CRA GST/HST Farmland Audit — Montreal CPA Firm Near You: Proving Agricultural Use and Defending Exempt Land Sales

A CRA GST/HST Farmland Audit determines whether the sale or use of farmland qualifies for GST/HST exemption under the Excise Tax Act. Because farmland can be used for personal, investment, commercial, or agricultural purposes, CRA scrutinizes these transactions to ensure farmers and landowners are applying the correct tax rules.
Farmland audits can lead to six-figure reassessments if CRA concludes the land was not truly used in a farming business, or if the seller is incorrectly classified as a builder or commercial operator.

Mackisen CPA Montreal specializes in defending farmland audits by documenting real agricultural use, reconstructing farming activity evidence, and proving that the land qualifies for the Schedule V farmland exemption.

Legal Foundation

Excise Tax Act Schedule V, Part I — exempts farmland sales if the land was used primarily in a farming business and sold by an individual, trust, estate, or personal-use entity.
Excise Tax Act s.165 — taxable supplies default to GST/HST unless exemption applies.
Excise Tax Act s.123(1) — defines “commercial activity,” “builder,” and “farmland.”
Case law:
• DaSilva v. Canada — CRA must consider actual farming activity, not assumptions.
• McEachern v. Canada — farmland exemption denied when commercial intent was proven.

Learning insight: Farmland is exempt only if actual agricultural use is proven — not just because zoning says “agricultural.”

Why CRA Audits Farmland

CRA flags farmland transactions when it detects:
• land sold at a significant profit (suspected commercial activity)
• farmland owned by non-farmers or used for non-agricultural purposes
• land severed, subdivided, rezoned, or marketed as development land
• cash-crop land with missing sales or expense records
• GST/HST not collected on a sale where CRA suspects taxable use
• periodic rentals (e.g., equipment storage) that indicate commercial activity
• mixed-use farmland (residential + agricultural)
• missing evidence that the land was actively farmed

Learning insight: CRA assumes taxable status unless you prove agricultural use + non-commercial intention.

CRA Farmland Audit Process

1. CRA requests:
   – farm receipts (crop sales, livestock sales)
   – purchase invoices for seeds, fertilizer, feed, equipment
   – land leases, sharecropping agreements
   – photos of farming activity
   – municipal zoning letters and agricultural classifications
   – past tax returns reporting farm income
   – fuel receipts and equipment logs
   – marketing or MLS listings

2. CRA determines if the land was used primarily in a farming business.

3. CRA tests whether the seller is a builder or engaged in commercial land development.

4. CRA assesses whether GST/HST should have been charged.

5. CRA issues a proposed reassessment.

6. Mackisen CPA prepares a full documentary and legal rebuttal.

Learning insight: CRA focuses on activity, not zoning — your CPA must prove the activity.

Mackisen CPA’s Farmland Audit Defense Strategy

• document agricultural activity with receipts, sales logs, fuel purchases, and equipment invoices
• prepare a use of land narrative with photos, maps, and witness statements
• analyze municipal records to confirm agricultural zoning and classification
• defend exemption by proving the land was used primarily in farming
• challenge improper builder classification
• correct ITCs or GST calculations where necessary
• prepare CPA-certified audit binders responding directly to CRA’s criteria
• file objections if CRA misinterprets land use or intention

Learning insight: CRA reassessments are overturned when agricultural use is documented clearly and chronologically.

Common CRA Findings in Farmland Audits

• farmland treated as taxable because no farming receipts were provided
• exemption denied due to part of land used for commercial storage
• land considered “inventory” due to subdivision or rezoning
• seller reclassified as a builder
• missing documentation for sharecropping or crop-share arrangements
• mixed-use property incorrectly allocated between exempt and taxable components
• land rented casually but claimed as primary farmland use
• ITCs denied for insufficient evidence of farming purpose

Learning insight: Farmland audits often fail due to missing documents, not lack of real farming.

Real-World Results

• A multi-acre farm avoided a $260,000 GST reassessment when Mackisen CPA proved active crop rotation using invoices, soil purchases, and fuel logs.
• A family selling inherited farmland kept their exemption after we demonstrated agricultural use despite no formal bookkeeping.
• A landowner reversed a builder classification when we proved no development activity occurred.
• A mixed-use cattle and residential property avoided reassessment by properly allocating agricultural vs. personal-use portions.

Learning insight: When the evidence is organized and credible, CRA withdraws — even on large-dollar audits.

SEO Optimization and Educational Value

Primary keywords: CRA farmland audit, GST farmland exemption, GST/HST land audit, Mackisen CPA Montreal, exempt farmland sale
Secondary keywords: agricultural use documentation, builder classification farmland, GST land reassessment defense, tax audit agriculture

Learning insight: Educational content builds both CRA credibility and SEO authority, especially in niche topics like farmland.

Why Mackisen CPA Montreal

With over 35 years of GST/HST real estate audit defense experience, Mackisen CPA Montreal is the leading Québec authority on farmland tax treatment, agricultural exemptions, and builder classification disputes.
Our bilingual CPAs understand farmland recordkeeping challenges and reconstruct audit-ready files that satisfy CRA requirements.

Learning insight: Farmland audits are won through clear evidence of use — we create that evidence.

Call to Action

If CRA is auditing your farmland sale or questioning its GST/HST exemption, contact Mackisen CPA Montreal immediately for expert defense.
Phone: 514-276-0808 | Email: info@mackisen.com | Website: mackisen.com

Learning conclusion: A CRA GST/HST Farmland Audit tests actual farming activity, intent, and documentation. Mackisen CPA Montreal ensures all three are proven — protecting your land sale from unnecessary tax, penalties, and reassessments.