CRA GST/HST Interior Design & Home Décor Services Audit — Montreal CPA Firm Near You: Defending Design Fees, Material Purchases, Furniture Markups & ITCs

A CRA GST/HST Interior Design & Home Décor Services Audit targets businesses providing:
• interior design
• interior decorating
• space planning
• furniture sourcing
• home décor consulting
• colour consultations
• procurement services
• project coordination
• luxury interior styling
• Airbnb/short-term rental design setup
• online/virtual interior design services
• furniture procurement & reselling

This sector is highly audited because it mixes:
• taxable services (design, consulting, sourcing)
• taxable goods (furniture, lighting, décor)
• material markups
• subcontracted installers
• interior styling bundles
• project management fees
• cross-province clients
• online design packages
• large ITCs for décor purchases, furniture samples, tools, subscriptions

Mackisen CPA Montreal specializes in defending interior design audits by separating labour vs goods, mapping tax obligations, rebuilding ITCs, and preparing CRA-ready audit binders.

Legal Foundation

Excise Tax Act

• s.165 — GST/HST applies to ALL design & décor services

• s.221 — designers must collect GST/HST on all taxable supplies

• s.169 — ITC documentary requirements

• s.141.01 — allocation rules for mixed-use supplies

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

• s.123(1) — defines “service,” “property,” “supply,” “installation”

Case Law

• Royal Bank v. Canada — ITCs require strict documentation

• General Motors — tax treatment must follow substance, not description

• Northwest Company Inc. — incomplete invoices = ITC denial

• CRA interpretation: interior design is always fully taxable

Learning insight: Interior design is 100% taxable (labour, sourcing, planning, consulting). No exemptions exist.

Why CRA Audits Interior Designers & Home Décor Professionals

CRA flags these businesses when it detects:

Revenue Risks

• GST/HST not charged on design consultations
• sourcing fees & procurement fees taxed incorrectly
• furniture purchases resold without GST/HST
• markups not taxed
• travel fees not taxed
• multi-province clients taxed incorrectly
• deposits not recorded in GST filings
• online design packages misclassified
• contractor installers not charging GST/HST

ITC Risks

• large ITCs claimed on:
– décor
– furniture
– samples
– subscriptions (Canva, AutoCAD, Adobe)
– software (SketchUp, Revit)
– tools, auto expenses
• missing supplier invoices
• décor purchased for personal use claimed as business
• imported goods missing s.218 self-assessment
• warehouse/storage ITCs missing proof

Operational Risks

• inconsistent design agreements
• no separation between designer fee & client goods
• inconsistent reporting for procurement services
• personal vs business décor inventory
• reimbursed expenses improperly treated

High-risk designers:

• interior designers & decorators

• luxury home stylists

• short-term rental (Airbnb) design specialists

• commercial office designers

• furniture resellers with markup

• virtual design providers

• colour consultants

Learning insight: CRA assumes revenue underreporting + ITC overclaims + misclassified supplies unless documentation proves otherwise.

CRA Interior Design Audit Process

1. CRA requests:
   – client contracts & design proposals
   – invoices (consulting, sourcing, procurement, installation)
   – furniture & décor purchase invoices
   – supplier GST numbers
   – subcontractor invoices (installers, movers, stagers)
   – bank & merchant statements
   – e-commerce receipts (IKEA, Structube, Wayfair, CB2, RH)
   – software & subscription invoices
   – ITC spreadsheets
   – travel logs & expenses

2. CRA tests:
   • taxable vs non-taxable? (almost always taxable)
   • correct GST/HST rate by province
   • markups included in tax calculation
   • ITC documentary compliance
   • subcontractor GST registration
   • imported décor & furniture self-assessment
   • deposits vs revenue timing
   • procurement vs resale classification

3. CRA issues Proposed Audit Adjustment.

4. Mackisen CPA builds a complete legal + documentary defense.

Learning insight: CRA breaks down each design package into its components — labour, goods, markups, travel.

Mackisen CPA’s Interior Design Audit Defense Strategy

• create a Design Supply Tax Matrix (labour, goods, installation, markup, travel)
• rebuild invoices with accurate GST/HST logic
• validate subcontractor GST numbers
• reconstruct ITC binder:
– décor
– furniture
– tools
– subscriptions/software
– vehicle/travel
• separate personal vs business décor inventory
• correct classification of procurement vs resale
• reconcile contracts → invoices → deposits → GST filings
• correct place-of-supply for out-of-province clients
• prepare CRA-standard audit binder
• negotiate relief from penalties & interest

Learning insight: Designers win audits with clean invoice structure + correct markup treatment + ITC integrity.

Common CRA Findings in Interior Design Audits

• GST/HST not charged on:
– design consultations
– sourcing fees
– markup on furniture
– installation coordination
– travel
• ITCs denied due to missing or invalid supplier invoices
• décor used personally claimed as business
• subcontractor installers unregistered
• misclassification of resale vs reimbursed expenses
• imported décor with no self-assessment
• deposits unreported
• multi-province tax rate errors

Learning insight: The biggest reassessments arise from markup misclassification + invalid ITCs.

Real-World Results

• A luxury interior design firm avoided a $312,000 GST reassessment after Mackisen CPA rebuilt fee + procurement tax logic.
• A home décor stylist reversed a $168,000 ITC denial using complete supplier proof.
• A commercial designer eliminated penalties after correcting cross-province tax rules.
• A virtual interior design studio cleared CRA findings by reconstructing digital service invoices and platform deposits.

Learning insight: CRA retreats when faced with structured, CPA-certified documents.

SEO Optimization & Educational Value

Primary keywords: GST/HST interior design audit, CRA décor audit, design consulting GST, Mackisen CPA Montreal
Secondary keywords: furniture resale GST, ITC denial designer, procurement service GST, virtual design GST Canada

Learning insight: Interior design GST issues produce strong SEO results due to the high number of small design studios in Canada.

Why Mackisen CPA Montreal

With 35+ years defending interior designers, decorators, stylists, and furniture procurement businesses, Mackisen CPA Montreal is Québec’s #1 authority in GST/HST audit defense for design-related industries.
We understand design packages, sourcing fees, markups, client invoicing, and CRA audit methodology.

Learning insight: Design audits require classification precision + invoice clarity + perfect ITC documentation — delivered by Mackisen CPA.

Call to Action

If CRA is auditing your interior design firm, home décor business, procurement services, or design fee structures, contact Mackisen CPA Montreal immediately:

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

Learning Conclusion:

A CRA GST/HST Interior Design Audit tests design-service taxability, markup classification, procurement logic, subcontractor compliance, and ITC documentation.
Mackisen CPA Montreal ensures your entire design operation is fully defended and protected from costly reassessments.