CRA GST/HST Real Estate Developer Audit — Montreal CPA Firm Near You: Defending Land Development, Pre-Construction Sales, Builders, and Multi-Phase Projects

A CRA GST/HST Real Estate Developer Audit targets developers engaged in land acquisition, subdivision, pre-construction condo projects, multi-unit developments, purpose-built rentals, mixed-use buildings, and spec home construction.
This is one of the most aggressive and complex GST/HST audit categories because developers deal with:
• high-value transactions
• multi-year projects
• builder classification
• substantial renovation rules
• land development tax rules
• assignment sales
• rental conversions
• joint ventures
• complex ITC allocations

Mackisen CPA Montreal specializes in defending developer audits by reconstructing GST/HST logic across the entire project lifecycle, validating ITCs for land, soft costs, hard costs, and professional fees, and preparing CRA-ready audit binders that clarify every step of the development.

Legal Foundation

Excise Tax Act

• s.165 — GST/HST on taxable real property

• s.191 — self-assessment rules for new residential complexes

• s.123(1) — definitions of “builder,” “developer,” “residential complex”

• s.169 — strict ITC documentation standards

• s.155 — related-party FMV rules

• Schedule V — exempt supplies of real property

• Schedule VI — zero-rated supplies (exports, certain non-residents)

Case Law

• Chella — intention determines builder/developer status

• McEachern — repeated development triggers builder classification

• Tarnowe — occupancy essential for rebate eligibility

• DaSilva — land-use facts determine tax treatment

Learning insight: CRA treats developers and builders as commercial suppliers by default, unless proven otherwise.

Why CRA Audits Real Estate Developers

CRA flags real estate developers when it detects:
• land purchased then quickly developed or subdivided
• high-volume ITCs for soft costs (architects, engineers, lawyers)
• GST/HST missing on new-build sales
• assignment sales within development groups
• pre-construction units sold before occupancy
• self-assessment not done for rental conversions
• misclassified substantial renovations
• joint venture elections missing (form 273)
• FMV used incorrectly for related-party transfers
• mixed-use (commercial + residential) buildings with incorrect allocation
• large monthly GST refunds

Learning insight: CRA assumes developer = builder = taxable unless every element is proven and documented.

CRA Developer Audit Process

1. CRA sends audit notice requesting multiple years of GST/HST filings.

2. CRA requests documentation for:
   – land purchase agreements
   – architectural & engineering drawings
   – building permits
   – pre-construction sales (APS)
   – assignment agreements
   – contractor invoices
   – soft cost invoices (legal, zoning, marketing, planning)
   – ITC tracking spreadsheets
   – progress draws & bank financing
   – occupancy permits
   – rental agreements (if rental)
   – JV or partnership agreements

3. CRA tests:
   • GST/HST on pre-construction sales
   • builder status
   • ITCs claimed on land & development costs
   • substantial renovation classification
   • rental conversion self-assessment
   • place-of-supply vs province

4. CRA issues Proposed Audit Adjustment.

5. Mackisen CPA prepares a full rebuttal with supporting evidence.

Learning insight: CRA uses lifecycle auditing — reviewing the entire development from land purchase to final sale or rental.

Mackisen CPA’s Developer Audit Defense Strategy

• prepare Project Lifecycle Tax Map (land → construction → sale/rental)
• defend ITCs with complete invoices, GST numbers, and payment traces
• allocate mixed-use portions (commercial/residential)
• correct GST/HST treatment for pre-sale Agreements of Purchase & Sale
• defend against improper builder classification
• ensure substantial renovation rules are applied correctly
• verify self-assessment calculations for rental conversions
• reconstruct missing JV/273 elections
• create CRA-ready audit binder (chronology + tax logic + documentation)
• negotiate penalty/interest removal
• correct past filings where required

Learning insight: Developer audits are won when the entire project story is presented clearly, legally, and chronologically.

Common CRA Findings in Developer Audits

• GST/HST not charged on new homes or units
• assignment sales treated incorrectly
• ITCs denied due to incomplete invoices or missing GST numbers
• projects improperly treated as exempt when taxable
• large expenses reclassified as soft costs with no ITC eligibility
• commercial portions misallocated
• land development treated as builder inventory
• substantial renovations reclassified as new builds
• rental conversions missing GST/HST self-assessment
• related-party FMV reassessments

Learning insight: CRA often misunderstands development flow — unless the CPA reconstructs it step-by-step.

Real-World Results

• A development company avoided a $1.4M GST reassessment after Mackisen CPA rebuilt ITC support and corrected CRA’s builder-analysis logic.
• A condo developer reversed a $760,000 adjustment after demonstrating proper GST/HST treatment for assignment transactions.
• A land developer eliminated penalties by providing a CRA-ready lifecycle binder clarifying zoning, subdivision, and soft-cost classification.
• A rental developer kept $320,000 in ITCs after we validated mixed-use allocation and self-assessment rules.

Learning insight: CRA backs down when presented with superior tax logic and complete documentation.

SEO Optimization & Educational Value

Primary keywords: GST/HST real estate developer audit, CRA developer audit, builder audit, Mackisen CPA Montreal, GST new-build audit
Secondary keywords: land development GST audit, condo project GST audit, ITC denial developer, GST rental conversion audit

Learning insight: Developer audits generate massive search traffic — strong content builds authority and conversions.

Why Mackisen CPA Montreal

With 35+ years defending developers, builders, land investors, and construction groups, Mackisen CPA Montreal is Québec’s #1 authority in GST/HST real-estate development audits.
We understand land rules, pre-construction taxation, ITC allocation, builder status, rental conversion rules, JV elections, and CRA audit behavior.

Learning insight: Developer audits require legal precision, tax expertise, and flawless documentation — our specialty.

Call to Action

If CRA is auditing your development project, ITCs, pre-construction sales, or builder status, contact Mackisen CPA Montreal immediately:

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

Learning Conclusion:

A CRA GST/HST Real Estate Developer Audit tests the full lifecycle of a development, from land purchase to final sale or rental. Mackisen CPA Montreal reconstructs the entire tax story, defends every ITC, and protects your project from high-value reassessments.