CRA GST/HST Barber, Hair Stylist & Mobile Grooming Services Audit — Montreal CPA Firm Near You: Defending Taxable Services, Chair Rentals, Product Sales, Subcontractors & ITCs

A CRA GST/HST Barber, Hairstylist & Grooming Services Audit targets:

• barbers
• hair stylists
• hairdressers
• mobile barbers/stylists
• chair-rental salon operators
• barbershop owners
• freelance stylists renting space in salons
• blow-dry bars & styling lounges
• haircut + beard groomers
• men’s grooming specialists
• subcontract stylists working on commission

This industry is one of CRA’s most frequently audited sectors, because it is:

• 100% taxable
• cash/e-transfer heavy
• often operates with chair-rental or subcontractor structures
• involves retail product sales (shampoo, gel, pomade, tools)
• has inconsistent invoicing and weak bookkeeping
• includes mobile operations across municipalities

Mackisen CPA Montreal specializes in defending barber & hairdressing audits through subcontractor validation, product-sales GST/HST corrections, and ITC reconstruction.

Legal Foundation

Excise Tax Act

• s.165 — ALL haircuts, grooming, styling & colour services are fully taxable

• s.221 — GST/HST must be collected on all salon & mobile services

• s.169 — strict ITC requirements (invoice + proof of payment)

• s.141.01 — allocation rules for tools/equipment shared with personal use

• Schedule IX — GST/HST rate determined by service location

• s.123(1) — defines “service,” “tangible property,” “rental supply,” “chair lease”

Case Law & CRA Rulings

• Barber & stylist services = fully taxable

• Chair rental = taxable commercial rent

• Product sales = taxable at applicable GST/HST rate

• Royal Bank v. Canada — ITCs denied if invoices incomplete

• CRA: mobile services follow the place-of-supply rule for GST/HST

Learning insight: Neither barbering nor hairstyling has any exemption — all services are taxable.

Why CRA Audits Barbers, Stylists & Mobile Groomers

Revenue Risks

• GST/HST not charged on haircuts or grooming
• cash/e-transfer payments underreported
• product sales without GST
• chair-rental income not declared
• mobile services misrated between QC/ON/Atlantic
• deposits for weddings/events not reported
• loyalty discounts not properly handled
• cosmetic add-ons (beard oil, dye, etc.) not separated
• multiple stylists working under one GST account

Subcontractor Risks

• chair renters not GST-registered when required
• commission-based stylists treated improperly
• subcontractors paid cash without invoices
• T4A non-compliance
• invalid GST/HST numbers

ITC Risks

• missing invoices for:
– scissors, clippers, razors
– dye, colour, shampoo, gel
– barber chairs & stations
– capes, gloves, PPE
– mobile barber kits
– POS & booking software
– vehicle expenses for mobile stylists
• imported hair tools without GST self-assessment (s.218)
• claiming ITCs for personal-use hair products
• ITCs overstated due to shared home-studio use

Operational Risks

• no service logs
• stylists working split shifts with no documentation
• walk-ins not invoiced consistently
• product inventory not tracked
• mobile stylists not matching travel logs
• commission structures unclear

High-risk operators:

• barbershops with 3–10 chairs

• salons with chair rentals

• mobile barbers & stylists

• small independent hair studios

• stylists selling products without tracking

Learning insight: CRA assumes cash underreporting + invalid ITCs + subcontractor problems unless documentation proves otherwise.

CRA Barber/Stylist Audit Process

1. CRA requests:
   – service invoices (haircuts, colour, beard grooming)
   – chair-rental contracts
   – subcontractor invoices + GST numbers
   – product-sales invoices
   – bank & e-transfer statements
   – supplier invoices (beauty distributors, Amazon, Sally, etc.)
   – ITC spreadsheets
   – equipment purchase receipts
   – import receipts
   – POS/booking platform reports (Fresha, Square, Booksy)

2. CRA tests:
   • GST/HST charged on ALL services
   • GST/HST charged on ALL product sales
   • subcontractor compliance
   • validity of chair-rental GST
   • invoice → deposit → GST return consistency
   • personal vs business tools
   • imported equipment self-assessment
   • inventory vs product-sale reconciliation

3. CRA issues Proposed Audit Adjustment.

4. Mackisen CPA prepares full documentary + legal defense.

Learning insight: CRA reconstructs revenue from POS data, e-transfer trails, appointment logs & inventory usage.

Mackisen CPA’s Barber & Salon Audit Defense Strategy

• create a Salon Tax Matrix (haircut, colour, grooming, chair rent, product sales, travel)
• rebuild compliant GST/HST invoices
• validate subcontractor GST numbers & contracts
• reconstruct ITC binder (supplies, tools, equipment, PPE)
• correct GST/HST on product sales and chair rentals
• reconcile appointment logs → invoices → deposits → GST returns
• rebuild imported-tool self-assessment entries
• defend vehicle-use ITCs for mobile stylists
• prepare CRA-certified audit binder
• negotiate penalty & interest reduction

Learning insight: Salon audits are won with clean logs, proper product tracking, and strong subcontractor compliance.

Common CRA Findings in Barber & Stylist Audits

• GST/HST not charged on haircuts or grooming
• product sales missing GST
• assistant stylists unregistered for GST
• chair-rental income hidden or underreported
• ITCs denied due to missing receipts
• imported tools not self-assessed
• bank deposits > reported revenue
• personal-use scissors/clippers included in ITCs
• wrong GST/HST rate for mobile services

Learning insight: Biggest reassessments come from missing GST on services and chair rentals + invalid ITCs.

Real-World Results

• A barbershop avoided a $167,000 reassessment after Mackisen CPA rebuilt service logs & subcontractor files.
• A salon with 7 stylists reversed a $122,000 ITC denial through complete supplier invoice reconstruction.
• A mobile stylist eliminated penalties by correcting cross-province GST/HST rates.
• A barber-studio owner cleared CRA findings via deposit→invoice→GST reconciliation.

Learning insight: CRA backs down when evidence is CPA-organized and irrefutable.

SEO Optimization & Educational Value

Primary keywords: GST/HST barber audit, CRA hair stylist audit, salon GST rules Canada, Mackisen CPA Montreal
Secondary keywords: chair rental GST audit, product sales GST, salon ITC denial, mobile barber GST

Learning insight: Barber & salon audits show high SEO performance because the industry is extremely GST-sensitive.

Why Mackisen CPA Montreal

With 35+ years defending barbershops, salons, mobile stylists & grooming professionals, Mackisen CPA Montreal is Québec’s #1 authority in GST/HST audits for grooming and beauty trades.
We understand chair rentals, product sales, subcontractors, POS systems, and CRA methodology deeply.

Learning insight: These audits require service clarity, product-tracking precision, subcontractor control, and ITC accuracy — all strengths of Mackisen CPA.

Call to Action

If CRA is auditing your barbershop, salon, mobile grooming business, or chair-rental operation, contact Mackisen CPA Montreal immediately:

📞 514-276-0808
📧 info@mackisen.com
🌐 mackisen.com

Learning Conclusion:

A CRA GST/HST Barber & Stylist Audit tests service taxability, chair-rental GST, product-sale GST, subcontractor compliance, and ITC documentation.
Mackisen CPA Montreal ensures full protection from reassessments.