits)

Year-after-year losses that wipe out other household income will prompt the CRA to ask whether you have a business or a hobby. They may also review eligibility for the Canada Workers Benefit, which phases out above $26,000 of net income. Be prepared with a business plan, marketing evidence, and proof you’re pursuing profit—new product launches, price lists, client proposals, etc.

6. Paying Your Spouse (or Child) “Market-Rate” Wages

Hiring family members is allowed, but compensation must be reasonable for the skills and hours worked. Document timesheets, job descriptions, comparable market pay, and proof of actual payment (e-transfers, T4A slips). Expect the CRA to ask: “Would you pay an unrelated person the same amount?”

7. Year-Over-Year Expense Swings

The CRA’s data-analytics tools track trends. A sudden leap in advertising or contract-labour costs, for instance, invites questions. Enter notes in your bookkeeping software (e.g., “one-time rebrand campaign”) and keep supplier contracts to show why the spike occurred. Cross-check that sales reported on your T1 return equal the revenue on your GST/HST return to avoid mismatched figures.

Quick Checklist Before You Click “File”

Final Word

A clean, well-documented file is your best defence if the CRA comes calling. Keep digital copies of every receipt for six years, reconcile income across all returns, and don’t be afraid to seek professional advice when a deduction seems grey. A little diligence now beats the stress of an audit later.