6 worked Merchant Account Reconciliation case studies — the position a client typically comes to us with, what we do, and what it is worth. Each is an illustrative example built on the rules that apply to merchant account reconciliation work, not a specific client's file.
Case Study 1 · Scaling without breaking
Growth Handled Without A Missed Filing, $76,000 Freed — Courier Subcontractor, Red Deer
Client: A courier subcontractor paid by the drop · Where: Red Deer, Alberta · Engagement: 10 weeks, fixed fee
Cash freed$76,000
Compliance failuresNone
ReportingMonthly
The situation — A courier subcontractor paid by the drop, Red Deer, Alberta
A courier subcontractor paid by the drop in Red Deer, Alberta was opening in a second province. That meant different filing obligations and a different payroll regime. Meals and entertainment coded at full cost with the input tax credit claimed on the whole amount already sat in the file.
What we did for A courier subcontractor paid by the drop, Red Deer, Alberta
We converted the foreign-currency purchases at transaction-date rates and recorded the exchange difference at settlement instead of burying it in cost of sales. We then put monthly reporting in place. That let the owner see the cash effect of growth while there was still time to act on it.
The result — A courier subcontractor paid by the drop, Red Deer, Alberta
Growth was absorbed without a compliance failure. $76,000 of cash was released, and the monthly reporting now flags a problem while it is still small.
Case Study 2 · Objection and relief
$129,000 Of Penalties And Interest Cancelled On Relief — Mobile Pet-Grooming Company, Kelowna
Client: A mobile pet-grooming company · Where: Kelowna, British Columbia · Engagement: 8 weeks, fixed fee
Penalties and interest cancelled$129,000
Relief groundsAccepted
AssessmentAdjusted to filed position
The situation — A mobile pet-grooming company, Kelowna, British Columbia
An assessment of $129,000 landed at a mobile pet-grooming company in Kelowna, British Columbia following a desk review. It turned on a bookkeeping file where owner draws, payroll and supplier payments all landed in the same account. The auditor had not seen the records behind it.
What we did for A mobile pet-grooming company, Kelowna, British Columbia
We rebuilt sales from the processor settlement reports so gross sales, fees and refunds each landed in an account of their own. We then set out the legislative basis for the position alongside the documents supporting it.
The result — A mobile pet-grooming company, Kelowna, British Columbia
$129,000 of penalties and interest was cancelled under the taxpayer relief provisions, and the underlying assessment was adjusted to match the filed position.
Case Study 3 · CRA review defended
Audit Defence Closed In 3 Weeks, $57,000 Cleared — Specialty Coffee Roaster, Vancouver
Client: A specialty coffee roaster · Where: Vancouver, British Columbia · Engagement: 3 weeks, fixed fee
Proposed tax cleared$57,000
Review duration3 weeks
OutcomeNo change
The situation — A specialty coffee roaster, Vancouver, British Columbia
A specialty coffee roaster in Vancouver, British Columbia was selected for review. A payroll clearing account that had never been brought to zero, carrying a balance nobody could explain had shown up in the CRA's automated matching. The proposed adjustment on merchant account reconciliation came to $57,000.
What we did for A specialty coffee roaster, Vancouver, British Columbia
We separated the owner’s personal spending out of the corporate accounts and cleared the resulting shareholder loan properly. Every figure in the response traced to a source record the auditor could verify without asking a second question.
The result — A specialty coffee roaster, Vancouver, British Columbia
The review closed with no change. $57,000 of proposed tax came off the table, and the documentation now in place makes the next review a short one.
Case Study 4 · Deadline rescue
$69,000 Late-Filing Penalty Cancelled On Relief Application — Multi-Processor Online Seller, Hamilton
Client: An online seller reconciling three payment processors · Where: Hamilton, Ontario · Engagement: 9 weeks, fixed fee
Penalty cancelled$69,000
Relief applicationGranted
ReturnAccepted as filed
The situation — An online seller reconciling three payment processors, Hamilton, Ontario
An online seller reconciling three payment processors in Hamilton, Ontario had already missed one deadline and was about to miss a second. Behind it sat three years of returns filed off numbers nobody could trace back to a bank statement. A penalty of $69,000 was accruing.
What we did for An online seller reconciling three payment processors, Hamilton, Ontario
We split the work into what had to happen before the deadline and what could follow it. Then we rebuilt the ledger from bank and card statements and matched every receipt to a transaction. We removed duplicated input tax credits before they became a review.
The result — An online seller reconciling three payment processors, Hamilton, Ontario
The outstanding return was accepted as filed, and the taxpayer relief application cancelled $69,000 of the penalty already assessed on the earlier year.
Case Study 5 · Missed incentive claimed
$11,500 Credit Claim Filed And Accepted Without Adjustment — Small Law Practice, Burnaby
Client: A small law practice · Where: Burnaby, British Columbia · Engagement: 6 weeks, fixed fee
Claim value$11,500
AcceptedWithout adjustment
RepeatableAnnually
The situation — A small law practice, Burnaby, British Columbia
A small law practice in Burnaby, British Columbia assumed the credits did not apply to a business its size. Meals and entertainment coded at full cost with the input tax credit claimed on the whole amount meant they had applied all along.
What we did for A small law practice, Burnaby, British Columbia
We identified the qualifying activity and built the documentation to support it. Then we cleared the payroll and sales tax clearing accounts every month and tied each remittance to the liability it settled.
The result — A small law practice, Burnaby, British Columbia
$11,500 recovered. Because the eligibility analysis is on file, the same claim can be repeated each year with a fraction of the effort.
Case Study 6 · Records and systems rebuilt
Month-End Close Cut From 6 Weeks To 8 Days — Home-Renovation Contractor, Victoria
Client: A home-renovation contractor · Where: Victoria, British Columbia · Engagement: 11 weeks, fixed fee
Close time before6 weeks
Close time after8 days
Year-endReview, not rebuild
The situation — A home-renovation contractor, Victoria, British Columbia
The accounting file at a home-renovation contractor in Victoria, British Columbia had a weak foundation. It was built on a receivables list that included invoices collected eleven months earlier. The year-end had taken 6 weeks each of the last three years.
What we did for A home-renovation contractor, Victoria, British Columbia
We recoded the meals and entertainment accounts to the statutory limit and reversed the over-claimed input tax credits before the next return went in. We also moved the reconciliations into the monthly cycle, so the year-end stopped being a rebuild.
The result — A home-renovation contractor, Victoria, British Columbia
The file reconciles. Month-end closes in 8 days instead of 6 weeks, and the year-end is a review rather than a reconstruction.
Reviewed by Udit Gupta, Founder and Tax Accountant for the 2025 tax year. These case studies are illustrative worked examples composed from the CRA rules that apply to this type of work, not specific client files; figures are representative and outcomes depend on your own facts.
