- The Canada Revenue Agency (CRA) has started conducting GST/HST audits on property sales.
- The audits accuse taxpayers of building their own homes and selling them as part of a business.
- The CRA claims that taxpayers are builders and not exempt from charging GST/HST on the sale of the home.
- A GST/HST property sale audit is similar to an income tax property audit, with a questionnaire sent to the taxpayer.
- New construction is normally subject to GST/HST, but there are exemptions for individuals building a home for personal use.
- The CRA must first determine that the taxpayer is a builder in order to claim GST/HST should have been charged.
- Taxpayers can fight the assessment by proving they are not builders or by meeting specific exemption rules.
- Input tax credits can be used to lower the potential assessment if the taxpayer cannot prove primary residence occupancy.
- The fair market value of the home at the time of construction completion can be argued as the basis for the GST/HST assessment.
Source: sdtaxlaw.ca
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
