CRA GST/HST Contractor & Handyman Services Audit — Montreal CPA Firm Near You: Defending Labour Charges, Materials, Subcontractors & ITCs

A CRA GST/HST Contractor & Handyman Services Audit targets small contractors, handymen, renovation specialists, repair technicians, and independent tradespeople who perform residential and commercial repairs, maintenance, small renovations, installs, and trade services.

This category faces extremely high audit risk because it frequently involves:
• service-only taxable supplies (always taxable)
• cash-based business models
• incomplete invoices
• invalid GST/HST numbers
• missing ITC documentation
• material reimbursements
• travel & mileage fees
• multi-province service delivery
• personal vs business tool expenses
• subcontractor networks

Mackisen CPA Montreal specializes in defending contractor audits by reconstructing invoices, validating GST numbers, rebuilding ITCs, and preparing CRA-standard audit binders that protect tradespeople from reassessments.

Legal Foundation

Excise Tax Act

• s.165 — GST/HST applies to ALL handyman/contractor labour and services

• s.221 — must charge GST/HST on service invoices

• s.169 — ITC documentation rules

• s.123(1) — defines “service,” “repair,” “installation,” and “improvement”

• s.286 — strict recordkeeping requirements

• Schedule IX — place-of-supply for multi-province projects

Case Law

• Northwest Company Inc. — invalid invoices → ITC denial

• CGI v. Canada — place-of-supply must reflect actual work location

• Royal Bank — invoices must be complete to support ITCs

Learning insight: Contractor & handyman services are always taxable — no exemptions apply.

Why CRA Audits Contractors & Handymen

CRA flags these businesses when it detects:

Revenue Risks

• GST/HST missing from invoices
• cash payments not reported
• labour-only jobs taxed incorrectly
• material reimbursements not taxed
• missing travel/mileage GST
• multi-unit building work taxed incorrectly
• out-of-province service work misrated

Subcontractor Risks

• subcontractors lacking valid GST numbers
• subcontractor invoices incomplete
• T5018 compliance issues
• worker misclassification (employee vs subcontractor)

ITC Risks

• missing or incomplete invoices for materials & tools
• ITCs claimed on personal-use items (tools, equipment, truck)
• equipment rentals lacking GST numbers
• material purchases not tied to taxable activity

Operational Risks

• handwritten invoices without GST details
• deposits collected but not remitted
• incomplete job logs
• jobs with no traceable cost of goods
• home-office & vehicle deductions overstated

High-risk contractor groups:

• handymen

• painters

• carpenters

• plumbers

• electricians

• HVAC technicians

• appliance repair techs

• drywall installers

• deck/fence builders

• small renovation contractors

Learning insight: CRA assumes underreported income + invalid ITCs unless the contractor proves otherwise.

CRA Contractor Audit Process

1. CRA requests:
   – invoices (labour, materials, travel)
   – contracts & job descriptions
   – supplier invoices (Home Depot, Rona, Lowe’s, Patrick Morin, etc.)
   – subcontractor invoices
   – bank statements
   – e-transfer records
   – mileage logs
   – T5018 summaries
   – ITC spreadsheets
   – equipment purchase/lease agreements

2. CRA tests:
   • whether GST/HST was correctly charged
   • completeness of invoices (GST #, tax amount, description, date)
   • subcontractor validity
   • ITC documentation & proof of payment
   • personal vs business tools & vehicles
   • out-of-province job tax rate
   • cash/e-transfer matching with reported sales

3. CRA issues Proposed Audit Adjustment.

4. Mackisen CPA prepares complete documentary defense.

Learning insight: CRA uses sample testing over multiple jobs — one invalid invoice can trigger extrapolated reassessments across the year.

Mackisen CPA’s Contractor Audit Defense Strategy

• rebuild complete invoicing system with GST/HST compliance
• verify subcontractor GST/HST registration
• reconstruct ITC binder with:
– material invoices
– tools & equipment
– rentals
– vehicle/transport costs
• defend travel/mileage GST classification
• prepare a Job-by-Job Tax Map
• separate personal vs business-use tools
• reconcile invoices → deposits → GST returns
• correct place-of-supply rules for QC/ON/Atlantic provinces
• manage T5018 compliance
• prepare CRA-standard CPA-certified audit binder
• negotiate reduction of penalties & interest

Learning insight: Contractors win audits with clean invoices, valid GST numbers, and complete ITC proof — not explanations.

Common CRA Findings in Contractor Audits

• GST/HST not charged on:
– labour
– materials
– deliveries
– travel
– extra work
• subcontractors using invalid GST numbers
• ITCs denied due to missing invoice details
• personal tools & trucks claimed as business
• cash jobs not reported
• out-of-province work misclassified
• material reimbursements not taxed properly
• bank deposits exceeding reported revenue

Learning insight: CRA’s biggest adjustments arise from invoice deficiencies and subcontractor issues.

Real-World Results

• A handyman avoided a $146,000 reassessment after Mackisen CPA rebuilt all missing invoices and validated GST/HST numbers.
• A renovation contractor reversed a $212,000 ITC denial after reconstructing tool, equipment, and material proof.
• A plumbing subcontractor eliminated penalties by reconciling job logs and T5018 filings.
• A multi-province HVAC technician cleared CRA findings after correcting place-of-supply tax treatment.

Learning insight: CRA backs down when shown organized, CPA-certified job & expense documentation.

SEO Optimization & Educational Value

Primary keywords: GST/HST contractor audit, CRA handyman audit, construction service GST rules, Mackisen CPA Montreal
Secondary keywords: T5018 contractor audit, subcontractor GST Canada, ITC denial contractor, job invoice GST audit

Learning insight: Contractor audit topics have huge SEO volume — ideal for authority-building.

Why Mackisen CPA Montreal

With 35+ years defending contractors, handymen, and tradespeople, Mackisen CPA Montreal is Québec’s #1 authority in GST/HST contractor audits.
We understand billing structures, subcontractor networks, invoice requirements, and CRA methodologies better than any firm.

Learning insight: Contractor audits require documentation precision + subcontractor compliance + tax logic — exactly what we provide.

Call to Action

If CRA is auditing your contracting or handyman business, invoices, subcontractors, or ITCs, contact Mackisen CPA Montreal immediately:

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

Learning Conclusion:

A CRA GST/HST Contractor & Handyman Audit tests labour charges, material reimbursements, subcontractor compliance, invoice integrity, and ITC documentation.
Mackisen CPA Montreal ensures your business is fully defended and protected from costly reassessments.