C172 Flight Instructor reported during takeoff ATC cleared an aircraft to cross the runway resulting in rejected takeoff.

Narrative

A student and I were flying the left traffic pattern for [Runway] XXL at ZZZ whilst a air ambulance PC-12 was landing straight-in for XXR. I was the pilot flying and was cleared for the option XXL and intended to perform a touch and go; the PC-12 had landed and was holding short of our runway at the end. As we touched down I began to clean the aircraft up and added full power. As I added full power I heard ATC clear the PC-12 to cross our runway and observed the PC-12 cross the runway as I pulled the power back. I questioned the tower as to whether or not we were cleared for the option and they confirmed that we were; however at that point we taxied off the runway then back to the beginning of the runway for a normal takeoff. Upon returning to our home field I called the tower and they explained they thought we were already on the upwind leg and that a pole on the tower blocked their view of us on the runway. I was told that after I queried the tower about whether we were cleared for the option or not; they realized then that we were still on the runway and the PC-12 was crossing.