The CRA Audit Experts

GST/HST Audit Help for Canadian Businesses

GST Audit, Assessmentโ€จ& Reassessment Stakes are High.โ€จDonโ€™t Jeopardize Your Business.

CRA Audits Can Be an Uphill Battle; โ€จUntil You Reach Out to Sam Faris

You already have enough on your plate, and answering a GST/HST audit requires the full attention of a licensed expert in tax laws. The CRA has extensive resources and broad authority; they can even start collecting GST/HST they feel you โ€จowe before your objectionโ€™s been heard. Moreover,
it falls on the taxpayer to present a strong, well-documented case if they want to challenge audit findings and protect themselves from an unfair GST/HST bill.

Thatโ€™s where we come in.

Understanding GST/HST Audits

Learn How GST/HST Audits Function in the Canadian Tax System

A GST/HST audit is the CRAโ€™s way of checking whether a business is accurately reporting and remitting the goods and services tax (GST) or the harmonized sales tax (HST). If youโ€™re collecting these taxes on behalf of the government, youโ€™re expected to follow very specific rules, and the CRA wants to make sure youโ€™re doing just that.
These audits typically focus on whether youโ€™ve collected the right amount of tax, claimed input tax credits (ITCs) properly, and filed your returns correctly. The CRA may zero in on particular reporting periods, but sometimes theyโ€™ll expand their review if they uncover errors or inconsistencies. What triggers an audit? It could be something as routine as a random selection, or as specific as red flags in your filings, like frequent refund claims, industry-specific risks, or noticeable changes in sales patterns.

Audits usually begin with a phone call or letter asking for supporting documents, such as invoices, receipts, and bank statements. If the CRA decides to do an on-site audit, theyโ€™llโ€จusually visit your place of business or your accountantโ€™s office โ€จ
to review records. Throughout the process, the auditor will lookโ€จat how you calculated GST/HST, whether your records are complete and organized, and whether your tax positions are justifiable.

According to the CRA, the goal of a GST/HST audit is compliance, not punishment. They want to ensure the system is fair and that everyone is meeting their obligations. But mistakes, even unintentional ones, can lead to reassessments, penalties, and interest. Thatโ€™s why itโ€™s crucial to have clear records and a strong understanding of what youโ€™re required to do, or to work with professionals who can help you stay on track and represent you if questions arise.

Input Tax Credits (ITC) and Compliance

Reporting and Claiming ITCs Accurately

When you run a business thatโ€™s registered for GST/HST, youโ€™re allowed to recover the tax you pay on business expenses. This is done through input tax credits (ITCs). Essentially, ITCs let you claim back the GST/HST paid on purchases and operating costs that are directly related to your commercial activities. If you're collecting sales tax, the ITC system helps ensure youโ€™re not out of pocket for the tax you had to pay along the way.

To claim ITCs, your purchases need to meet specific criteria. First, they must be for business use. If something is used both personally and commercially, only the business portion is eligible. Second, the supplier must be a GST/HST registrant. And third, you need proper documentation. That includes receipts or invoices that clearly show the amount of GST/HST paid, the vendorโ€™s registration number, and a description of the goods or services.

Documentation and Record-Keeping

Putting the Right Knowledge into Action Protects Your Finances

Putting the Right Knowledge into Action Protects Your Finances

Good record-keeping and an understanding of what qualifies are essential for staying compliant. If your ITC claims are challenged by the CRA, the burden is on you to prove your entitlement. The Canada Revenue Agency expects you to have detailed, organized records that support every GST/HST credit, deduction, and refund you report. If youโ€™re ever audited, this is the first place the CRA will look, and if your paperwork doesnโ€™t add up, your claims can be denied.

Why Accurate Records Matter

Accurate records are more than just good business practice. Theyโ€™re essential for compliance. Every GST/HST return you file should be supported by receipts, invoices, and transaction records that show exactly what you bought, sold, collected, or paid tax on. Without this trail, the CRA can question your input tax credits (ITCs), reassess your return, and apply interest or penalties.

