CRA GST/HST Audit for Builders — Montreal CPA Firm Near You: Defending Builder Status, New Housing Rules, and GST on Real Estate Sales

A CRA GST/HST Audit for Builders targets individuals or corporations whom CRA believes are builders under the Excise Tax Act — even if they do not consider themselves builders.
Being classified as a “builder” has major GST/HST consequences, including:
• GST/HST required on the sale price of new or substantially renovated homes
• mandatory self-assessment on change of use
• possible denial of housing rebates
• potential GST/HST liability on fair market value
• classification of profits as business income, not capital gains
• audits extending to multiple years and properties

Mackisen CPA Montreal specializes in defending builder audits by proving true intention, use, and activity level, and by presenting full documentary evidence to neutralize CRA’s assumptions.

Builder audits are among the most complex and high-dollar real estate audits in Canada.

Legal Foundation

Excise Tax Act s.123(1) — defines “builder,” “residential complex,” and “new residential complex.”
Excise Tax Act s.191 — requires GST/HST self-assessment for builders.
Excise Tax Act s.165 — GST/HST applies to taxable real property.
Schedule V — defines exemptions for residential use.
Case law:
• Chella v. Canada — builder status depends on intention and activity.
• McEachern v. Canada — multiple sales can trigger builder classification.
• Tarnowe — occupancy and use determine rebate eligibility.

Learning insight: CRA classifies you as a builder when you show patterns, not just one transaction.

Why CRA Audits for Builder Status

CRA flags taxpayers for builder audits when it detects:
• multiple property purchases and sales over several years
• rapid resale after purchase or renovation
• substantial renovation (possible “new build”)
• assignment purchases/sales
• GST/HST missing on “new home” sales
• housing rebates claimed without occupancy
• Airbnb/short-term rental activity
• marketing or MLS listings inconsistent with personal-use claims
• properties held by corporations, partnerships, or numbered companies

Learning insight: CRA assumes commercial activity unless you prove personal use or investment intent.

CRA Builder Audit Process

1. CRA requests:
   – purchase and sale agreements
   – renovation receipts, permits, contractor invoices
   – occupancy evidence (utilities, insurance, ID address)
   – mortgage documents
   – MLS listings, staging invoices
   – rental ads, leases (if applicable)
   – assignment documents
   – corporate records

2. CRA builds a timeline of activity — purchase → renovation → listing → sale.

3. CRA determines builder status based on:
   • intention
   • frequency
   • degree of renovation
   • marketing efforts
   • financing arrangements

4. CRA reassesses GST/HST owing + penalties + interest.

5. Mackisen CPA prepares full rebuttal.

Learning insight: Builder audits are narrative audits — CRA builds a story; your CPA must build the true one.

Mackisen CPA’s Builder Audit Defense Strategy

• reconstruct intention at the time of purchase
• prove personal use or investment purpose
• document occupancy with utility usage, insurance, ID, and correspondence
• defend against builder classification with activity analysis
• prove renovations were not substantial (avoiding new-home rules)
• negotiate GST/HST treatment on sales and assignments
• rescue denied rebates with occupancy and usage evidence
• correct or calculate self-assessment amounts if legally required
• prepare CPA-certified audit binder matching CRA’s audit protocol

Learning insight: We defeat CRA assumptions by showing the real reason behind each property’s use and sale.

Common CRA Findings in Builder Audits

• taxpayer deemed a builder → GST/HST payable on sale price
• rebate denied for lack of occupancy
• profit treated as business income
• GST owing on assignment profit
• substantial renovation deemed “new build”
• personal-use claims rejected
• s.191 self-assessment missing
• multiple properties treated as commercial flipping

Learning insight: CRA errors often come from misinterpreting intention — your CPA must prove the truth with evidence.

Real-World Results

• An individual avoided a $486,000 reassessment after Mackisen CPA proved the home was genuinely occupied and not built for sale.
• A family who renovated a duplex avoided builder reclassification using contractor affidavits and renovation-percentage analysis.
• A new investor overturned CRA’s claim of commercial activity by demonstrating long-term rental intention and external life events.
• An assignment seller reversed a $94,000 GST assessment when we showed GST was already embedded in the builder’s price.

Learning insight: Builder audits are won with timelines, documentation, and legal definitions — we master all three.

SEO Optimization and Educational Value

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Secondary keywords: builder classification CRA, GST on new homes audit, substantial renovation builder rules, GST audit assignments

Learning insight: Strong builder-audit content improves search authority and attracts high-value real estate clients.

Why Mackisen CPA Montreal

With over 35 years of real estate tax-audit defense, Mackisen CPA Montreal is Québec’s leading authority on builder audits. Our bilingual CPAs understand every nuance of the Excise Tax Act’s builder rules, change-of-use rules, renovation thresholds, and rebate eligibility criteria.

Learning insight: CRA builder audits are the most legally complex audits — you need expert representation from day one.

Call to Action

If CRA is auditing your builder status, real estate sales, renovations, rebates, or assignment transactions, act now.
Contact Mackisen CPA Montreal for full GST/HST builder-audit defense.
Phone: 514-276-0808 | Email: info@mackisen.com | Website: mackisen.com

Learning conclusion: A CRA GST/HST Builder Audit tests intent, use, renovation scope, and commercial activity. Mackisen CPA Montreal proves your true status, defends your file, and protects you from six-figure tax liabilities.