We solve serious CRA tax problems

Involved in a CRA GST / HST Audit?

When facing a GST/HST audit, you don’t need a tax lawyer. At Faris CPA, we’ve been providing GST/HST audit assistance and saving taxpayers unnecessary legal fees for over a decade.

Use the contact form or call us today at 1-844-340-5771.

 

GET YOUR TAX PROBLEMS SOLVED BY FARIS & TEAM

CRA GST HST Audits

What is GST & HST?

The GST/HST is a value added tax that applies to the additional value created by a business in the supply of a good or service.  GST stands for “Goods and Services Tax”, and is the tax collected by the Federal Government. In some cases, Provinces chose to opt into the value added tax system and harmonize their sales tax with the GST, giving rise to the HST or “Harmonized Sales Tax”.  The HST reduced compliance burdens and tax costs for business in the provinces that have it.  The starting point, if you sell any good or service, is that GST/HST applies and has to be charged, collected, and remitted unless you find a specific exemption that applies.

The tax is collected on behalf of the Government of Canada and the funds collected by your business are held in trust for the Government of Canada.  Depending on a business’s reporting period for GST/HST, the business is required to report the amount of GST/HST collected or collectable in that period as well as the Input Tax Credits (ITCs) deductible from the GST/HST collected. ITCs are the amounts of GST/HST charged to you and paid by you to suppliers of goods and services you use or consume in the process of providing your business’s own goods and services.  The difference between GST/HST collected and ITCs deductible, is the Net Tax.  Where the total amount of the GST/HST charged is more than the amount of ITCs you can claim for a period, in other words where the Net Tax is positive, you have to remit the Net Tax To the Government of Canada.  However, where the amount of GST/HST you charged is less than the ITCs deductible, you are entitled to and can claim a refund from the government. Learn more about the CRA audit process

Facing a CRA GST/HST Audit?
Get Professional Help to Navigate It Successfully

VOLUNTARY DISCLOSURE EXPERTS IN TORONTO

Do I Need to Register for GST/HST?

You are required to register your business for GST/HST if your business revenues from taxable supplies exceed the small supplier threshold ($30,000 in a quarter not taking into account any expenses). If you are a small supplier, you may still wish to voluntarily register for GST/HST so you can claim ITCs on purchases for your business.  Not every business that exceeds the small supplier threshold needs to register for GST/HST with the Canada Revenue Agency.  If your business ONLY provides exempt supplies (e.g. Child Care Services, Long tern residential rentals, most educational services including music lessons, and others) you do not have to collect GST/HST and are also not entitled to claim ITCs.  Your tax expert can help you determine which of your goods and services are taxable, exempt, or zero-rated, and whether or not you need to register for GST/HST.  You register for a GST/HST account by using your Business Number (BN) with the Canada Revenue Agency by filling out a Form RC1 “Request for a business number and certain program accounts”. 

As with any self-reporting system, the Government of Canada relies on the honesty and accuracy of business owners in administering this tax.  Your reporting period is the period that your business uses to file your GST/HST returns.  If you provide annual taxable supplies of less than $1,500,000 then you are assigned an annual reporting period, where the value of your taxable supplies is between $1,500,000 and $6,000,000, you are assigned a quarterly reporting period, and where your taxable supplies exceed $6,000,000, you are assigned a monthly reporting period.  The government, through the Canada Revenue Agency (CRA), conducts audits to make sure that business owners are reporting the GST/HST collected or collectible accurately, and are not claiming ITCs they are not entitled to. In other words, the CRA ensures that you are meeting your reporting requirements for each period.  

CRA GST & HST Audits

Audits can be very demanding, both on your business and personal resources as well as emotionally and mentally.  The CRA does not publish the reasons they decide to audit or not audit a business, however, experience has shown that there are a number of audit triggers for GST/HST audits.  These triggers can include:

  •   Claiming a GST/HST refund;
  •   Having losses for a number of quarters;
  •   Claiming ITCs that exceed the industry average;
  •   Reporting revenues that fall well below the industry average;
  •   Being in high-risk industries (exports, temporary employment services, cash-heavy industries); and
  •   Reporting discrepancies across various returns.

Audits may also be consequential, meaning that if the CRA’s audit of a client or supplier of yours flags your business as a potential risk for tax evasion, the CRA may choose to also audit your business.

