CRA GST/HST Assignment Sale Audit — Montreal CPA Firm Near You: Defending Pre-Construction Assignments, GST on Profit, and Builder Classification

A CRA GST/HST Assignment Sale Audit focuses on pre-construction condo assignments, where the original buyer (“assignor”) sells their purchase rights to another buyer (“assignee”) before closing.
Because assignment profits can be fully taxable, partially taxable, or non-taxable depending on intention, CRA aggressively audits these transactions to determine:
• whether GST/HST applies to the assignment profit
• whether the assignor should be treated as a builder
• whether GST/HST was already embedded in the builder’s price
• whether the deal was actually a flip or part of a profit-making business
• whether the rebate was incorrectly claimed or denied

Mackisen CPA Montreal specializes in defending assignment sale audits by reconstructing timelines, proving the taxpayer’s intention, analyzing invoice/GST logic, and preparing CPA-certified audit files that prevent six-figure reassessments.

Legal Foundation

Excise Tax Act s.165 — GST/HST applies to taxable supplies, including assignment interests.
Excise Tax Act s.123(1) — defines “builder,” “residential complex,” and “assignment of interest.”
Excise Tax Act s.254 & s.256.2 — rebate eligibility rules affected by assignments.
Case law:
• Cheema v. Canada — true beneficial ownership determines GST/HST liability.
• R. v. DeGuzman — assignment profits treated as business income when intention is resale.

Learning insight: CRA cares about intention, not the contract wording. Your CPA must prove the intent was investment, not business flipping.

Why CRA Audits Assignment Sales

CRA audits assignment transactions when it detects:
• multiple pre-construction purchases and assignment sales
• assignment profits not reported as income
• GST/HST not charged on assignment profit
• principal residence declared but never occupied
• rebate claimed on a unit that was assigned
• assignment agreement missing GST/HST clauses
• quick assignment after signing APS
• large profit suggesting commercial intention
• confusion between “reimbursement” of deposits vs taxable profit

Learning insight: CRA assumes assignment = business unless you prove personal-use or investment intention.

CRA Assignment Audit Process

1. CRA requests:
   – Agreement of Purchase and Sale (APS)
   – Assignment Agreement
   – Deposit receipts and payment trail
   – Mortgage documents
   – Lawyer trust ledgers
   – Emails with builder and agents
   – Marketing or ads (if any)

2. CRA determines:
   – Was assignment profit taxable?
   – Was assignor a builder?
   – Was GST/HST already included?
   – Was rebate eligibility affected?

3. CRA issues proposed adjustment.

4. Mackisen CPA responds with a fully documented audit narrative.

Learning insight: Assignment audits are won with timeline + intention + deposit tracing, not with explanations alone.

Mackisen CPA’s Assignment Sale Defense Strategy

• prove intention at the time of purchase (investment vs business vs personal use)
• reconstruct deposit payment trail (bank drafts, trust ledgers, receipts)
• demonstrate absence of commercial activity (no marketing, no flipping history)
• analyze assignment agreement to determine whether GST was included, excluded, or already paid to builder
• defend against improper builder classification
• calculate correct GST/HST on profit, if applicable
• defend rebate eligibility or correct rebate filings
• create a CPA-certified “Assignment Audit Binder” for CRA

Learning insight: CRA must be shown not just what happened — but why it happened.

Common CRA Findings in Assignment Sale Audits

• GST owing on assignment profit (most common)
• assignment seller deemed a builder → GST on full price
• rebate denied because property was assigned, not occupied
• deposit reimbursements misinterpreted as taxable profit
• personal-use claim rejected due to quick assignment
• assignment treated as business inventory
• incorrect GST/HST disclosure in assignment agreement
• missing documents for deposit, occupancy, or financing

Learning insight: Most CRA errors come from misunderstanding the flow of funds and intention — your CPA clarifies both.

Real-World Results

• Client avoided a $94,000 GST reassessment after Mackisen CPA proved the assignment was non-commercial and GST was already embedded in the builder’s price.
• A couple kept their housing rebate after we demonstrated that their intention was to occupy until unforeseen circumstances forced the assignment.
• An investor avoided builder classification when we documented that they held only one pre-construction property and had no flipping activity.
• A client with a $52,000 proposed GST assessment had it reduced to $0 after we reconstructed the deposit trail and corrected CRA’s misinterpretation.

Learning insight: Assignment audits succeed when intention is proven and CRA’s assumptions are dismantled.

SEO Optimization and Educational Value

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Learning insight: Clear educational content builds trust in both auditors and future clients searching for audit help.

Why Mackisen CPA Montreal

With 35+ years of GST/HST real estate experience, Mackisen CPA Montreal is Québec’s top firm for assignment sale audits. We understand CRA’s criteria for intention, beneficial ownership, builder classification, and rebate impact, and we build robust defense files that CRA accepts.

Learning insight: Assignment transactions look suspicious to CRA — unless a CPA proves the true intention.

Call to Action

If CRA is auditing your assignment sale, rebate, or builder classification, contact Mackisen CPA Montreal immediately for full representation.
Phone: 514-276-0808 | Email: info@mackisen.com | Website: mackisen.com

Learning conclusion: A CRA GST/HST Assignment Sale Audit tests the nature of the transaction, the intention, and the tax treatment. Mackisen CPA Montreal ensures everything is supported, documented, and defended — protecting your profit and your rebate.