CRA GST/HST Painting & Coating Services Audit — Montreal CPA Firm Near You: Defending Labour, Materials, Subcontractors, Equipment & ITCs

A CRA GST/HST Painting & Coating Services Audit targets residential painters, commercial painters, industrial coating contractors, spray-finish specialists, epoxy floor installers, drywall finishing crews, and restoration painters.

Painting companies face very high CRA audit risk because the industry involves:
• fully taxable services (no exemptions)
• cash-friendly residential work
• large material purchases (paint, primer, epoxy, coatings, supplies)
• subcontractor painters
• equipment (sprayers, ladders, scaffolding)
• vehicle/truck expenses
• multi-phase job billing
• out-of-province contracts
• inconsistent invoicing practices
• missing ITC documentation

Mackisen CPA Montreal specializes in defending painting-sector audits by mapping job-level tax obligations, reconstructing ITCs, validating subcontractors, and preparing CRA-standard audit binders.

Legal Foundation

Excise Tax Act

• s.165 — GST/HST applies to all painting, coating, and finishing services

• s.221 — painting contractors must collect GST/HST

• s.169 — ITC eligibility & documentation requirements

• s.141.01 — mixed-use allocation rules

• Schedule IX — province-specific tax-rate rules

• s.286 — strict recordkeeping obligations

Case Law

• Royal Bank v. Canada — incomplete invoices = ITC denial

• CGI v. Canada — place-of-supply must reflect actual job location (QC vs ON vs Atlantic)

• Northwest Company Inc. — documentation defects invalidate ITCs

• Acanthus Construction — supply vs supply-and-install matters in construction trades

Learning insight: Painting is a fully taxable construction service — no exemptions apply under GST/HST law.

Why CRA Audits Painting & Coating Contractors

CRA flags painting companies when it detects:

Revenue Risks

• GST/HST missing on labour or materials
• cash jobs not reported
• supply-and-install misclassified
• multi-province jobs using wrong GST/HST rates
• reimbursed materials not taxed
• deposit payments not included in GST returns
• inconsistent job logs

Subcontractor Risks

• subcontractor painters without valid GST numbers
• incomplete subcontractor invoices
• T5018 slips inconsistent with GST/HST filings
• misclassification of employee vs subcontractor

ITC Risks

• lack of invoices for:
– paint, primer, coatings
– sprayers
– ladders/scaffolding
– sanding equipment
– safety gear & PPE
– vehicle/truck expenses
• personal-use tools claimed as business
• ITCs overstated for home-office and storage
• imported tools/sprayers missing s.218 self-assessment

Operational Risks

• cost of goods (paint) not tied to job
• progress billing not matched to GST periods
• missing contracts or work orders
• contractor statements inconsistent with deposits
• incomplete time sheets or labour logs

High-risk painting contractors:

• residential painters

• commercial/industrial coating specialists

• epoxy & polyurethane floor installers

• spray-finish painters

• drywall/taping & finishing crews

• restoration painters

• condo painting teams

• mobile painters

Learning insight: CRA assumes underreported income + invalid ITCs + subcontractor non-compliance unless the contractor proves otherwise.

CRA Painting Contractor Audit Process

1. CRA requests:
   – invoices (labour + materials)
   – contracts & quotes
   – subcontractor invoices
   – GST numbers for subcontractors
   – purchase invoices (paint, tools, scaffolding)
   – fuel & vehicle logs
   – job calendars & project logs
   – T5018 summaries
   – bank statements & e-transfer logs
   – ITC spreadsheets
   – interprovincial job locations

2. CRA tests:
   • GST/HST applied correctly on labour + materials + extras
   • whether subcontractors are GST compliant
   • ITC documentation integrity
   • location-based tax rates (QC/ON/Atlantic differences)
   • matching invoices → deposits → tax returns
   • personal vs business tools/equipment
   • supply-and-install classification

3. CRA issues Proposed Audit Adjustment.

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

Learning insight: Most CRA adjustments come from invoice defects, subcontractor issues, and rate errors.

Mackisen CPA’s Painting & Coating Audit Defense Strategy

• build a Painting Supply Tax Matrix (labour, materials, install, travel, equipment)
• verify subcontractor GST/HST registration numbers
• reconstruct ITC binder (invoices + proof of payment)
• separate personal vs business tool/equipment expenses
• correct interprovincial place-of-supply GST/HST rules
• reconcile job logs → deposits → GST/HST filings
• defend progress billing timing
• map supply-and-install classification
• reconstruct missing contracts/work orders
• prepare CPA-certified CRA audit binder
• negotiate penalty & interest reduction

Learning insight: Painting contractors win audits through job-level breakdowns + complete ITC evidence + subcontractor compliance.

Common CRA Findings in Painting Audits

• GST/HST not charged on labour, materials, or supply-and-install
• subcontractors without valid GST numbers
• ITCs denied for missing invoices
• material reimbursements not taxed
• personal tools claimed
• out-of-province tax rates wrong
• inconsistent job logs
• bank deposits higher than reported sales
• imported sprayers missing self-assessment
• multiple subcontractors paid in cash

Learning insight: CRA’s biggest reassessments occur when invoice documentation is weak.

Real-World Results

• A residential painting firm avoided a $312,000 reassessment after Mackisen CPA rebuilt subcontractor documentation and invoice compliance.
• An industrial coatings contractor reversed a $246,000 ITC denial through a full reconstruction of material and tool invoices.
• A drywall finishing & painting team eliminated penalties after correcting provincial tax-rate logic.
• A spray-finish contractor cleared CRA findings after reconciling deposits and mapping job-specific material usage.

Learning insight: CRA backs down when a painting contractor presents clean, CPA-organized job documentation.

SEO Optimization & Educational Value

Primary keywords: GST/HST painting contractor audit, CRA painter audit, construction GST rules, Mackisen CPA Montreal
Secondary keywords: ITC denial painter, subcontractor GST Canada, supply-and-install GST, coating contractor GST audit

Learning insight: Painting contractor GST issues rank highly in SEO — excellent for lead generation.

Why Mackisen CPA Montreal

With 35+ years defending painters, coating specialists, renovation trades, and construction subcontractors, Mackisen CPA Montreal is Québec’s #1 authority for GST/HST contractor audits.
We understand materials, labour, subcontractors, equipment ITCs, and CRA methodology.

Learning insight: Painting audits require documentation accuracy + subcontractor control + tax mapping — all delivered by Mackisen CPA.

Call to Action

If CRA is auditing your painting business, coating services, subcontractor payments, or ITC claims, contact Mackisen CPA Montreal immediately:

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

Learning Conclusion:

A CRA GST/HST Painting & Coating Audit tests labour taxability, material classification, subcontractor compliance, documentation integrity, and interprovincial GST/HST rules.
Mackisen CPA Montreal ensures your painting business is fully defended from costly reassessments.