What the CRA Expects to See

Hereโ€™s the kind of documentation you need to keep on hand:

  • Sales invoices showing the GST/HST charged to customers
  • Purchase invoices or receipts that list the GST/HST paid on business expenses
  • Contracts or agreements that relate to taxable transactions
  • Bank statements and credit card records that match the timing and amount of transactions
  • General ledgers and journals that clearly track revenue and expenses
  • Import/export documents, if applicable
  • Electronic records, if you use accounting software (must be accessible and readable)โ€จ

Stay Ready for an Audit

Good record-keeping makes audits smoother and claims easier to defend. If your records are clean and complete, it shortens review times and shows the CRA that your business is serious about compliance. On the other hand, poor documentation invites questions, and once thereโ€™s doubt, it can be more challenging to get the CRA to believe you.

If youโ€™re unsure whether your current records meet CRA standards or need help organizing them before an audit, itโ€™s smart to get ahead of it now. Clean books today could mean fewer problems tomorrow.

Contact us for CRA Audit Help Today

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Common Triggers for GST Audits

GST/HST audits donโ€™t just happen out of the blue. The Canada Revenue Agency typically looks for certain red flags in filings and business behaviours before launching a review. While some audits are purely random, most are triggered by patterns or inconsistencies that stand out against CRA expectations or industry norms.

Inconsistent Filings

Inconsistent filings are one of the most common triggers. If your reported sales or input tax credits (ITCs) differ drastically from one filing period to the next, with no clear explanation, it can raise suspicion. The CRA pays close attention to fluctuations that seem out of step with the size or type of your business.

Unusual Claim Patterns

Unusual claim patterns are another signal. If youโ€™re consistently claiming high ITCs compared to the tax you collect, or if youโ€™re making frequent large refund requests, the CRA may want to dig deeper to ensure those credits are legitimate and properly documented.

Industry Benchmarks

Industry benchmarks also play a big role in audit targeting. The CRA uses data models to compare businesses within the same sector. If your numbers, like revenue-to-expense ratios or refund claims, deviate significantly from whatโ€™s typical in your industry, that can put you on their radar.

Random Selection

And then thereโ€™s random selection. Every year, the CRA audits a certain number of businesses at random as part of their compliance strategy. Even if everything in your filings looks fine, you could still be selected for review simply as part of the agencyโ€™s broader quality control efforts.

GST Audit Process and Procedures

Typical Steps Involved in the GST/HST Audit Process

When the CRA decides to audit a business for GST/HST, they follow a structured process. Itโ€™s not a surprise visit or a one-day event: it unfolds in phases, and understanding whatโ€™s ahead can help you stay prepared and calm throughout.

1. Notification of Audit

It all begins with a formal notice. The CRA typically reaches out by mail or phone to let a business know itโ€™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.

2. Gathering and Organizing Records

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 whatโ€™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.

3. On-Site Examination (or Remote Review)

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 donโ€™t align with industry norms. If you use accounting software, they may request digital access or exports of certain data.

Post-GST-Audit Actions and Appeals

Learn the Next Steps After Your GST/HST Audit is Completed

Once a GST/HST audit wraps up, the next phase can be just as important as the audit itself. The CRA will issue a proposal letter or a notice of assessment, and from there, itโ€™s your move. How you respond can impact your tax position, future audits, and even potential penalties. Here's how to navigate the post-audit landscape with confidence:

Step 1: Review the Audit Results Thoroughly

Start by reviewing the CRAโ€™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:

  • Disallowed input tax credits (ITCs)
  • Reassessments of taxable supplies or zero-rated supplies
  • Allegations of unreported income
  • Any penalties or interest applied

If the report includes technical language or assumptions you donโ€™t agree with, flag them. The right tax advisor, like the Tax Audit Help team, can help you spot errors, interpret the CRAโ€™s reasoning, and prepare a response.

Step 2: Implement Recommendations or Adjustments

If the audit outcome is accurate and fair, take the necessary steps to address the issues. Examples include:

  • File any required adjustments to past returns
  • Pay any outstanding GST/HST along with applicable interest or penalties
  • Update your invoicing, bookkeeping, or ITC documentation processes to align with CRA expectations

Making these changes isnโ€™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.

