CRA GST/HST Retail Store Audit — Montreal CPA Firm Near You: Defending POS Systems, Inventory Flows, ITCs, Promotions & Multi-Channel Sales

A CRA GST/HST Retail Store Audit targets brick-and-mortar retailers, boutiques, convenience stores, pharmacies, electronics shops, fashion stores, supplement retailers, grocery markets, beauty stores, and hybrid retail-ecommerce operations.

Retail is one of CRA’s most heavily audited sectors because it involves:
• complex POS systems
• daily cash sales
• mixed taxable & zero-rated products
• promotional discounts & coupons
• loyalty programs
• inventory shrinkage
• vendor rebates
• multiple payment platforms
• returns, exchanges & store credits
• employees receiving taxable benefits
• large recurring ITCs for inventory purchases

Mackisen CPA Montreal specializes in defending retail GST/HST audits by reconciling POS data, verifying tax treatment for products, rebuilding ITC documentation, and preparing CPA-certified audit binders.

Legal Foundation

Excise Tax Act

• s.165 — GST/HST on taxable supplies

• Schedule VI — zero-rating rules (e.g., groceries, certain vitamins)

• Schedule V — exemptions for certain medical/health products

• s.221 — requirement to collect & remit GST/HST

• s.169 — ITC documentation requirements

• s.286 — POS and recordkeeping obligations

Case Law

• Northwest Company Inc. — incomplete invoices = ITC denial

• Shoppers Drug Mart Case — coupons & promotions must follow tax rules

• Honeywell — burden of proof lies with retailer

• Royal Bank — strict documentation for ITCs

Learning insight: Retail taxation hinges on product classification, POS accuracy, and complete documentation.

Why CRA Audits Retail Stores

CRA selects retail businesses when it detects:
• discrepancies between POS reports & reported GST/HST
• multiple POS terminals inconsistent with revenue
• high levels of cash transactions
• incorrect tax treatment for:
– groceries
– supplements
– low-value goods
– prescription vs OTC items
• inventory shrinkage interpreted as unreported sales
• promotions, coupons, or discounts improperly applied
• ITCs claimed on personal or mixed-use purchases
• e-commerce sales not aligned with in-store sales
• supplier invoices missing GST/HST numbers
• high refund requests or monthly ITC claims

High-risk retailers:

• convenience stores

• grocery stores

• pharmacies

• fashion boutiques

• electronics shops

• supplement & vitamin retailers

• beauty supply stores

• discount retailers

• furniture stores

• hybrid retail + e-commerce brands

Learning insight: CRA assumes under-reported sales and ITC over-claims unless the retailer disproves it.

CRA Retail Audit Process

1. CRA requests:
   – POS daily Z-reports
   – inventory movement logs
   – merchant processor statements (Visa/Mastercard/Interac)
   – cash reconciliation reports
   – supplier invoices
   – purchase orders & receiving slips
   – returns/exchange logs
   – coupon & promotion records
   – loyalty program data
   – bank statements
   – ITC spreadsheets

2. CRA tests:
   • sales reported vs deposits received
   • product tax classification accuracy
   • POS programming (taxable vs zero-rated)
   • supplier invoice validity (GST numbers, tax amounts)
   • shrinkage vs unreported sales
   • coupon/discount tax implications
   • ITC documentation
   • intercompany supply if part of a chain

3. CRA issues a Proposed Audit Adjustment.

4. Mackisen CPA prepares a complete factual & legal defense.

Learning insight: CRA uses projection methodology — one error in a sample can be applied to entire months or years.

Mackisen CPA’s Retail Audit Defense Strategy

• reconcile POS → merchant deposits → GST filings
• validate product tax classification (taxable, zero-rated, exempt)
• rebuild missing ITC proof (invoices + payment evidence)
• defend shrinkage using inventory reconciliation + supplier shortages
• correct tax logic for coupons, BOGO promotions, loyalty points
• prepare Retail Supply Classification Matrix
• identify supplier GST/HST registration errors
• reconcile cash sales with Z-reports and bank deposits
• prepare CPA-certified audit binder in CRA-preferred format
• negotiate penalty & interest reductions

Learning insight: Retail audits are won through data clarity + documentation completeness + product-level tax accuracy.

Common CRA Findings in Retail Store Audits

• GST/HST charged incorrectly on certain products
• zero-rated products treated as taxable (or vice-versa)
• POS tax rules configured incorrectly
• shrinkage treated as hidden revenue
• loyalty program redemptions miscalculated
• coupons incorrectly applied
• ITCs denied for:
– missing invoices
– invalid GST numbers
– personal-use expenses
• mismatches between POS and bank deposits
• intercompany charges incorrectly treated

Learning insight: CRA’s largest reassessments come from POS classification mistakes and invoice gaps.

Real-World Results

• A supplement retailer avoided a $410,000 reassessment after Mackisen CPA corrected zero-rating rules for vitamins & restored ITC documentation.
• A grocery store reversed a $230,000 projected assessment when we proved shrinkage was supplier-related, not unreported sales.
• A pharmacy eliminated penalties by explaining POS programming logic and correcting medical vs taxable product codes.
• A fashion retailer cleared CRA findings after reconciling merchant statements and rebuilding ITC support.

Learning insight: When POS data and ITCs are reconstructed properly, CRA’s assumptions fall apart.

SEO Optimization & Educational Value

Primary keywords: GST/HST retail audit, CRA store audit, Mackisen CPA Montreal, POS GST audit
Secondary keywords: zero-rated grocery audit, supplement GST/HST rules, retail ITC audit, pharmacy GST audit

Learning insight: Retail GST/HST content ranks extremely well due to high audit volume and confusion.

Why Mackisen CPA Montreal

With 35+ years defending retail businesses, Mackisen CPA Montreal is Quebec’s top expert in POS reconciliation, GST/HST classification, inventory flow analysis, and audit defense.
We understand retail operations at a technical, operational, and financial level — exactly what CRA scrutinizes.

Learning insight: Retail audits require operational insight + tax logic + flawless documentation — the Mackisen advantage.

Call to Action

If CRA is auditing your retail store, POS system, inventory, or ITC claims, contact Mackisen CPA Montreal immediately:

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

Learning Conclusion:

A CRA GST/HST Retail Store Audit tests POS accuracy, product classification, shrinkage logic, ITC documentation, supplier validity, and sales reconciliation.
Mackisen CPA Montreal ensures your retail business is fully defended, compliant, and protected from costly reassessments.