The CRA Audit Experts
Claiming ITCs may sound straightforward, but compliance is where things can get tricky. The Canada Revenue Agency frequently reviews ITC claims to ensure businesses are only claiming what they’re entitled to. One common issue is missing or incomplete invoices: if a receipt doesn’t show the vendor’s GST/HST number or the tax paid, it may be disallowed. Another common issue is claiming 100% of GST/HST on expenses with limited eligibility. Most businesses, for example, can only claim 50% of the GST/HST paid for meals and entertainment. Charities and public institutions, however, can claim 100% of the GST/HST they pay on meals and entertainment, and long-haul truck drivers can claim 80%.
Timing is also key. The deadline for claiming input tax credits with the CRA is no later than four years after the end of the reporting period in which the ITC could have first been claimed. This four-year limit applies to most registrants, including individuals and most corporations. However, some financial institutions and certain large businesses have a reduced two-year claim period.
Here’s the kind of documentation you need to keep on hand:
The CRA requires that all records be kept for at least six years from the end of the last tax year they relate to. That includes both paper and digital formats. And if you’re switching systems or archiving files, make sure everything remains retrievable in case you get audited years down the line.
However, if the CRA has contacted you to request further information, or is reviewing or auditing your GST/HST returns, our professional tax consultants ensure your responses are accurate, your documents are audit-ready, and you’re not leaving money on the table, regardless of what shape your books are currently in.
When the CRA decides to audit a business for GST/HST, they follow a structured process. It’s not a surprise visit or a one-day event: it unfolds in phases, and understanding what’s ahead can help you stay prepared and calm throughout.
It all begins with a formal notice. The CRA typically reaches out by mail or phone to let a business know it’s been selected for a GST/HST audit. This notice outlines the scope of the audit, the reporting period under review, and the name and contact information of the auditor assigned to the case. The auditor may request specific records in advance, or schedule a meeting to review your documentation together. This initial contact is not meant to be adversarial, just procedural.
Before the audit begins, businesses are expected to gather all relevant records. That includes GST/HST returns, invoices, receipts, bank statements, contracts, expense reports, and internal accounting records. What the CRA wants to see is consistency: reported GST/HST must match what’s in your books and what your business activities reflect. A common challenge at this stage is missing documentation or a lack of clarity between personal and business transactions.
Many audits are conducted at the business location, but sometimes they happen through correspondence or remotely, especially for smaller operations or simpler audits. During an on-site audit, the CRA auditor reviews records, asks questions, and takes notes. They may ask for clarification on specific transactions or dig deeper into claim patterns that don’t align with industry norms. If you use accounting software, they may request digital access or exports of certain data.
The auditor isn’t just checking math; they’re also assessing whether your business is applying GST/HST and other business tax rules properly. That includes how you determine taxable supplies, calculate input tax credits, and document exempt or zero-rated sales. They’ll also evaluate your internal controls and compliance systems.
This is another reason why professional representation is crucial during a CRA audit. Not only can we help secure the best possible results, but we also protect you from inviting further scrutiny.
Once the review is complete, the auditor will issue a summary of findings. If there are no issues, you’ll receive confirmation that the audit is closed with no changes. If discrepancies are found, you’ll get a proposal letter outlining the CRA’s position and any potential adjustments. You’ll have a chance to respond before anything is finalized.
In some cases, the CRA will issue a Notice of Assessment or Reassessment. If you disagree with the outcome, there’s a formal appeals process you can pursue. However, it’s best to resolve issues during the audit whenever possible, as the CRA can begin collection actions on GST/HST before your objection is decided upon; another reason for getting an expert involved from the start.
The audit doesn’t always end with a bill. Sometimes, it highlights weak areas in your record-keeping or tax reporting that you can fix moving forward. Auditors may offer suggestions or refer you to CRA educational resources. And if your business has a clean file, it may reduce the likelihood of future audits.
Start by reviewing the CRA’s findings line by line. The audit report will explain the adjustments they made, the reasons behind them, and any supporting documentation they relied on. Look for:
If the report includes technical language or assumptions you don’t agree with, flag them. The right tax advisor, like the Tax Audit Help team, can help you spot errors, interpret the CRA’s reasoning, and prepare a response.
If the audit outcome is accurate and fair, take the necessary steps to address the issues. Examples include:
Making these changes isn’t just about compliance; it can also reduce the risk of future audits. CRA auditors often look at historical behaviour, so demonstrating that you've made changes post-audit shows a proactive mindset.
If you disagree with the CRA’s decision, you’re not locked in. You have the right to file a formal objection within 90 days of the date on the notice of assessment or reassessment.
Here’s how the appeal process typically works:
CRA’s GST/HST Memoranda Series. These provide detailed technical guidance on GST rules, input tax credits, place of supply, and more. Professionals rely on them to build solid arguments during audits and appeals.
The CRA’s Audit Information Circulars. These outline what auditors look for, common audit practices, and how audits are selected. They can help you understand the CRA’s expectations.
Industry-specific guides. Many sectors have GST/HST nuances that aren't always obvious. Industry and professional associations may publish specialized guides or organize presentations to demonstrate how GST applies in your field and where audits frequently identify issues. Always confirm the credentials of the presenter/publisher and that the information is still applicable.
Getting help early can make all the difference. Whether you're preparing for a review or responding to a formal audit letter, professional support keeps the process clear and your position protected.
