CRA GST/HST Public Service Bodies (PSB) Rebate Audit — Montreal CPA Firm Near You: Defending Municipal, Charity, NPO, and University Rebates

A CRA GST/HST Public Service Bodies (PSB) Rebate Audit examines whether your organization — such as a charity, non-profit organization (NPO), municipality, university, school, hospital, or indigenous government — correctly claimed the PSB rebate for GST/HST paid on eligible expenses.

PSB rebates can range from 50% to 100% of GST/HST paid, depending on the type of organization. Because these rebates often involve large refund claims, CRA rigorously verifies eligibility, activities, documentation, and allocation rules.

Mackisen CPA Montreal specializes in defending PSB rebate audits by reconstructing eligibility evidence, reviewing governance documentation, rebuilding ITC and rebate trails, and preparing CPA-certified audit binders aligned with CRA’s standards.

Legal Foundation

Excise Tax Act s.259 — governs PSB rebate eligibility and calculation rules.
Excise Tax Act s.169 — limits ITCs and governs documentation for GST/HST paid.
Income Tax Act — registration requirements for charities and NPOs.
Case law: Royal Bank v. Canada — rebate claims must be supported with complete documentation and commercial logic.

Learning insight: CRA approves PSB rebates only when proper governance + documentation + eligibility are clearly demonstrated.

Why CRA Audits PSB Rebates

CRA audits PSBs when it detects:
• unusually large rebate claims
• missing or incomplete invoices
• rebates claimed on ineligible supplies (exempt or personal-use)
• unclear or undocumented PSB status
• NPOs or charities engaging in commercial activities requiring GST/HST registration
• incorrect allocation between commercial and exempt activities
• capital project rebates claimed improperly
• inconsistent reporting between tax filings and financial statements
• municipal or school board filings with complex multi-entity structures

Learning insight: CRA assumes overclaimed rebates unless every dollar is supported, allocated, and justified.

CRA PSB Rebate Audit Process

1. CRA requests:
   – invoices and receipts
   – proof of payment
   – PSB status documentation (letters patent, registration, by-laws)
   – financial statements
   – contracts and funding agreements
   – expense allocation schedules (commercial vs exempt)
   – capital project records

2. CRA tests eligibility for each category of expense.

3. CRA checks whether ITCs should have been claimed instead of rebates.

4. CRA recalculates rebate rates based on PSB type (e.g., charity: 50% federal).

5. CRA issues a proposed reassessment.

6. Mackisen CPA responds with a complete legal-tax defense.

Learning insight: CRA requires organizational proof before accepting expense proof.

Mackisen CPA’s PSB Rebate Defense Strategy

• verify your PSB category (charity, NPO, municipality, etc.)
• review governing documents to prove eligibility
• rebuild receipts, proof-of-payment, and vendor GST/HST numbers
• prepare detailed allocation schedules for mixed-use activities
• defend capital project rebates with construction invoices and contracts
• classify expenses correctly between exempt and commercial activities
• prepare CPA-certified audit binders with PSB rebate mapping
• negotiate penalty/interest relief for inadvertent errors

Learning insight: PSB rebate audits are won through complete organization-level documentation, not just receipts.

Common CRA Findings in PSB Rebate Audits

• rebates claimed on ineligible expenses (exempt or personal)
• no proof of PSB status or improper classification
• commercial activities requiring ITCs instead of rebates
• capital projects misclassified or undocumented
• invalid GST/HST numbers on supplier invoices
• expenses unrelated to charitable/NPO activities
• missing allocation schedules for mixed activities
• duplicate claims or clerical errors

Learning insight: CRA denies rebates when the organization cannot show mission-aligned use + proper paperwork.

Real-World Results

• A charity retained a $310,000 PSB rebate after Mackisen CPA rebuilt missing invoices and demonstrated program-related use.
• A municipality reversed a $740,000 reassessment by proving correct rebate rates and allocation across multi-department activities.
• A non-profit avoided penalties when we reconstructed five years of GST documentation and validated capital project expenditures.
• A school kept its full rebate when we proved educational-program use for disputed expenses.

Learning insight: CRA withdraws when the organization’s governance + activity documentation is clear.

SEO Optimization and Educational Value

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Learning insight: Sharing detailed PSB audit guidance strengthens your firm's authority for both CRA and clients.

Why Mackisen CPA Montreal

With 35+ years defending charities, NPOs, municipalities, health organizations, and schools, Mackisen CPA Montreal is Québec’s leading authority on PSB rebate audits. Our bilingual CPAs understand the exact criteria CRA uses and build files that withstand scrutiny.

Learning insight: PSB rebate audits test eligibility, allocation, and governance — we defend all three.

Call to Action

If CRA is auditing your PSB rebate or requesting records, contact Mackisen CPA Montreal immediately for full representation and compliance support.
Phone: 514-276-0808 | Email: info@mackisen.com | Website: mackisen.com

Learning conclusion: A CRA PSB Rebate Audit tests documentation, mission alignment, and eligibility. Mackisen CPA Montreal ensures your rebate is fully defended, compliant, and protected.