CRA GST/HST IT & Software Development Audit — Montreal CPA Firm Near You: Defending SaaS, App Development, Cloud Services & Digital Platforms

A CRA GST/HST IT & Software Development Audit examines whether your technology business — SaaS company, app developer, IT consultant, cloud-services provider, MSP, AI platform, or digital agency — correctly charged GST/HST, applied the right provincial tax rate, and claimed ITCs according to the Excise Tax Act.

The IT industry is one of CRA’s highest-risk audit sectors because:
• digital services have complex place-of-supply rules,
• software can be taxed as service, digital product, or intangible property,
• many companies deal with foreign customers,
• subcontractors often have invalid GST/HST numbers,
• imports require self-assessment under s.218,
• recurring billing systems can misapply provincial rates,
• ITCs can be large, recurring, and documentation-heavy.

Mackisen CPA Montreal specializes in defending IT audits by reconstructing tax logic for digital services, analyzing consumption-location rules, validating ITCs, and preparing CPA-certified audit binders that remove CRA assumptions.

Legal Foundation

Excise Tax Act

• s.165 — GST/HST on taxable supplies of digital services

• s.169 — ITC eligibility rules

• s.221 — requirement to collect & remit GST/HST

• s.218/218.1 — self-assessment on imported digital services

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

• Schedule VI — zero-rating rules for certain foreign services

Case Law

• Honeywell v. Canada — burden of proof for digital exports

• City of Calgary v. Canada — consumption-location determines tax rate

• Royal Bank v. Canada — ITCs require strict documentation

• CRA Policy P-077 & B-103 — classification of electronic supplies

Learning insight: CRA audits IT companies because digital services cross borders, and tax treatment depends on the recipient location, not the business location.

Why CRA Audits IT & Software Firms

CRA flags IT businesses when it detects:
• clients located in multiple provinces → risk of wrong GST/HST rate
• foreign customers → zero-rating must be proven
• SaaS subscriptions → recurring billing errors
• subcontractor invoices missing GST/HST numbers
• imported software/services → missing self-assessment
• mixed-use ITCs (personal vs business equipment)
• rapid growth in revenue with inconsistent GST remittances
• digital platforms with unclear tax classification (SaaS vs downloadable vs consulting)

High-risk IT businesses include:

• SaaS platforms

• software development firms

• tech consulting agencies

• app developers

• cloud hosting providers

• MSPs & IT support companies

• digital agencies

• AI/data model providers

• e-commerce technology suppliers

Learning insight: Technology companies get audited because software is invisible, international, and complex to classify.

CRA IT Audit Process

1. CRA sends a GST/HST audit notice for multiple filing periods.

2. CRA requests:
   – invoices & subscription statements
   – client address records
   – CRM data & usage logs
   – subcontractor invoices
   – cloud-service invoices (AWS, Azure, Google Cloud)
   – foreign sales lists
   – proof of payment
   – GL & bank statements
   – merchant platform reports

3. CRA tests:
   • GST/HST charged correctly (by province)
   • zero-rated foreign services supported with documentation
   • ITC support (invoice details + payment proof)
   • subcontractor validity
   • whether imported digital services require self-assessment

4. CRA issues Proposed Audit Adjustment

5. Mackisen CPA prepares a technical + documentary defense.

Learning insight: CRA uses automated cross-matching to detect mismatches between customer location and tax rates — IT companies must prove the logic.

Mackisen CPA’s IT Audit Defense Strategy

• rebuild place-of-supply matrix for every province (QC/ON/BC/AB/Atlantic)
• classify digital supply as SaaS, consulting, license, or intangible property
• prove zero-rating for foreign clients (IP logs, billing data, contracts)
• prepare ITC binders with invoices + payment proof
• validate subcontractor GST/HST numbers
• calculate self-assessment under s.218 for imported software/services
• reconcile merchant deposits (Stripe/PayPal/Shopify) with GST returns
• prepare CPA-certified audit binder
• negotiate reductions of penalties and interest

Learning insight: CRA accepts digital-service files that show structured, logical, and evidence-based tax treatment.

Common CRA Findings in IT Audits

• wrong GST/HST rate applied based on client location
• foreign clients mistakenly charged GST/HST or wrongly zero-rated
• subcontractor invoices invalid → ITCs denied
• missing self-assessment on imported digital tools (Google, AWS, Canva, ChatGPT, GitHub, etc.)
• SaaS incorrectly treated as digital product
• equipment ITCs overstated for mixed-use
• payments not matching revenue
• digital service “bundle” misclassified for tax purposes

Learning insight: CRA denies ITCs and reassesses revenue when tax logic is unclear.

Real-World Results

• A SaaS company avoided a $780,000 reassessment after Mackisen CPA rebuilt a nationwide tax-rate matrix and corrected zero-rating documentation.
• An app developer reversed a $240,000 ITC denial when we validated subcontractor documentation and rebuilt payment trails.
• A cloud-services provider eliminated penalties by reconstructing self-assessment entries for imported software.
• A digital agency cleared a CRA audit once we aligned their platform usage logs with customer address data.

Learning insight: When digital-service tax logic is organized, CRA backs down.

SEO Optimization & Educational Value

Primary keywords: GST/HST IT audit, CRA software audit, SaaS GST audit, ITC denial tech audit, Mackisen CPA Montreal
Secondary keywords: place-of-supply digital services, imported software GST, GST audit technology firm, cloud services GST/HST

Learning insight: GST/HST for IT firms is one of the top-searched audit topics — strong content builds authority and leads.

Why Mackisen CPA Montreal

With 35+ years defending IT companies, SaaS platforms, and digital agencies, Mackisen CPA Montreal is Québec’s leading authority on GST/HST tech audits.
We understand digital tax classification, border rules, foreign services, place-of-supply computations, and CRA audit methodology — and we prepare files that CRA must accept.

Learning insight: IT audits are tax logic + documentation + classification — we master all three.

Call to Action

If CRA is auditing your SaaS company, digital platform, software development firm, or IT consulting business, contact Mackisen CPA Montreal immediately.

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

Learning Conclusion:

A CRA GST/HST IT & Software Development Audit tests service classification, place-of-supply, ITC validity, foreign sales, and imported software rules.
Mackisen CPA Montreal ensures every item is legally defensible and fully documented — protecting your business from costly reassessments.