CRA GST/HST Painting Company (Full-Service): Interior, Exterior, Residential & Commercial Audit — Montreal CPA Firm Near You: Defending Labour, Materials, Subcontractors, Prep Work & ITCs

A CRA GST/HST Full-Service Painting Company Audit targets medium-to-large painting operations conducting:

• residential interior painting
• exterior painting
• commercial & industrial painting
• spray painting
• popcorn ceiling removal + paint
• primer, undercoat & finishing systems
• brick painting & limewash
• multi-unit (condo/apartment) contracts
• seasonal exterior painting
• subcontracted painting crews
• restoration painting after water or fire damage

CRA audits painting companies aggressively because this trade involves:

• entirely taxable labour & materials
• high-volume cash/e-transfer residential work
• multi-crew subcontractor structures
• large material purchases (paint, primer, sprayers, rollers, prep supplies)
• prep + paint bundles frequently misclassified
• progress billing, seasonality, and poor documentation

Mackisen CPA Montreal specializes in defending painting companies through job-by-job reconstruction, subcontractor validation, ITC defense, and CRA-compliant audit binders.

Legal Foundation

Excise Tax Act

• s.165 — ALL painting, finishing, coating & prep labour is fully taxable

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

• s.169 — strict ITC documentation requirements

• s.141.01 — allocation rules for mixed-use equipment

• Schedule IX — GST/HST rate based on province where the job occurs

• s.123(1) — defines “service,” “installation,” “labour,” “tangible property”

Case Law

• Royal Bank v. Canada — missing invoice data → ITC denial

• Northwest Company Inc. — supplier invoices must meet strict criteria

• CGI v. Canada — place-of-supply = job location

• CRA rulings: interior/exterior painting & prep = 100% taxable (no exemptions)

Learning insight: Prep, paint, materials, travel, subcontractor labour — all taxable, no exceptions.

Why CRA Audits Mid-Size & Large Painting Companies

Revenue Risks

• GST/HST missing on labour or materials
• residential “cash jobs” underreported
• large commercial contracts misclassified
• painting + prep bundles not fully taxed
• popcorn removal billed without GST/HST
• seasonal gaps suggesting underreporting
• deposits not reported in the right GST period
• progress billing omitted or delayed
• supply-and-install incorrect classification
• condo/HOA work billed incorrectly

Subcontractor Risks

• subcontractor painters with invalid GST/HST numbers
• helpers paid in cash
• missing subcontractor invoices
• T5018 errors
• employee vs subcontractor misclassification

ITC Risks

• missing or invalid invoices for:
– paint, primer, caulk, sealants
– sprayers, compressors, ladders, scaffolding
– tape, rollers, trays, PPE
– vehicle expenses & fuel
– equipment rentals
• imported sprayers/tools missing s.218 self-assessment
• ITCs overstated for personal-use tools
• home-storage expenses misallocated

Operational Risks

• no job maps or cost sheets
• daily site logs inconsistent with deposits
• prep-material usage not tied to projects
• supplier purchases not matching billed jobs
• heavy seasonality → CRA suspects hidden jobs
• insurance paint jobs misreported

High-risk operations:

• residential repainting crews

• multi-crew operations

• commercial painting firms

• spray & finish specialists

• prep + restoration painters

Learning insight: CRA assumes underreported revenue + subcontractor issues + invalid ITCs unless documentation is flawless.

CRA Painting Company Audit Process

1. CRA requests:
   – project contracts & quotes
   – invoices (labour, materials, prep, extras)
   – subcontractor invoices & GST/HST numbers
   – supplier invoices (paint stores, hardware stores)
   – bank & e-transfer statements
   – vehicle/fuel logs
   – equipment purchase & rental receipts
   – job logs, daily site sheets, or scheduling calendars
   – T5018 summaries
   – ITC spreadsheets

2. CRA tests:
   • correct GST/HST on ALL painting-related services
   • QC/ON/Atlantic place-of-supply rate logic
   • subcontractor compliance
   • invoice → deposit → GST return consistency
   • ITC integrity and proof-of-payment
   • personal vs business equipment
   • materials usage vs project scale
   • imported-tool self-assessment (s.218)

3. CRA issues Proposed Audit Adjustment.

4. Mackisen CPA prepares full legal + documentary audit defense.

Learning insight: CRA re-creates your painting season using supplier purchases + job logs + bank deposits.

Mackisen CPA’s Painting Company Audit Defense Strategy

• build a Painting Supply Tax Matrix
– prep
– labour
– materials
– equipment rental
– travel
• rebuild all GST/HST-compliant invoices
• validate subcontractor GST/HST numbers & documents
• reconstruct ITC binder for materials, tools, rentals, vehicles
• correct QC/ON/Atlantic rate applications
• reconcile contract → deposit → invoice → GST filing
• justify paint waste, return, and consumption patterns
• rebuild imported-equipment self-assessment
• prepare CPA-certified audit binder with full evidence
• negotiate penalty & interest reductions

Learning insight: Painting companies win audits by providing organized job documentation, subcontractor compliance and ITC accuracy.

Common CRA Findings in Painting Company Audits

• GST/HST not charged on prep, paint & labour
• invalid subcontractor invoices (or no invoices)
• ITCs denied due to missing/incorrect supplier documents
• personal tools included in ITCs
• imported sprayers/tools missing GST self-assessment
• large differences between bank deposits & reported sales
• supply-and-install misclassification
• missing progress billing entries

Learning insight: CRA’s largest reassessments occur due to invoice defects + subcontractor compliance failures + ITC gaps.

Real-World Results

• A commercial painting firm avoided a $478,000 reassessment after Mackisen CPA rebuilt project documentation & subcontractor records.
• A large residential painting company reversed a $246,000 ITC denial via complete paint/tool invoices & proof-of-payment reconstruction.
• A multi-crew operation eliminated penalties by correcting provincial tax-rate rules on out-of-province jobs.
• A restoration painter cleared CRA findings after fully reconciling deposits, job logs and GST filings.

Learning insight: Evidence wins — organized, CPA-certified job mapping defeats CRA assumptions.

SEO Optimization & Educational Value

Primary keywords: GST/HST painting audit, CRA painting contractor audit, painting GST rules Canada, Mackisen CPA Montreal
Secondary keywords: painting ITC denial, subcontractor painter audit, prep & paint GST, commercial painting GST audit

Learning insight: Painting audits generate high SEO demand due to widespread contractor activity.

Why Mackisen CPA Montreal

With 35+ years defending medium and large painting companies, Mackisen CPA Montreal is Québec’s #1 authority on GST/HST construction-trade audits.
We understand crew logistics, spray systems, subcontractors, seasonal patterns, and CRA methodology deeply.

Learning insight: Painting audits require precision documentation, subcontractor control, and ITC discipline — all strengths of Mackisen CPA.

Call to Action

If CRA is auditing your painting company, subcontractors, GST filings, equipment, or project revenue, contact Mackisen CPA Montreal immediately:

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

Learning Conclusion:

A CRA GST/HST Painting Company Audit tests labour taxability, material documentation, subcontractor compliance, ITC integrity, and provincial rate logic.
Mackisen CPA Montreal protects your operation from costly reassessments.