Step 3: Know Your Right to Object and Appeal

If you disagree with the CRAโ€™s decision, youโ€™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.

Hereโ€™s how the appeal process typically works:

  • File a Notice of Objection. This is submitted to the CRAโ€™s Appeals Division and should clearly explain why you disagree with the audit results. You can include documentation, legal arguments, and professional analysis.โ€จ
  • Further Appeal to Tax Court. If the CRA denies your objection, you can escalate your case to the Tax Court of Canada.

Get Clarity on Where You Stand After a GST Audit

If you didnโ€™t have representation, or the right representation, during a GST/HST audit, speak to our experts before accepting the results or filing an objection. Weโ€™ll ensure you donโ€™t pay more than you have to, tell you if you have grounds to object or appeal, and help you file an objection that has the best chance of acceptance.

Professional GST Audit Assistance and Resources

Why You Need Expert Help with GST/HST Audits and Objections

Once a GST/HST audit wraps up, the next phase can be just as important as the audit itself. The CRA will issue a proposal letter or a notice of assessment, and from there, itโ€™s your move. How you respond can impact your tax position, future audits, and even potential penalties. Here's how to navigate the post-audit landscape with confidence:
Navigating a GST/HST audit requires the full attention of someone who knows the tax laws, procedures, and whatโ€™s needed for successful outcomes. It can be overwhelming, especially if youโ€™re trying to stay on top of day-to-day operations at the same time. Thatโ€™s where professional support becomes more than just helpful. It becomes essential.

Our tax consultants and accountants regularly handle GST audits and know what to expect. We understand how the Canada Revenue Agency conducts audits, what auditors look for, and how to respond effectively. This kind of insight helps reduce your risk of penalties and ensures you're not volunteering more information than necessary. We
review your records for compliance, correct oversights, and communicate with the CRA on your behalf to keep things professional and focused.โ€จโ€จIf you're under audit, our tax professionals can help you prepare the requested documents, frame your responses appropriately, and anticipate potential outcomes. Most importantly, partnering with us as soon as you receive notice of an audit helps you avoid having to file an objection.

If youโ€™ve already been audited, we can explain the audit findings in plain language and give you the information you need to decide whether to accept the results or challenge them through a formal objection or appeal.

Resources with Guidance on the GST/HST Audit Process

CRAโ€™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 CRAโ€™s Audit Information Circulars. These outline what auditors look for, common audit practices, and how audits are selected. They can help you understand the CRAโ€™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.

Why Canadians Trust TaxAuditHelp.ca

  • Led by CPA Sam Faris, with 20+ years of CRA audit experience

  • Strategic, confidential, judgment-free support

  • We donโ€™t provide โ€œchurn-and-burnโ€ service; we passionately fight every clientโ€™s case

  • Proven results in defending and resolving audits and disputed assessments
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What to Expect When You Work With Us

Consultation

We discuss your situation, review your CRA documents, and advise you of your rights, potential outcomes, and next steps based on your instructions.

Audit & Dispute Defence

We organize your paperwork, prepare a response package, and communicate with the CRA on your behalf.

Resolution

Our goal is to present airtight submissions that deliver the best outcomes, reduced penalties, fair assessments, and peace of mind.

Real Results From Clients Like You

  • CRA GST/HST Audit for Alleged Principal Residence Flipping

    Our client faced a GST/HST audit related to a property he had purchased. The CRA alleged that he was engaged in flipping houses and should have been charging and remitting GST/HST on the sale of the home. After conducting a thorough review of the facts and completing an in-depth analysis, we were fully satisfied that the property qualified as his principal residence and that no GST/HST should apply.

    We assembled and presented strong evidence showing that our client intended to occupy the home following his marriage. This included correspondence between our client, his ex-fiancรฉe, and the architect, along with wedding invitations, a wedding ring receipt, and other supporting documentation. In total, we submitted a comprehensive package of approximately 400 pages to the CRA auditor.

    Ultimately, the auditor accepted both our argument and the evidence we provided, and our client was not assessed GST/HST on the sale of the home.

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