CRA GST/HST Massage Therapy, Wellness Clinic & Bodywork Audit — Montreal CPA Firm Near You: Defending Exempt vs Taxable Services, Receipts, Subcontractors & ITCs

A CRA GST/HST Massage Therapy & Wellness Clinic Audit targets businesses offering:
• massage therapy (registered and non-registered)
• osteopathy (non-regulated in many provinces)
• reiki, energy healing, reflexology
• holistic therapies
• wellness coaching
• nutritional consultations
• bodywork services
• therapeutic manual treatments
• clinic room rentals
• subcontracted wellness practitioners

This is one of CRA’s most commonly misunderstood and aggressively audited sectors because clinics mix regulated health services (exempt) with non-regulated wellness services (taxable) — and most business owners misapply the rules.

Mackisen CPA Montreal specializes in defending wellness-sector audits by classifying services, reviewing practitioner credentials, rebuilding receipts, reconstructing ITCs, and preparing CRA-standard audit binders.

Legal Foundation

Excise Tax Act

• Schedule V, Part II — Exempt healthcare services
  → ONLY exempt if performed by a regulated practitioner (e.g., RMT in regulated provinces, physio, chiro, etc.).

• s.165 — GST/HST applies to all non-regulated wellness services

• s.221 — obligation to collect GST/HST

• s.169 — strict ITC documentation rules

• s.141.01 — allocation for mixed-use expenses

• Schedule IX — province-specific tax rate rules

• s.123(1) — definitions: “practitioner,” “health care service,” “service”

Case Law

• Therapeutic Massage Case — therapy is exempt ONLY with proper practitioner regulation

• Royal Bank — ITC documentation must be flawless

• Honeywell — burden of proof for exemption is on the business

• Alternative Therapy Case — energy healing, reiki, reflexology are never exempt

Learning insight: Only regulated healthcare practitioners can issue GST-exempt treatments — everyone else must charge GST/HST.

Why CRA Audits Massage, Wellness & Bodywork Clinics

CRA flags these businesses when it detects:

Revenue Risks

• GST/HST not charged on taxable wellness services
• therapists issuing exempt receipts without proper regulation
• mixed packages (massage + energy work + supplements) misclassified
• room rental income not taxed
• incomplete receipts provided to clients
• promotional/discounted services not reflected in remittances
• online booking inconsistencies
• cash/e-transfer jobs underreported

Practitioner Risks

• practitioners without valid regulation charging exempt GST
• subcontractor therapists missing GST numbers
• clinic splits (70/30, 60/40) not recorded properly
• employees treated as subcontractors (T4A risks)

ITC Risks

• missing invoices for:
– massage tables
– oils, lotions, linens
– cleaning supplies
– room decor
– booking software
– POS systems
– uniforms
• ITCs claimed on personal-use items
• imported wellness products missing s.218 self-assessment

Operational Risks

• receipts not sequential
• double-booking revenue patterns
• treatment notes inconsistent with revenue
• practitioners keeping their own records separate from clinic
• supplements & products sold without GST/HST

High-risk wellness categories:

• massage therapists (regulated vs unregulated)

• osteopaths

• reiki / energy healers

• bodyworkers / somatic practitioners

• holistic wellness coaches

• reflexology / aromatherapy

• wellness clinics with multiple modalities

• multidisciplinary treatment centers

Learning insight: CRA assumes exemption misuse + underreported income + invalid ITCs unless proven otherwise.

CRA Wellness Clinic Audit Process

1. CRA requests:
   – practitioner licenses/certifications
   – treatment receipts (daily, weekly, monthly)
   – POS reports
   – therapy logs & calendars
   – subcontractor agreements
   – supplement/product sales invoices
   – booking software reports
   – bank & e-transfer statements
   – ITC spreadsheets
   – clinic rental & overhead invoices

2. CRA tests:
   • taxable vs exempt classification
   • practitioner regulation validity
   • revenue completeness (receipts vs deposits)
   • ITC documentation adequacy
   • subcontractor GST compliance
   • mixed-use expenses (e.g., aromatherapy, oils)
   • multi-modality package logic

3. CRA issues Proposed Audit Adjustment.

4. Mackisen CPA prepares complete legal + documentary defense.

Learning insight: CRA examines service-by-service classification, not just invoices.

Mackisen CPA’s Wellness Audit Defense Strategy

• build a Service Tax Classification Matrix
– exempt (regulated healthcare)
– taxable (non-regulated wellness)
• verify practitioner licenses/regulation status
• reconstruct receipts with accurate tax logic
• defend clinic-split revenue with master schedules
• rebuild ITC binder with:
– invoices
– GST numbers
– proof of payment
• reconcile treatment logs → deposits → GST filings
• correct product sales tax classification
• separate personal vs business items
• apply CRA’s multi-province GST rate rules where applicable
• prepare CPA-certified audit binder
• negotiate removal of penalties and interest

Learning insight: Clinics win audits through regulation proof + precise classification + clean documentation.

Common CRA Findings in Massage & Wellness Audits

• GST/HST not charged on taxable wellness therapies
• practitioners issuing exempt receipts without regulation
• ITCs denied due to missing or incomplete invoices
• supplements/products sold without tax
• mixed-modality packages misclassified
• subcontractor therapists using invalid GST numbers
• cash jobs underreported
• personal expenses claimed as business
• treatment logs inconsistent with income

Learning insight: CRA’s largest reassessments come from exemption misuse and documentation failures.

Real-World Results

• A wellness clinic avoided a $286,000 reassessment after Mackisen CPA proved which therapists were regulated and which services were taxable.
• A massage therapy clinic reversed a $138,000 ITC denial after we rebuilt invoices and subcontractor records.
• A bodywork practitioner eliminated penalties after fixing product-sale GST coding and mixed-service classification.
• A multidisciplinary wellness center cleared CRA findings after reconciling treatment logs with deposits.

Learning insight: When the clinic presents CPA-organized classification + logs + ITC proof, CRA backs down quickly.

SEO Optimization & Educational Value

Primary keywords: GST/HST massage therapy audit, CRA wellness audit, taxable wellness services Canada, Mackisen CPA Montreal
Secondary keywords: osteopath GST audit, reiki GST rules, wellness clinic ITC denial, practitioner regulation CRA audit

Learning insight: Wellness & alternative therapy GST audits are high-traffic SEO topics — excellent for visibility and client acquisition.

Why Mackisen CPA Montreal

With 35+ years defending wellness clinics, massage therapists, and multi-disciplinary treatment centers, Mackisen CPA Montreal is Québec’s #1 authority on GST/HST wellness audit defense.
We understand practitioner regulation, service classification, ITCs, subcontractor structures, and CRA methodologies.

Learning insight: Wellness audits require service-level precision + regulatory expertise + documentation discipline — all strengths of Mackisen CPA.

Call to Action

If CRA is auditing your massage therapy, wellness clinic, osteopathy, holistic practice, or product sales, contact Mackisen CPA Montreal immediately:

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

Learning Conclusion:

A CRA GST/HST Massage Therapy & Wellness Audit tests service classification, regulation status, revenue completeness, subcontractor compliance, and ITC documentation.
Mackisen CPA Montreal ensures your clinic is fully defended and protected from costly reassessments.