CRA GST/HST Digital Marketing & Advertising Agency Audit — Montreal CPA Firm Near You: Defending Ad Buys, Media Spend, Subcontractors, and Cross-Province Campaigns

A CRA GST/HST Digital Marketing & Advertising Agency Audit examines whether your agency correctly charged GST/HST, claimed ITCs, and properly classified online advertising, media purchases, subcontracted creatives, campaign management, and digital assets.

Digital marketing agencies face extremely high audit risk because they handle:
• cross-province clients (QC, ON, BC, Atlantic)
• foreign clients (U.S., EU, international)
• media spending (Facebook, Google, TikTok, LinkedIn, YouTube)
• subcontractors and freelancers (designers, videographers, editors)
• SaaS, software, and digital tools (imported digital services → s.218 self-assessment)
• mixed services (strategy + ads + creative + consulting)
• monthly retainers + variable ad spend
• affiliate commissions
• influencer payments
• digital product creation

Mackisen CPA Montreal specializes in defending digital agencies through complete tax classification, ITC reconstruction, and CRA-standard audit binders.

Legal Foundation

Excise Tax Act

• s.165 — GST/HST applies to taxable services

• s.221 — agencies must collect GST/HST

• s.169 — ITC documentation requirements

• s.141.01 — mixed-use allocation rules

• Schedule IX — place-of-supply rules for digital services

• s.218 & 218.1 — self-assessment on imported digital services (Google, Meta, SaaS tools)

• s.123(1) — “advertising service,” “intangible property,” “digital service”

Case Law

• Royal Bank v. Canada — strict ITC documentation

• City of Calgary — place-of-supply determined by consumer location

• Honeywell — foreign zero-rating requires proof

• Advertising-specific CRA rulings on:
  – media buying
  – digital asset creation
  – influencer marketing

Learning insight: Advertising is fully taxable; only sales to qualifying non-residents can be zero-rated, and only with strict documentation.

Why CRA Audits Digital Marketing Agencies

CRA flags digital agencies when it detects:

Revenue Risks

• GST/HST not charged on retainers
• wrong provincial tax rates
• foreign clients zero-rated without proof of non-residency
• digital products (templates, videos, courses) taxed incorrectly
• influencer commissions misclassified
• agency charging GST on ad spend reimbursement incorrectly
• consulting vs advertising services misapplied

Expense / ITC Risks

• ITCs on:
– Facebook/Google ads (imported → require self-assessment)
– SaaS tools (software, automation, CRM, email)
– subcontractor invoices missing GST numbers
– videographers/designers with invalid GST registration
• ITCs denied for missing invoice elements
• imported digital services missing GST/HST self-assessment (s.218)

Operational Risks

• pooled ad spend vs direct client billing
• affiliate/referral payments undocumented
• contractor misclassification
• deposit/retainer timing errors
• unreported digital product revenue

High-risk agency types:

• performance marketing

• social media marketing agencies

• branding & creative studios

• influencer marketing firms

• SEO/SEM agencies

• ad buying/media planning agencies

• videography/content creation studios

Learning insight: CRA assumes rate errors + invalid ITCs + missing self-assessment unless the agency proves otherwise.

CRA Digital Marketing Audit Process

1. CRA requests:
   – client list with addresses
   – contracts & retainers
   – campaign billing breakdowns
   – ad spend invoices (Meta, Google, TikTok)
   – Stripe/PayPal reports
   – subcontractor invoices
   – proof of payment
   – SaaS/software invoices
   – ITC spreadsheets
   – website/digital product sales reports

2. CRA tests:
   • correct GST/HST rate by client province
   • proof for foreign client zero-rating
   • imported digital services self-assessment
   • ITC validity
   • whether ad spend was reimbursed or resold
   • correctness of tax treatment for influencers/affiliates
   • classification of creative assets vs consulting

3. CRA issues Proposed Audit Adjustment.

4. Mackisen CPA prepares a complete legal, documentary, and tax logic defense.

Learning insight: CRA audits agencies by dissecting campaigns, suppliers, invoices, and deposits — every transaction must reconcile.

Mackisen CPA’s Digital Agency Audit Defense Strategy

• create a Client Tax Rate Matrix for all provinces
• rebuild zero-rating documentation (foreign billing & IP proof)
• classify each revenue stream:
– retainer
– consulting
– ad management
– media buying
– creative production
– digital products
• defend GST treatment on reimbursed vs resold ad spend
• verify subcontractor GST numbers
• rebuild ITC binder (invoices + payments)
• reconstruct imported digital services self-assessment
• reconcile Stripe/PayPal deposits with invoices
• prepare CRA-standard audit binder
• negotiate reduction of penalties & interest

Learning insight: Agencies win audits through data integrity + classification accuracy + complete ITC evidence.

Common CRA Findings in Digital Marketing Audits

• GST/HST not charged on retainers or consulting
• wrong tax rate for ON/NS/NB/NL clients
• zero-rating denied for foreign clients
• ITCs denied (invalid invoices or missing GST numbers)
• influencers/affiliates treated incorrectly
• imported digital tools missing s.218 self-assessment
• ad spend reimbursement treated as taxable or exempt incorrectly
• creative production misclassified
• Stripe/PayPal deposits not matching reported revenue
• contractor misclassification

Learning insight: Most CRA reassessments arise from place-of-supply errors, ITC gaps, and imported digital services.

Real-World Results

• A Montréal media buying firm avoided a $497,000 reassessment after Mackisen CPA rebuilt the provincial tax-rate matrix and corrected ad-spend billing logic.
• A branding & creative studio reversed a $216,000 ITC denial after we validated subcontractor invoices and rebuilt payment trails.
• A performance marketing agency eliminated penalties by properly documenting foreign-client zero-rating.
• An influencer marketing agency cleared CRA findings after we reclassified digital assets vs services.

Learning insight: CRA backs down when campaign-level evidence and ITC proof are structured and CPA-certified.

SEO Optimization & Educational Value

Primary keywords: GST/HST digital marketing audit, CRA advertising audit, marketing agency GST rules, Mackisen CPA Montreal
Secondary keywords: ad spend GST Canada, foreign client zero-rated marketing, ITC denial digital agency, imported digital services GST

Learning insight: Digital marketing GST rules are one of the most searched audit topics — fantastic for SEO visibility.

Why Mackisen CPA Montreal

With 35+ years defending marketing, media, advertising, creative, and digital agencies, Mackisen CPA Montreal is Québec’s #1 authority on GST/HST audits in the digital sector.
We understand campaign billing, media invoicing, influencer payments, imported SaaS tax rules, and CRA audit expectations.

Learning insight: Digital audits require technical + financial + legal expertise — we deliver all three.

Call to Action

If CRA is auditing your digital marketing agency, media buying, creative services, subcontractor structure, or ITCs, contact Mackisen CPA Montreal immediately:

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

Learning Conclusion:

A CRA GST/HST Digital Marketing & Advertising Agency Audit tests taxability, provincial tax rates, foreign-client rules, imported services, and ITC documentation.
Mackisen CPA Montreal ensures your agency is fully defended and protected from costly reassessments.