The Canada Revenue Agency (CRA) has significantly increased its audit activity in the construction sector. At Geib & Company, we understand the challenges this presents for builders, developers, and contractors.

Whether you are a small contractor or a growing developer, it is critical to understand what the CRA is targeting — and how to protect your business.

 

Why Is the CRA Targeting Construction?

With rising housing costs and affordability concerns, the CRA announced in late 2023 that it would focus on the construction sector — especially for income tax and GST/HST audits.

Construction businesses often operate through complex structures like:

• Joint ventures
• Family trusts
• Management companies
• Project-specific partnerships

These are legitimate, but they are often viewed by the CRA as high-risk for compliance issues.

 

CRA Audit Hotspots in Construction

Here are the key areas where CRA auditors are focusing their attention:

1. Joint Venture Reporting
   Many contractors enter joint ventures without understanding the tax implications — often resulting in GST/HST errors and double taxation.
2. Revenue Matching
   The CRA compares GST/HST returns to corporate tax filings. Even small mismatches can raise flags.
3. Timing of Revenue Recognition
   Improper deferrals or inconsistent revenue recognition can lead to reassessments and penalties.
4. Income vs. Capital Property Classification
   Mistakes when converting builds to rentals can result in significant GST/HST and tax exposure.
5. GST/HST Rebates for Landlords
   With new multi-family rebates introduced in 2023, eligibility criteria are under tight review.

 

How to Prepare for a CRA Audit

• Work with a Construction-Savvy Accounting Partner
  We understand the ins and outs of tax and reporting in your industry. Our team defends tax positions and conducts internal reviews to make sure you’re audit ready.
• Keep Clean, Accurate Records
  Transparent bookkeeping and consistent financial oversight can protect your business from costly errors.
• Use Review Engagements for Bonding
  We offer tailored review engagements that support bonding requirements — without the need for a full audit.
• Plan Your Audit Defense
  From audit support to fee protection plans, we offer solutions to reduce the financial and administrative stress of an audit.

 

Why Choose Geib & Company?
We support construction businesses at every stage:

• Startup & Structuring
  Entity selection, tax registration, and custom accounting system setup.
• Growth & Expansion
  Tax planning, reporting, and review engagements to support bonding and financing.
• Maturity & Optimization
  Profitability, risk management, and compliance strategies.
• Transition & Succession
  Valuations, tax-efficient transitions, and estate planning.

 

Ready to Protect Your Business?

If you are unsure whether your current accounting practices can withstand a CRA audit, let’s talk.

Schedule a Free Consultation Today
Let’s build a more secure and successful future — together.

 

The information contained herein is general in nature and is based on proposals that are subject to change. It is not, and should not be construed as, accounting, legal or tax advice or an opinion provided by Geib & Company to the reader. This material may not be applicable to, or suitable for, specific circumstances or needs and may require consideration of other factors not described herein.