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CRA GST/HST Audit Accounting Services

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Are you curious about what happens when you’ve been named in a potential audit? Do you know how to respond and what you should do next? Read on to learn more about an HST or GST audit works in Canada and why having experienced tax professionals at your side can make a big difference. 

A few different triggers in your business can lead to an increased likelihood of an audit for GST and HST. This includes reporting big sales in your early years, deducting major business expenses, recurring losses, operating in a cash-heavy industry, and revenue discrepancies across the different returns filed for your business. You can challenge an audit of your GST and HST, as this is common in certain industries and companies. You must, however, have the right bookkeeping in place well in advance to show that your reports were accurate. 

 

What is GST/HST?

These terms stand for goods and services tax and harmonized sales tax. These taxes are levied by the Canadian government, and the GST applies across the country. The HST, on the other hand, is the provincial amount of sales tax due but is incorporated under the same laws as the GST and therefore is administered by the CRA. 

Registering your business for GST/HST

If your business exceeds the small supplier amount, you need to register for GST/HST. You have a maximum of 29 days to apply for this registration from the date that your business goes beyond the small supplier threshold.  Make sure that you don’t just register for this but that you also turn in any taxes due under this rule, too. 

Is paying the GST/HST optional?

For most businesses, you will need to register for and pay for the GST and HST.  The GST/HST is not optional for most businesses, and that the CRA has ways of catching people who falsely claim they are exempt. Beware that you could be facing payment of the money due and possible other consequences if you are caught trying to evade the GST/HST tax. 

 

If faced with a CRA audit don’t take a chance, hire a professional CPA today to guide you through the process. 

 

What kind of businesses are exempt from paying GST/HST?

Not all businesses have to register for the HST/GST. This is true if your business provides only GST and HST exempt services and goods like music lessons, used residential housing, and child-care services. If you qualify as a small supplier you are also exempted from GST/HST. Small suppliers are typically defined as partnerships, sole proprietors, and corporations whose complete taxable revenues yearly are less than $30,000 before expenses. Additionally, public service bodies don’t trigger this requirement unless they exceed $50,000 or more annually. Certain small suppliers, however, still do have to register for HST/GST. This includes non-resident performers and limousine and taxi drivers. 

 

What should I do if the CRA starts a GST/HST audit on my business?

You should already have a relationship with an audit specialist before you get audited. You want to make sure all of your books support the claims that you have made whether that is with regard to what you’ve already paid or your classification as a small supplier. 

Hiring a CPA is one of the most important things you can do to support you during this challenging time. Going through a GST/HST  audit from the CRA can be incredibly stressful, time consuming, and end up very expensive, which is hiring a professional CPA to help guide and represent you through the process is one of the moves you can make for your business. A professional CPA can help by offering tax tips to help avoid future audits, and make sure you’re maximizing the best returns on your taxes the right way 


GST HST Audit FAQs 

Who gets a GST rebate?

 In order to qualify for this rebate, you have to be a resident of Canada and taxed there and must be 19 years of age or older, have or had a spouse or common law partner, or are/were a parent and live/lived with that child. 

How much is GST and HST? 

The total taxes due depends not just on the national sales taxes that apply, but also on the provincial ones. This applies 15$ HST in New Brunswick, Nova Scotia, Prince Edward Island, and Newfoundland. This applies 13% HST in Ontario and 5% GST in BC, Manitoba, Alberta, Northwest Territories, Quebec, Yukon, Saskatchewan, and Nunavut. 

What dates are GST due? 

For the taxable period that ends on April 30, the taxes that are due for the previous year must be submitted by May 28. Failing to file on time could lead to an increased chance of being audited; make sure you have procedures in place to capture this information and make reporting and payment simplified for you. 

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Case Study

A new client had a difficult CRA audit that disallowed an HST refund valued at almost one million dollars. The CRA audit revealed that his previous accountant had made significant errors which resulted in the disallowing of the HST refund valued at approximately 1 million dollars.

He was referred to our firm by another client of ours.

We performed an intensive review of the proposal letter from the CRA along with the income tax act. We were convinced that the case would be won if the records were corrected and a new argument was submitted as a replace to the proposal letter from the CRA.

The CRA auditor denied the response. Our firm filed a Notice of Objection to the CRA.

The Notice of Objection was successful, and our client was able to recover, not only the original refund, but there were additional amounts that the previous accounted had missed that were awarded to our client as well.

Testimonial

“After getting denied my GST/HST refunds, I needed a CPA who could get me my refund back. Sam Faris and his team came to my rescue. They got involved immediately, and made extensive submissions as to why CRA it was wrong. They agreed and released my funds with interest. I’m pretty happy with them and so will be you.”

- Ghaith Bazzi