It’s always best to assume that your business is going to be audited and be prepared to defend your position.  The best defence against an audit is to make sure you keep good records of sales and expenses.  When it comes to sales records, make sure that the record contains enough information about the good and service provided, the date, the customer contact information, and any information about coupons, discounts, or promotions applicable.  When it comes to invoices for goods and services you use or consume in your own business, make sure your supplier gives you an invoice that has the following information: 

  •   The legal name and address of your supplier;
  •   Details about the nature of the good and service supplied;
  •   The breakdown of the cost of the goods or services, the GST/HST applies, and the total paid;
  •   A date for the invoice (supply date and due date); and
  •   The GST/HST number of the supplier (you have to check to make sure that they are in good standing with the CRA).

You should also hold on to copies of any GST/HST elections you make as well as copies of past filings and payment confirmations.  

Hire an Experienced CPA for a CRA GST/HST Audit

Given that GST/HST is a trust debt, you are personally (as a sole proprietor or partner), and you as director (where the business is run as a corporation), are, in most cases, liable for the tax debt of the business.  Hiring a CPA will help ensure that you charge and collect the right amount of tax on the right goods and services, that you deal with your ITCs claimed properly, and that you are meeting your filing requirements so as to avoid audits, obtain favourable results in an audit, and avoid paying penalties and interest.

ACCA-Logo
AICPA-Logo
Chartered professional accountant logo

Chartered Professional Accountant in Canada, U.S. and U.K.

“Sam Faris reduced the significant unreported income based on net worth audit to be nil. Sam’s approach in fighting these types of complex audits is unique and sophisticated. He found countless mistakes made by the auditor, which were rectified when Sam appealed the audit decision. Instead of owning a significant amount of taxes, Sam reduced it to zero. I highly recommend hiring Sam for this type of audit and any CRA problem.”

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.

Other Services

Faris CPA is proud to offer a wide variety of tax-related services, not limited to:

FAQS

What is an HST audit?

An HST audit is carried out by the CRA on businesses who have to pay the tax. During the process, the business owner is asked to provide the auditor with their HST elections as well as receipts and other purchase and sales documentation. It is important to keep these documents in good order. Trying to sort them out retrospectively is a surprisingly time-consuming and difficult process.

How do I prepare for a GST audit?

Businesses can prepare for a GST audit by making sure that all of their accounts and financial records are always in good order. That means making sure that the details of each sale are recorded in full. As well as ensuring that suppliers provide you with proper invoices. Armed with this information, a business will be able to prove to the auditor that they have complied fully with the rules surrounding the collection of, and payment of, GST.

What is a GST audit?

A GST audit is when an auditor from the CRA examines a business´ financial records. In order to check that they have paid the correct amount of Goods and Services Tax. To facilitate this audit, the business is asked to provide documentation, mostly invoices, to support what they declared on their returns. The invoices need to contain a pre-prescribed list of details for the auditor to accept them as proof that the correct level of GST has been paid.

pro-tip

Pro Tip

ACCESSING THE SMALL BUSINESS DEDUCTION IN YOUR BUSINESS

The Small Business Deduction gives businesses a tax deduction on the first $500,000 of income. This saves an eligible corporation around up to $50,000 in income taxes. There are a number of conditions that have to be met to be eligible for this deduction.

