HST Audit of Unreported GST/HST

The Canada Revenue Agency recently reported that it has netted $240 million from audit activities on the real estate market in Canada., which includes an HST audit of unreported GST/HST.

The CRA reported that their auditors are focusing their efforts on the following five issues:

  • The “source of funds” to buy or maintain and renovate a property, to see whether the owner is involved in tax evasion or illegal activities, or helping to shield the identity of a wealthy buyer;
  • “Property flipping” by real estate agents, renovators and speculators, to ensure that those involved are properly reporting profits from real estate deals to the CRA;
  • “Unreported GST/HST” on the sale of new or substantially renovated properties, in cases where primary place of residence does not apply to the use of a home;
  • “Unreported capital gains” on secondary residences or houses sold by non-residents in Canada;
  • “Unreported worldwide income” by residents of Canada who have to report their worldwide income to the CRA.

An HST audit of unreported GST/HST can be a major concern, particularly where the GST/HST New Housing Rebate is claimed in error.  It can result in significant penalties and prosecution.

In an ideal scenario, after completing a review or audit of your file, the CRA deems you made no errors in reporting GST/HST. Needless to say, life is not ideal. If you find yourself facing a scenario where you may no longer qualify for a specific GST/HST rebate, do not fret. We are here to help! Speak to an HST advisor to learn more about HST Audit of unreported GST/HST.