CRA GST/HST Landscaping Construction: Interlock, Fencing, Deck Building & Hardscaping Audit — Montreal CPA Firm Near You: Defending Taxable Labour, Materials, Subcontractors & ITCs

A CRA GST/HST Hardscaping & Outdoor Construction Audit targets businesses providing:

• interlock paving & stonework
• retaining walls
• deck building & pergolas
• fencing installation
• backyard hardscape construction
• patio & walkway construction
• outdoor kitchens & built-in BBQ structures
• concrete pads
• excavation & grading (related to hardscapes)
• hybrid landscape–construction packages

This industry is extremely high-risk for CRA audits because it deals with:

• fully taxable construction services
• heavy material purchases (stone, lumber, concrete)
• subcontracted crews
• deposits/progress billing
• multi-phase projects
• equipment rentals
• cash/e-transfer payments
• multi-province construction
• customer misunderstandings (“home improvement” is still taxable)

Mackisen CPA Montreal specializes in defending outdoor-construction audits by reconstructing job documentation, validating subcontractors, rebuilding ITCs, and preparing CRA-ready audit binders.

Legal Foundation

Excise Tax Act

• s.165 — all hardscaping & construction labour is fully taxable

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

• s.169 — strict ITC requirements

• s.141.01 — mixed-use equipment allocation

• Schedule IX — tax-rate rules for out-of-province work

• s.123(1) — defines “construction,” “installation,” “improvement,” “tangible property”

Case Law

• CGI v. Canada — tax depends on the province where work occurs

• Northwest Company Inc. — invalid or incomplete invoices void ITCs

• Royal Bank v. Canada — documentary proof required for all ITCs

• CRA rulings: hardscape & deck/fence installation is always taxable (not exempt construction).

Learning insight: Landscapes, decks, fences, interlock, patios — every service is taxable. No exemptions.

Why CRA Audits Hardscaping, Interlock, Fence & Deck Contractors

CRA flags these companies when it sees:

Revenue Risks

• GST/HST not charged on materials or labour
• deposit collections not included in GST periods
• progress billing errors
• cash/e-transfer jobs underreported
• supply-and-install packages misclassified
• material reimbursements not taxed
• multi-province deck/fence/interlock jobs misrated
• add-ons (steps, borders, lighting) missing GST
• excavation fees not taxed

Subcontractor Risks

• subcontractors without valid GST numbers
• helpers treated as “contractors” without invoices
• T5018 inconsistencies
• labour-only subcontractors under-collecting GST

ITC Risks

• missing invoices for:
– lumber, stone, brick, pavers
– concrete/mortar
– joists, posts, hardware
– fencing materials
– equipment rentals (skid steers, compactors, concrete saws)
– PPE & safety gear
– truck & trailer expenses
• personal-use tools claimed as business
• imported tools missing s.218 self-assessment
• ITCs overstated due to home-storage & home-office mix-ups

Operational Risks

• no job logs or material lists
• invoices not tied to specific projects
• customer change-orders not documented
• large gaps between deposits and final invoices
• heavy seasonality causing perceived underreporting

High-risk operators:

• interlock & stone paver contractors

• deck & fence builders

• hardscape contractors

• hybrid landscape/construction teams

• backyard renovation companies

• excavation + hardscape combos

Learning insight: CRA assumes underreported revenue + invalid ITCs + subcontractor problems unless documentation is perfect.

CRA Hardscaping & Construction Audit Process

1. CRA requests:
   – contracts & quotes
   – invoices (labour, materials, excavation, add-ons)
   – subcontractor invoices + GST numbers
   – supplier invoices (lumber yards, stone/brickyards, Home Depot, Rona)
   – equipment rental invoices
   – mileage & vehicle logs
   – bank statements + e-transfer logs
   – T5018 summaries
   – job logs & site calendars
   – ITC spreadsheets

2. CRA tests:
   • GST/HST charged on all components (labour + materials + excavation + add-ons)
   • correct QC/ON/Atlantic tax rate
   • subcontractor validity & GST registration
   • ITC documentation + proof of payment
   • deposit vs invoice timing
   • personal vs business tool/equipment claims
   • bank deposits vs reported sales
   • supply-and-install classification

3. CRA issues Proposed Audit Adjustment.

4. Mackisen CPA prepares complete legal & documentary defense.

Learning insight: CRA compares logs → invoices → deposits → purchases to rebuild entire project timelines.

Mackisen CPA’s Hardscaping Audit Defense Strategy

• create a Construction Supply Tax Matrix (labour, materials, excavation, addons)
• rebuild GST/HST-compliant invoices
• validate subcontractor GST/HST registration
• reconstruct ITC binder (materials, tools, equipment rentals, fuel)
• defend vehicle & equipment ITCs with proper logs
• correct place-of-supply for interprovincial jobs
• reconcile contracts → deposits → invoices → GST filings
• separate personal vs business tools
• justify shrinkage/material waste
• prepare CPA-certified CRA audit binder
• negotiate penalty & interest relief

Learning insight: Hardscaping audits are won by job-by-job mapping + ITC reconstruction + subcontractor compliance.

Common CRA Findings in Hardscape & Deck/Fence Audits

• GST/HST not charged on:
– labour
– materials
– excavation
– delivery & disposal fees
– add-ons (steps, lighting, edging)
• subcontractor invoices invalid
• ITCs denied for missing invoices
• personal tools & home-office expenses overstated
• imported tools/equipment missing self-assessment
• bank deposits exceed reported sales
• multi-province tax-rate errors

Learning insight: Most reassessments arise from invoice defects + subcontractor issues + missing ITCs.

Real-World Results

• An interlock contractor avoided a $387,000 reassessment after Mackisen CPA rebuilt project-level tax logic and subcontractor documentation.
• A deck builder reversed a $204,000 ITC denial by reconstructing lumber & tool invoices.
• A fence contractor eliminated penalties after correcting QC/ON place-of-supply applications.
• A hardscape reno company cleared CRA findings through full deposit→invoice→GST reconciliation.

Learning insight: CRA backs down when shown CPA-organized, project-by-project documentation.

SEO Optimization & Educational Value

Primary keywords: GST/HST hardscaping audit, CRA interlock audit, deck builder GST rules, Mackisen CPA Montreal
Secondary keywords: fence installation GST audit, construction ITC denial, subcontractor GST Canada, outdoor construction GST rules

Learning insight: Hardscaping GST audits have strong SEO performance due to explosive industry growth.

Why Mackisen CPA Montreal

With 35+ years defending hardscape contractors, interlock installers, deck & fence builders, and backyard construction companies, Mackisen CPA Montreal is Québec’s leading authority in GST/HST construction-sector audits.
We understand materials, subcontractors, deposits, progress billing, and CRA audit methodology in depth.

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

Call to Action

If CRA is auditing your interlock, deck, fence, patio, or outdoor construction business, contact Mackisen CPA Montreal immediately:

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

Learning Conclusion:

A CRA GST/HST Hardscaping & Construction Audit tests labour taxability, material classification, subcontractor compliance, ITC documentation, and progress/deposit accuracy.
Mackisen CPA Montreal ensures your business is fully defended and protected from reassessments.