CRA GST/HST Tattoo, Piercing & Body Art Studio Audit — Montreal CPA Firm Near You: Defending Tattoo Services, Aftercare Products, Artist Splits & ITCs

A CRA GST/HST Tattoo, Piercing & Body Art Studio Audit targets tattoo shops, piercing studios, medical-aesthetic tattoo artists, permanent makeup artists, microblading artists, and hybrid cosmetic-tattoo studios.

CRA heavily audits this sector because it involves:
• fully taxable services (tattoo, piercing, microblading — all taxable)
• mixed supplies: service + aftercare products
• artist commission splits
• cash-heavy operations
• consumable supply ITCs (needles, gloves, ink, aftercare)
• subcontractor artists (often unregistered)
• high equipment expenses (tattoo machines, chairs, sterilization tools)
• jewelry and body-piercing retail sales
• lack of formal invoicing
• inconsistencies between POS and deposits

Mackisen CPA Montreal specializes in defending body-art studios by rebuilding GST/HST logic, validating ITCs, fixing artist-split documentation, and preparing CRA-standard audit binders.

Legal Foundation

Excise Tax Act

• s.165 — all tattooing, piercing & microblading services are taxable

• s.221 — studio must collect GST/HST

• s.169 — strict ITC documentation rules

• s.141.01 — mixed-use allocation for equipment

• s.286 — recordkeeping obligations

• Schedule IX — provincial tax-rate rules

Case Law & CRA Rulings

• Tattooing & piercing have no exemptions under Schedule V

• Microblading/permanent makeup is aesthetic → always taxable

• Aftercare products follow the product tax rules (mostly taxable)

• Royal Bank v. Canada — ITCs require perfect documentary evidence

• Northwest Company Inc. — incomplete invoices = ITC denial

Learning insight: No tattoo or piercing service qualifies for medical/health exemptions — everything is taxable.

Why CRA Audits Tattoo & Piercing Studios

CRA flags tattoo and body-art studios when it detects:

Revenue Risks

• GST/HST not charged on tattoo services
• piercing fees not taxed
• cash transactions underreported
• walk-in jobs with no invoice trail
• deposit/tip misclassification
• incorrect GST/HST on jewelry sales
• artist split commissions not reported correctly
• add-on fees (design fee, touch-ups) missing GST/HST
• multi-artist studios inconsistent in charging tax

ITC Risks

• large equipment ITCs (tattoo machines, PMU machines, laser, chairs)
• consumables: needles, cartridges, ink, gloves, disinfectant
• PPE, sanitation, sterilization supplies
• rent & utilities
• invalid or missing supplier invoices
• imports (ink, machines) missing self-assessment under s.218

Subcontractor Risks

• artists working as independent contractors without valid GST numbers
• shop-owner vs artist revenue-split confusion
• incomplete subcontractor invoices

Operational Risks

• aftercare products not taxed
• piercing jewelry taxed incorrectly
• inconsistent POS programming (taxable vs exempt)
• tips processed incorrectly
• refunds not adjusted for GST/HST

High-risk studios:

• tattoo studios

• piercing studios

• microblading artists

• permanent makeup clinics

• body art collectives

• traveling or guest artists

Learning insight: CRA often assumes underreported revenue + invalid ITCs + subcontractor issues, especially in cash-heavy studios.

CRA Tattoo/Piercing Studio Audit Process

1. CRA requests:
   – daily sales summaries & POS reports
   – appointment logs
   – artist split/commission agreements
   – invoices & receipts
   – jewelry & aftercare product sales
   – e-transfer & cash logs
   – bank deposits
   – subcontractor invoices
   – supplier invoices (ink, needles, PPE, equipment)
   – import docs for machines/ink
   – ITC spreadsheets

2. CRA tests:
   • GST/HST charged correctly on all services
   • aftercare products vs service classification
   • artist commissions: who collected the GST?
   • subcontractor registration & invoice validity
   • equipment & supply ITC documentation
   • cash/e-transfer deposits vs reported sales
   • imported supplies → self-assessment
   • place-of-supply for multi-province guest artists

3. CRA issues a Proposed Audit Adjustment.

4. Mackisen CPA prepares a full legal, documentary, and tax-logic defense.

Learning insight: CRA uses pattern matching — discrepancies between artist logs, POS, and deposits trigger assessments.

Mackisen CPA’s Body-Art Audit Defense Strategy

• rebuild Service & Product Tax Matrix
• reconstruct POS → deposits → GST/HST filings
• validate subcontractor GST numbers
• rebuild ITC binder (supplies + equipment + PPE)
• defend equipment ITCs with proof of purchase
• classify jewelry, aftercare, add-ons correctly
• separate personal vs business equipment
• correct GST/HST on deposits & cancellations
• reconcile artist splits with GST remittances
• prepare CRA-certified audit binder
• negotiate penalty/interest removal

Learning insight: Studios win audits with clean artist-split records, valid invoices, and ITC proof.

Common CRA Findings in Tattoo/Piercing Audits

• GST/HST not charged on tattoo/piercing services
• jewelry & aftercare taxed incorrectly
• subcontractor artists using invalid GST numbers
• ITCs denied for missing invoices
• imported ink/machines missing s.218 self-assessment
• cash jobs underreported
• artist-split commissions not recorded properly
• incomplete POS sales summaries
• expenses for personal-use equipment claimed

Learning insight: CRA’s largest adjustments arise from invalid invoices + cash mismatches + subcontractor issues.

Real-World Results

• A Montreal tattoo studio avoided a $182,000 GST reassessment after Mackisen CPA rebuilt artist split and POS documentation.
• A piercing studio reversed a $94,000 ITC denial by reconstructing equipment and consumable purchase records.
• A PMU/microblading clinic eliminated penalties by correcting product-sale tax codes and subcontractor compliance.
• A multi-artist collective cleared CRA findings when GST remittances were reconciled with bank deposits.

Learning insight: CRA backs down when the studio provides clean, CPA-organized evidence.

SEO Optimization & Educational Value

Primary keywords: GST/HST tattoo audit, CRA piercing audit, microblading GST rules, Mackisen CPA Montreal
Secondary keywords: tattoo artist GST number, ITC denial tattoo studio, aftercare GST/HST, artist commission split GST

Learning insight: Tattoo and piercing GST audits are among the most searched niche audits — high SEO opportunity.

Why Mackisen CPA Montreal

With 35+ years defending tattoo studios, piercing shops, PMU clinics, and body-art collectives, Mackisen CPA Montreal is Québec’s top authority in GST/HST audits for the body-art industry.
We understand artist splits, cash-flow issues, equipment ITCs, imported supplies, and CRA audit methodology better than any firm.

Learning insight: Body-art audits require precise classification, full documentation, and subcontractor control — all strengths of Mackisen CPA.

Call to Action

If CRA is auditing your tattoo studio, piercing business, microblading clinic, or artist collective, contact Mackisen CPA Montreal immediately:

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

Learning Conclusion:

A CRA GST/HST Tattoo, Piercing & Body Art Studio Audit tests service taxability, product classification, artist splits, subcontractor compliance, and ITC documentation.
Mackisen CPA Montreal ensures your studio is fully defended from costly reassessments.