CRA GST/HST Flooring Installation, Tile, Hardwood & Carpet Contractor Audit — Montreal CPA Firm Near You: Defending Labour, Materials, Subcontractors & ITCs

A CRA GST/HST Flooring & Tile Contractor Audit targets businesses providing:

• hardwood installation
• laminate installation
• vinyl plank flooring (LVP/LVT)
• ceramic tile installation
• stone & marble installation
• carpet installation & removal
• floor levelling & subfloor repair
• stair refinishing
• baseboard & trim installation as part of flooring
• demolition/removal of old flooring
• waterproofing membranes
• commercial flooring installation
• subcontracted installers

CRA audits this industry aggressively because flooring involves:

• labour + materials (100% taxable)
• heavy material purchases
• subcontractor installers
• cash/e-transfer residential jobs
• multi-phase project billing
• out-of-province GST/HST complexities
• wrong classification of removal/demolition labour
• missing ITC documentation for tools, adhesives, rentals

Mackisen CPA Montreal specializes in defending flooring audits by reconstructing job documentation, validating subcontractors, mapping tax rules, and preparing CRA-ready audit binders.

Legal Foundation

Excise Tax Act

• s.165 — ALL flooring labour, installation, and demolition services are fully taxable

• s.221 — GST/HST must be collected on labour + materials

• s.169 — strict ITC rules (invoices + proof-of-payment required)

• s.141.01 — mixed-use asset allocation

• Schedule IX — place-of-supply rules for cross-province flooring jobs

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

Case Law

• CGI v. Canada — tax rate depends on where the flooring is installed

• Royal Bank v. Canada — invoice defects result in ITC denial

• Northwest Company Inc. — supplier invoices must meet strict legal requirements

• CRA rulings: flooring installation, demolition, prep = 100% taxable

Learning insight: Flooring is fully taxable, regardless of whether it’s a renovation, repair, or improvement to a home.

Why CRA Audits Flooring Contractors

CRA flags flooring contractors when it detects:

Revenue Risks

• GST/HST missing on labour and materials
• demolition/removal labour incorrectly treated as exempt
• deposits not reported properly
• cash/e-transfer jobs underreported
• progress billing not included in GST periods
• misclassification of “supply-and-install” packages
• multi-province installations taxed at wrong rate
• commercial flooring misclassified
• flooring bundles (tiles + install + trim) not fully taxed

Subcontractor Risks

• installers operating without valid GST/HST numbers
• incomplete subcontractor invoices
• helpers treated as subcontractors without documentation
• T4A/T5018 inconsistencies

ITC Risks

• missing invoices for:
– tile, hardwood, laminate, carpet
– adhesives, grout, thinset, underlay
– tools (saws, cutters, spacers)
– floor-leveling compounds
– rental tools (mixers, wet saws)
– PPE & safety equipment
– vehicle expenses
• imported saws/tools missing s.218 self-assessment
• personal-use tools claimed as business
• ITCs overstated for home-storage/mixed-use space

Operational Risks

• no job logs or material lists
• mismatched quotes vs invoices
• materials not tied to specific jobs
• schedule discrepancies (calendar vs deposits)
• poor bookkeeping common in small flooring operations

High-risk operators:

• tile contractors

• hardwood installers

• LVP/LVT installers

• carpet installers

• demolition & removal contractors

• subfloor repair specialists

Learning insight: CRA assumes underreported revenue + invalid ITCs + subcontractor non-compliance unless documentation is precise.

CRA Flooring Audit Process

1. CRA requests:
   – contracts & quotes
   – invoices (labour, materials, demolition, disposal)
   – subcontractor invoices + GST numbers
   – supplier invoices (tile stores, lumber yards)
   – equipment rental receipts
   – bank statements & e-transfer logs
   – ITC spreadsheets
   – job logs & calendars
   – T5018 slips
   – import documents for tools

2. CRA tests:
   • correct GST/HST for ALL taxable supplies
   • subcontractor registration & invoice validity
   • ITC integrity & proof of payment
   • job-location-based tax rate accuracy
   • invoice → deposit → GST filing consistency
   • material usage vs project logs
   • imported tools → self-assessment

3. CRA issues Proposed Audit Adjustment.

4. Mackisen CPA prepares complete legal + documentary defense.

Learning insight: CRA reconstructs jobs by comparing material purchases, job logs, and bank deposits.

Mackisen CPA’s Flooring Audit Defense Strategy

• create a Flooring Tax Matrix (labour, materials, demolition, extras, travel)
• validate subcontractor GST numbers
• rebuild GST/HST-compliant invoices
• reconstruct ITC binder (materials, tools, equipment rentals, vehicles)
• defend vehicle & equipment ITCs using mileage logs
• correct QC/ON/Atlantic GST/HST rate rules
• reconcile contract → deposit → invoice → GST filing
• justify wastage, cuts & material variance
• rebuild imported-tool self-assessment
• prepare CRA-certified audit binder
• negotiate removal of penalties & interest

Learning insight: Flooring audits are won through job-by-job mapping, subcontractor compliance, and ITC precision.

Common CRA Findings in Flooring Audits

• GST/HST not charged on all labour + materials
• demolition labour incorrectly untreated as taxable
• invalid subcontractor invoices
• ITCs denied due to missing documentation
• personal-use tools claimed
• imported equipment missing GST
• bank deposits greater than reported revenue
• misclassified flooring bundles
• out-of-province tax rate mistakes

Learning insight: CRA’s largest reassessments arise from invoice defects + missing ITCs + subcontractor issues.

Real-World Results

• A tile contractor avoided a $318,000 reassessment after Mackisen CPA rebuilt job documentation & subcontractor GST validation.
• A hardwood installer reversed a $201,000 ITC denial after reconstructing material and equipment invoices.
• A demolition/removal contractor eliminated penalties with proper GST billing.
• A floor-leveling specialist cleared CRA findings through full deposit→invoice→GST reconciliation.

Learning insight: CRA backs down when shown CPA-organized, high-quality job and material evidence.

SEO Optimization & Educational Value

Primary keywords: GST/HST flooring audit, CRA tile contractor audit, flooring GST rules Canada, Mackisen CPA Montreal
Secondary keywords: flooring ITC denial, subcontractor flooring audit, flooring materials GST, carpet installation audit

Learning insight: Flooring GST audits generate strong SEO because thousands of small contractors operate independently.

Why Mackisen CPA Montreal

With 35+ years defending flooring installers, tile experts, hardwood contractors, and demolition/prep crews, Mackisen CPA Montreal is Québec’s top authority in GST/HST construction-trade audits.
We understand labour/material flows, subcontractors, demolition logic, and CRA methodology thoroughly.

Learning insight: Flooring audits require precision evidence, subcontractor compliance, and tax-rate accuracy — all strengths of Mackisen CPA.

Call to Action

If CRA is auditing your flooring installation, tile/hardwood business, demolition services, or ITC claims, contact Mackisen CPA Montreal immediately:

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

Learning Conclusion:

A CRA GST/HST Flooring Audit tests labour taxability, material classification, subcontractor compliance, ITC documentation, and provincial rate logic.
Mackisen CPA Montreal ensures your flooring business is fully defended and protected from reassessments.