CRA GST/HST Capital Property Audit — Montreal CPA Firm Near You: Defending ITCs, Depreciation, and Property Use Classification

A CRA GST/HST Capital Property Audit examines whether your business properly claimed Input Tax Credits (ITCs) and applied the correct GST/HST treatment on capital property, including:
• commercial buildings
• machinery & equipment
• vehicles
• leasehold improvements
• mixed-use property
• renovations and major capital upgrades

CRA audits capital property aggressively because these assets generate large ITCs, complex allocation questions, and long-term GST/HST implications.

Mackisen CPA Montreal specializes in defending capital property audits by reconstructing ITC documentation, proving business use, correcting allocation errors, and providing CPA-certified audit binders that remove CRA assumptions.

Legal Foundation

Excise Tax Act s.169 — ITC eligibility for capital property.
Excise Tax Act s.141.01 — allocation rules for capital property used in mixed activities.
Excise Tax Act s.199 — recapture of ITCs for certain large businesses.
Excise Tax Act s.191 — self-assessment on change-of-use.
Case law: Royal Bank v. Canada — ITCs require proper documentation and commercial purpose.

Learning insight: Capital property ITCs are allowed only when commercial use is proven and documented.

Why CRA Audits Capital Property

CRA selects files when it detects:
• large ITCs claimed for vehicles, equipment, or buildings
• incomplete invoices for major capital purchases
• mixed-use assets (personal + business use)
• GST/HST not self-assessed on conversion
• resale of capital property shortly after purchase
• inconsistent depreciation schedules
• commercial-use percentages not supported
• recapture rules ignored (Ontario, PEI, etc., prior years)
• errors in GST/HST on leasehold improvements

Learning insight: CRA assumes overclaimed ITCs unless your CPA proves the commercial use.

CRA Capital Property Audit Process

1. CRA requests invoices, contracts, proof of payment, asset registers, loan documents, and depreciation records.

2. CRA analyzes commercial use percentages vs residential/personal use.

3. CRA evaluates whether GST/HST was paid, self-assessed, or eligible for ITCs.

4. CRA validates whether capital improvements were treated as current or capital expenditures.

5. CRA tests if any change-of-use occurred requiring GST/HST adjustments.

6. CRA issues a proposed reassessment.

7. Mackisen CPA responds with legal-tax analysis and documentation.

Learning insight: CRA wants asset-by-asset documentation — not assumptions.

Mackisen CPA’s Capital Property Audit Defense Strategy

• validate every ITC with invoices, receipts, and payment proof
• calculate and justify commercial-use percentages
• prepare Capital Property Allocation Schedules
• defend leasehold improvements with construction invoices and contracts
• analyze mixed-use property for correct exempt/taxable treatment
• defend vehicles with mileage logs and business-use evidence
• recalc self-assessment or recapture only if required
• prepare CPA-certified audit binders arranged by asset class

Learning insight: Capital property defense requires precision + documentation + narrative.

Common CRA Findings

• ITCs denied because commercial use not proven
• assets misclassified as current expenses
• GST/HST not charged or self-assessed on property transfers
• personal-use vehicles incorrectly claimed as 100% business
• leasehold improvements lacking sufficient detail for ITCs
• mixed-use properties overstated for commercial use
• missing invoices for high-value equipment
• incorrect recapture reporting for large-business ITCs

Learning insight: Most negative findings stem from missing or weak documentation, not misconduct.

Real-World Results

• A manufacturing firm preserved $620,000 in ITCs after Mackisen CPA validated each capital invoice and reconstructed missing payment proof.
• A transportation company reversed a $140,000 reassessment by proving commercial-use mileage logs for fleet vehicles.
• A medical clinic avoided a major GST bill after we separated exempt-healthcare renovations from taxable commercial upgrades.
• A property investor overturned a builder classification on capital improvements by proving they were strictly for long-term rental use.

Learning insight: CRA withdraws capital adjustments when your file is stronger, clearer, and more organized.

SEO Optimization and Educational Value

Primary keywords: GST/HST capital property audit, CRA capital asset audit, ITC capital property, Mackisen CPA Montreal
Secondary keywords: GST mixed-use asset audit, leasehold improvement GST audit, ITC denial CRA, capital property self-assessment

Learning insight: Detailed capital property guidance boosts both audit credibility and online search authority.

Why Mackisen CPA Montreal

With 35+ years of expertise in GST/HST and corporate tax audits, Mackisen CPA Montreal is Québec’s authority on capital property audits. We understand asset classification, ITC eligibility, recapture rules, and mixed-use allocations — and build audit files that CRA accepts.

Learning insight: Capital property audits are won through meticulous documentation and correct tax logic — our specialty.

Call to Action

If CRA is auditing your capital property, ITCs, or asset classification, get expert CPA defense immediately.
Contact Mackisen CPA Montreal for complete capital-asset audit protection.
Phone: 514-276-0808 | Email: info@mackisen.com | Website: mackisen.com

Learning conclusion: A CRA GST/HST Capital Property Audit tests documentation, use, classification, and tax logic. Mackisen CPA Montreal ensures your assets are fully defended and your ITCs protected.