I was referred to Mr. Faris by another professional who recommended him to deal with my multiple years of outstanding corporate and tax returns. I interviewed Sam and was impressed in his confidence and transparency. He did not promise the moon just to get my business. Sam was able to file all returns under the voluntary disclosure program. After completing filling all tax returns, I realized the amount of money he saved me. I enjoyed very much working with him. He ensured that the work progress flow smoothly without any complications. He took to consideration the emotional stress factor and he was available to speak with me even beyond business hours just to make me more calm and to make me feel that he is on top of the matter and it will be resolved to my satisfaction. Indeed, this is what happened. The matter was resolved to my satisfaction and CRA concluded that the returns which Sam filed are reasonable and there is no need to further audit me nor my company. In summary, Sam is a life saver. He saved me and saved my family and now I am in the right track where all my tax filing obligations are met and I don’t owe any taxes. So grateful to Sam and his dedication while working on my file.
Response from the owner:Raj Thank you for the positive Google review. We are happy that you are satisfied with our services. Voluntary disclosure program is one of our specialties and we have dealt with many complex cases too. We get referrals from other professionals as we have been in the business of fighting CRA many years and we have countless success stories that many professionals are aware of. Please do contact us if you require further help in the future.
Sam is an excellent CPA and the best tax consultant in the country. He helped me to deal with a very complicated tax audit with the CRA where the CRA sent me a proposal assessment of 1.5 million dollars based on their net worth audit calculation and analysis. Sam was able to provide a counter analysis which highlighted significant mistakes that the auditor made with his assumptions and calculations. It’s ridicules that CRA wanted to taxed me on a loan that I obtained from my bank. Sam dealt with this audit perfectly. He demonstrated a very high level of expertise and CRA had to accept his counter analysis with no question asked. Many thanks to Sam’s efforts and high business standards in dealing with this issue and resolve it to my favor. I will have Sam as my primary CPA going forward so I can focus on doing business and will have a peace of mind in terms of the high quality of work done by him. Well deserved this review with the 5 stars rating.
Response from the owner:Yash Thank you for the positive feedback and the 5 stars Google review. We are glad that you are happy with our service and you are satisfied with the outcome. Net worth audits are very complicated and disputing them might get very tricky. We have been dealing with the same types of audits for many years and we are confident in fighting CRA and to point out mistakes that the auditor have made while performing the audit. We will remain at your disposal anytime you contact us in the future.
Sam Faris helped me with a complex cross border tax matter. This issue involved 12 years of tax returns and it was as a result from mistakes that my previous accountant did. He was able to perfectly address the issue with the CRA and to fix the returns under the voluntary disclosure program. End results; CRA accepted Sam’s work with not a single question and the returns were reassessed to my satisfaction without penalties and interest. Many thanks to Sam brilliant work.
Response from the owner:Dear Sir It was a pleasure working on your file and get you the results that you aimed to have and to your satisfaction. We have been dealing with similar cases for many years and we were confident that the results are favorable. Please feel free to contact us in the future if you do require further help.
I found Sam’s firm online and I read the excellent Google reviews about him and his team. I decided to hire him to help me navigate an issue with the CRA. Sam delivered as expected and as promised. Results were to my satisfaction and I am very happy with how the process was handled. Highly professional and extremely knowledgeable.
Response from the owner:Dear Tanya Thank you for the 5 stars Google review and your kind words. We strive to provide the best customer service and make our clients relax and calm during the process. The cases we are taking are very sensitive so providing quality work to the CRA is extremely important so just to avoid any escalation and to make sure that our package is accepted from the first round. We will remain at your disposal anytime you require our services. Sam Faris
You will notice Sam is very quick with his responses. He knows his stuff and gives solid advice. Highly efficient, would recommend.
Response from the owner:Dear Jay Thank you for the 5 stars positive review. Working with you was pleasant too. Many thanks for your business and please do feel free to contact me if you have any questions. Sam Faris
after the initial assessment I had with Sam, he proposed a strategy to dispute CRA decision. He knew up front how to approach my case as he seemed that he dealt with similar cases many times. I hired him the end results were as promised and no surprises. Sam is very trust worthy and has a high business standards. May thanks Sam.
Response from the owner:Many thanks for the positive review.
I recently turned to Faris CPA for help with my tax filing, and I must say, I'm over the moon with the results! The whole process was a breeze, saving me time and stress. What really stood out was the friendly professionalism, impressive expertise, and crystal-clear communication from Sam and his team. They made what could've been a daunting task feel like a walk in the park! If you're looking for a warm, approachable tax expert who genuinely cares about his clients, I wholeheartedly recommend Sam and the folks at Faris CPA - they're great tax consultants!
Response from the owner:Many thanks.
Working with Sam and his team was an extremely valuable experience. One of the best Tax consultants in Toronto I've ever come across.

He has a ton of experience resolving problems with the CRA and was truly a big asset to me when I had issues I needed help with.

Would highly recommend Sam and Faris CPA, thanks again for all the great work!
Response from the owner:Thank you Paul for your positive feedback and we are glad we met your expectations.
I had an amazing experience working with Faris CPA for my CRA needs. They really know the CRA processes and made everything so easy. They were super professional, always ready to answer my questions, and made sure everything was done right. I couldn't have asked for better help. Highly recommend their services for anyone dealing with the CRA! -Sara
Response from the owner:Thank you Sara for the 5 stars review.