CRA GST/HST Non-Profit Organization (NPO) Audit — Montreal CPA Firm Near You: Defending Taxable Activities, Exempt Supplies, ITCs & Funding Compliance

A CRA GST/HST Non-Profit Organization (NPO) Audit examines whether your organization — whether cultural, athletic, community-based, professional, religious, or service-oriented — correctly charged GST/HST, collected and remitted tax, and claimed ITCs in accordance with the Excise Tax Act.

NPOs are heavily audited because they often engage in mixed activities, including both exempt and taxable supplies:

• memberships
• sponsorships
• fundraising events
• ticket sales
• facility rentals
• training programs
• merchandise
• government-funded projects
• donations with benefits
• grant-based programs

CRA audits NPOs to determine whether the organization is involved in commercial activity, whether ITCs were properly claimed, and whether GST/HST was remitted on taxable supplies.

Mackisen CPA Montreal specializes in defending NPO audits by clarifying classification of activities, reconstructing ITC documentation, analyzing grant and funding agreements, and preparing CRA-ready audit binders.

Legal Foundation

Excise Tax Act

• s.123(1) — definitions of “commercial activity” and “public service body (PSB)”

• s.165 — GST/HST rules on taxable supplies

• s.169 — ITC rules (strict documentation required)

• s.259 — Public Service Body (PSB) rebate rules

• s.141.01 — mixed-use allocation rules

• Schedule V — exempt supplies (education, health, community services)

• Schedule VI — zero-rating rules where applicable

Case Law

• Royal Bank v. Canada — documentation must be complete for ITCs

• Friends of the Conservatory — NPO activities must be classified accurately

• YMCA case — membership benefits determine taxability

Learning insight: NPOs often mistakenly treat taxable activities as exempt — CRA audits this aggressively.

Why CRA Audits NPOs

CRA targets non-profit organizations because they often have:

• taxable sales mixed with exempt activities
• large ITCs claimed for capital projects (renovations, equipment)
• fundraising events with unclear GST/HST treatment
• sponsorships that include advertising benefits (taxable)
• member dues that may be partially taxable
• staff or volunteer benefits that trigger GST/HST
• government funding not properly allocated
• inconsistent GST/QST treatment for facility rentals

High-risk NPO sectors:

• sports associations

• arts & cultural organizations

• religious charities

• professional associations

• community service groups

• childcare & youth organizations

• social clubs

• educational NPOs

• fitness/athletic clubs

Learning insight: CRA knows most NPOs do not apply GST/HST rules consistently — making this a profitable audit category.

CRA NPO Audit Process

1. CRA requests documentation including:
   – membership categories and benefits
   – fundraising event details
   – sponsorship agreements
   – invoices and receipts
   – proof of payment
   – bank statements
   – financial statements
   – contracts for facility rentals or programs
   – grant agreements
   – ITC worksheets

2. CRA evaluates whether:
   • activities are taxable or exempt
   • ITCs were claimed only on commercial activities
   • PSB rebate applies (if eligible)
   • sponsorships include advertising → taxable
   • membership benefits are exempt or taxable
   • facility rentals meet exemption conditions
   • fundraising meets “voluntary effort” exemption
   • government-funded projects require GST/HST adjustments

3. CRA issues a Proposed Audit Adjustment.

4. Mackisen CPA prepares a complete legal, financial & documentary defense.

Learning insight: NPOs are judged on activity classification + documentation, not goodwill or charitable purpose.

Mackisen CPA’s NPO Audit Defense Strategy

• create a full Activity Classification Map (taxable, exempt, mixed)
• review sponsorship and membership contracts for taxability
• rebuild ITC documentation (invoices + proof of payment)
• allocate expenses properly between exempt vs commercial activities
• analyze grants & funding agreements for GST/HST implications
• prepare CPA-certified GST/HST reconciliation for all revenue streams
• defend PSB rebate eligibility
• correct past filings where errors occurred
• negotiate penalties and interest reduction
• prepare CRA-ready audit binders with legal arguments

Learning insight: The NPO audit defense succeeds when every activity is clearly mapped, classified, and documented.

Common CRA Findings in NPO Audits

• membership dues incorrectly treated as exempt
• sponsorships with advertising benefits → taxable
• fundraising events incorrectly treated as exempt
• government-funded projects misreported for GST
• ITCs claimed on exempt activities
• PSB rebate miscalculated or misapplied
• facility rentals misclassified
• taxable sales underreported
• donations incorrectly treated as non-taxable despite benefits

Learning insight: CRA’s biggest findings come from mixed activities not allocated properly.

Real-World Results

• A sports association avoided a $310,000 reassessment after Mackisen CPA rebuilt membership classification and sponsorship GST logic.
• An arts NPO reversed a $145,000 ITC denial when we reconstructed expense allocation and clarified exempt programming.
• A youth center maintained its PSB rebate after we demonstrated accurate categorization of exempt vs taxable activities.
• A community organization avoided penalties by reconstructing GST on fundraising events and government-funded programs.

Learning insight: When the NPO’s activities are organized and defensible, CRA backs down.

SEO Optimization & Educational Value

Primary keywords: GST/HST NPO audit, CRA non-profit audit, Mackisen CPA Montreal, PSB rebate audit, GST audit charity
Secondary keywords: membership GST rules, sponsorship GST audit, fundraising GST/HST, non-profit tax audit Canada

Learning insight: GST rules for NPOs are widely misunderstood — ideal for high-performing SEO content.

Why Mackisen CPA Montreal

With 35+ years of non-profit audit defense experience, Mackisen CPA Montreal is Québec’s top authority in GST/HST classification for NPOs, charities, cultural groups, and associations.
We understand PSB rebates, membership-taxation rules, fundraising exemptions, and NPO activity classification better than any firm.

Learning insight: NPO audits are won with classification precision + documentation — our specialty.

Call to Action

If CRA is auditing your non-profit organization, membership revenue, fundraising activities, sponsorships, or PSB rebates, contact Mackisen CPA Montreal immediately:

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

Learning Conclusion:

A CRA GST/HST NPO Audit tests activity classification, taxability, ITCs, rebates, and documentation. Mackisen CPA Montreal ensures your non-profit remains protected, compliant, and fully defended.