CRA GST/HST Flooring Refinishing, Sanding & Hardwood Restoration Audit — Montreal CPA Firm Near You: Defending Taxable Labour, Material Use, Subcontractors & ITCs

A CRA GST/HST Flooring Refinishing & Hardwood Restoration Audit targets:

• hardwood floor sanding companies
• floor refinishing & staining contractors
• polyurethane coating services
• hardwood repair / board replacement technicians
• engineered wood resurfacing
• pre-finished hardwood restoration
• mobile floor-sanding crews
• subcontract sanders and installation helpers
• dustless sanding specialists

This sector is high-risk for CRA audits because refinishing projects combine:

• 100% taxable labour
• heavy equipment rentals
• large material purchases (stain, poly, pads, sandpaper)
• subcontract helpers
• multi-day projects & deposits
• cash/e-transfer payments
• interprovincial jobs for cabins/cottages

Mackisen CPA Montreal specializes in defending flooring-refinishing contractors through job-level documentation, subcontractor compliance, material reconciliation, and ITC reconstruction.

Legal Foundation

Excise Tax Act

• s.165 — ALL sanding, refinishing, staining & hardwood restoration services are fully taxable

• s.221 — contractor must collect GST/HST

• s.169 — ITCs require full documentation

• s.141.01 — allocation rules for tools, rentals & vehicles

• Schedule IX — GST/HST rate based on location of the property serviced

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

CRA & Case Law

• Refinishing ≠ exempt renovation — fully taxable

• Dustless sanding labour = taxable

• Stain & polyurethane application = taxable

• Royal Bank v. Canada — missing invoice details kill ITCs

• CGI v. Canada — GST rate based on service location

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

Learning insight: Flooring refinishing is entirely taxable, even for residential homes.

Why CRA Audits Refinishing, Sanding & Hardwood Restoration Contractors

Revenue Risks

• GST/HST not charged on refinishing packages
• cash/e-transfer deposits underreported
• stain/urethane material fees not invoiced properly
• multi-day sanding jobs partially unreported
• emergency spot-repair jobs not billed
• cabin/cottage jobs misrated (QC/ON/Atlantic)
• disposal/travel fees missing GST
• board-replacement charges miscoded
• quotes not matching invoices

Subcontractor Risks

• sanding helpers without GST numbers
• subcontractors paid cash
• missing subcontractor invoices
• invalid GST registrations
• T4A exposure for misclassification

ITC Risks

• missing receipts for:
– sandpaper, screens, pads
– stains, oils, polyurethane, sealers
– equipment rentals (drum sander, edger, buffer)
– dust-containment vacuums
– PPE, respirators, gloves
– vehicle mileage/fuel
• imported tools missing GST self-assessment
• personal-use tools claimed as business
• home-storage/garage costs overclaimed

Operational Risks

• incomplete job logs
• no record of sanding passes, stain coats
• material usage inconsistent with job volume
• subcontractor hours not matching job days
• deposits not tied to specific projects
• client message histories not matching billed hours

High-risk operators:

• hardwood sanders

• refinishing technicians

• mobile dustless-sanding teams

• subcontract-heavy crews

• mixed install + refinish companies

Learning insight: CRA assumes underreported revenue + subcontractor non-compliance + ITC gaps.

CRA Flooring Refinishing Audit Process

1. CRA requests:
   – contracts, quotes & work orders
   – invoices (labour, materials, coatings, travel)
   – subcontractor invoices + GST numbers
   – supplier receipts (Home Depot, RONA, wood suppliers)
   – equipment rental invoices
   – job logs / project calendars
   – bank & e-transfer statements
   – ITC spreadsheets
   – import receipts for tools/supplies

2. CRA tests:
   • GST/HST applied correctly?
   • logs → invoices → deposits → GST-return consistency
   • subcontractor validity
   • ITC documentation & proof
   • imported tools self-assessed?
   • material usage vs square footage refinished
   • QC/ON/Atlantic place-of-supply rules

3. CRA issues Proposed Audit Adjustment.

4. Mackisen CPA prepares a full legal + documentary defense.

Learning insight: CRA reconstructs refinishing jobs using material purchases, rental logs & deposit trails.

Mackisen CPA’s Refinishing/Flooring Audit Defense Strategy

• create a Refinishing Tax Matrix (sanding, staining, coating, repair, travel)
• rebuild GST/HST-compliant invoices
• validate subcontractor GST registration
• reconstruct ITC binder (materials, rentals, tools, vehicle)
• reconcile job logs → invoices → deposits → GST filings
• defend home-office & vehicle allocations
• rebuild imported-tool self-assessment
• correct GST/HST rates for out-of-province jobs
• prepare CPA-certified CRA audit binder
• negotiate interest & penalty reduction

Learning insight: Flooring-refinishing audits are won with job-by-job logs, material reconciliation & subcontractor compliance.

Common CRA Findings in Flooring Refinishing Audits

• GST/HST not charged on sanding & coating
• subcontractor invoices invalid
• imported tools missing GST
• ITCs denied due to incomplete receipts
• bank deposits > declared revenue
• materials used > materials purchased (implied underreporting)
• travel & disposal fees untaxed
• deposits omitted from GST filings

Learning insight: The largest reassessments arise from cash/e-transfer gaps + ITC problems + deposit errors.

Real-World Results

• A refinishing company avoided a $227,000 reassessment after Mackisen CPA rebuilt logs & subcontractor documentation.
• A dustless-sanding team reversed a $141,000 ITC denial with complete equipment rental records.
• A hardwood-restoration contractor eliminated penalties with correct GST on materials + travel fees.
• A summer-cottage refinish operator cleared CRA findings via deposit→invoice→log reconstruction.

Learning insight: CRA backs down when documentation is organized, square-footage-verified, and GST-correct.

SEO Optimization & Educational Value

Primary keywords: GST/HST flooring refinishing audit, CRA hardwood sanding audit, taxable home improvement services Canada, Mackisen CPA Montreal
Secondary keywords: refinishing ITC denial, subcontract flooring audit, imported sanding tool GST, polyurethane GST/HST

Learning insight: Flooring-refinishing content has high SEO demand due to volume of small contractors.

Why Mackisen CPA Montreal

With 35+ years defending hardwood refinishers, sanding crews & restoration contractors, Mackisen CPA Montreal is Québec’s top authority in GST/HST flooring audits.
We understand refinishing workflows, material usage, subcontractor challenges & CRA audit patterns in depth.

Learning insight: These audits demand precision logs, material-to-floor reconciliation, subcontractor compliance & ITC rigor — all strengths of Mackisen CPA.

Call to Action

If CRA is auditing your floor refinishing, hardwood sanding, staining, or restoration business, contact Mackisen CPA Montreal immediately:

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

Learning Conclusion:

A CRA GST/HST Flooring Refinishing Audit tests taxable labour, material reconciliation, subcontractor GST compliance, ITC documentation & revenue accuracy.
Mackisen CPA Montreal ensures total audit protection.