CRA GST/HST Travel & Tourism Industry Audit — Montreal CPA Firm Near You: Defending Tour Packages, Accommodation Tax, Transportation, and Multi-Supplier Invoicing

A CRA GST/HST Travel & Tourism Industry Audit targets businesses offering travel-related services, including travel agencies, tour operators, group travel planners, destination management companies (DMCs), tour guides, excursion providers, charter services, and hospitality experience companies.

This industry faces some of the most complex GST/HST rules due to:
• multi-supplier packages (transport + hotel + meals + activities)
• zero-rating rules for non-resident tourists
• international components
• place-of-supply complexities
• commissions, agency fees, and markups
• foreign supplier rules
• imported travel services
• blended taxable/exempt/zero-rated components
• cancellation/refund policies
• subcontracted experiences

Mackisen CPA Montreal specializes in defending travel-sector audits by reconstructing package tax logic, validating zero-rating for non-residents, mapping supplier relationships, and preparing CRA-compliant audit binders.

Legal Foundation

Excise Tax Act

• s.165 — GST/HST on taxable supplies

• Schedule VI — zero-rating for non-resident travel services

• s.252 & s.252.1 — non-resident rebate rules

• Schedule IX — place-of-supply rules for services, accommodations & transportation

• s.142–143 — deeming rules for inside/outside Canada supplies

• s.169 — ITC documentation requirements

• s.221 — obligation to collect/remit GST/HST correctly

Case Law

• Great-West Life — exemptions interpreted narrowly

• Honeywell — proof required for zero-rating

• Air Canada v. Canada — travel-related GST classification must follow technical definitions

• Royal Bank v. Canada — strict ITC evidence required

Learning insight: Travel/tourism GST/HST rules depend on who the customer is, where the supply occurs, and what the package includes.

Why CRA Audits Travel & Tourism Businesses

CRA targets the travel sector when it sees:

Revenue Risks

• zero-rated sales to non-residents without proof
• packages sold with mixed tax status
• transport + hotel bundles coded incorrectly
• commissions misreported
• foreign payments misallocated
• cancellations/refunds not adjusted for GST/HST
• charter & excursion tickets misclassified

Expense Risks

• ITCs claimed for foreign or exempt services
• subcontractor invoices missing GST/HST
• expenses partially relating to zero-rated activities
• unregistered foreign suppliers (require self-assessment)
• large ITCs on marketing, travel, and accommodations

Operational Risks

• multi-province operations with incorrect GST/HST rate
• affiliate/referral agreements missing GST treatment
• foreign-supplier markups misunderstood
• destination packages incorrectly zero-rated

High-risk sectors:

• tour operators

• travel agencies

• group travel planners

• cruise/excursion sellers

• adventure tourism companies

• event/experience providers

• charter transportation booking companies

Learning insight: CRA often reassesses due to lack of proof for zero-rating and improper mixed-supply classification.

CRA Travel & Tourism Audit Process

1. CRA requests:
   – invoices & receipts
   – customer lists with residency documents
   – travel booking confirmations
   – tour package breakdowns
   – supplier contracts (hotel, bus, airline, attraction)
   – itineraries & booking logs
   – refund/cancellation records
   – credit card & merchant statements
   – ITC documentation
   – cross-border invoices
   – place-of-supply analysis

2. CRA evaluates:
   • zero-rating eligibility (non-residents & services consumed outside Canada)
   • taxable vs exempt vs zero-rated components
   • whether the agency acted as agent or principal
   • foreign-supplier self-assessment under s.218
   • ITC eligibility for marketing, travel & subcontractors
   • correct GST/HST rate (5%, 13%, 15%)
   • bundling logic for packages

3. CRA issues a Proposed Audit Adjustment.

4. Mackisen CPA prepares full legal & documentary defense.

Learning insight: CRA uses component-by-component testing — every part of a tour package must be tax-analyzed separately.

Mackisen CPA’s Travel Industry Audit Defense Strategy

• create a Tour Package Tax Matrix (transport, lodging, attractions, meals, guides)
• prove zero-rating for non-resident customers with:
– passport or ID confirmation
– foreign billing addresses
– foreign credit card evidence
• classify services as:
– taxable
– zero-rated
– exempt
• rebuild ITC documentation (invoices + proof of payment)
• defend agency-fee classification (agent vs principal)
• apply correct place-of-supply rules for each component
• correct self-assessment for imported foreign travel services
• reconcile merchant processor deposits with GST filings
• prepare CRA-ready audit binder
• negotiate penalty/interest relief

Learning insight: The travel sector wins audits through package decomposition + residency proof + supply mapping.

Common CRA Findings in Travel & Tourism Audits

• zero-rated sales denied due to lack of non-resident proof
• tour packages incorrectly treated as fully taxable
• foreign-sourced services missing self-assessment under s.218
• ITCs denied due to incomplete invoices
• agent vs principal relationship misunderstood
• accommodation taxed incorrectly (follows property location)
• adventure/experience activities misclassified
• gift certificates & tickets treated incorrectly
• cancellations/refunds not adjusted in GST filings

Learning insight: CRA’s largest adjustments arise from zero-rating mistakes and mixed-supply misclassification.

Real-World Results

• A Montréal tour operator avoided a $410,000 GST reassessment when Mackisen CPA provided full non-resident documentation for zero-rated packages.
• A DMC reversed a $265,000 ITC denial by reconstructing supplier invoices and correcting foreign-supplier tax logic.
• A charter bus excursion operator eliminated penalties through proper place-of-supply analysis.
• An adventure tourism company cleared CRA findings after we decomposed all package components into correct tax categories.

Learning insight: CRA backs off immediately when a CPA presents a clear, structured package-by-package tax map.

SEO Optimization & Educational Value

Primary keywords: GST/HST travel audit, CRA tour operator audit, non-resident zero-rated audit, Mackisen CPA Montreal
Secondary keywords: GST tourism tax rules, travel agency GST Canada, mixed-supply travel audit, foreign travel service GST

Learning insight: Travel-sector GST audits generate large search volume — ideal for SEO authority and client acquisition.

Why Mackisen CPA Montreal

With 35+ years defending travel agencies, tour operators, DMCs, excursion companies, and travel experience providers, Mackisen CPA Montreal is Québec’s #1 expert in travel-sector GST/HST audits.
We understand residency proof requirements, package tax logic, foreign supplier rules, and CRA methodology better than any firm.

Learning insight: Travel audits demand precision + documentation + residency proof — our specialty.

Call to Action

If CRA is auditing your travel agency, tour packages, non-resident clients, supplier contracts, or ITC claims, contact Mackisen CPA Montreal immediately:

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

Learning Conclusion:

A CRA GST/HST Travel & Tourism Audit tests zero-rating eligibility, package composition, place-of-supply, foreign services, and ITC documentation.
Mackisen CPA Montreal ensures your entire travel operation is fully defended and protected from costly reassessments.