HST Audit Triggers

An HST audit can be a trying process for many people.  The CRA will examine the taxpayer’s books and records to determine whether the correct amount of HST has been remitted.  If all is done correctly, then the audit will be concluded without any additional amounts owing to the CRA.  Because of the complexity of the Excise Tax Act and other errors in ones returns, there can often be additional HST owing on an HST audit.

Sometimes an HST audit is unavoidable.  However, there are various HST audit triggers that could alert the CRA to review a particular taxpayer.  The following is a non-exhaustive list:

  • if your annual sales are above the $30,000 threshold, you must register for and file a GST/HST return. Failure to do so can trigger and audit
  • requests made by you to amend your GST/HST return can raise flags with the CRA, even though it may be necessary to do so
  • having GST/HST remittance or input tax credit (ITC) amounts that are out of the normal range for your industry
  • along the same lines, having GST/HST remittance or ITC amounts that are not consistent with your prior period returns can be problematic. The CRA performs “variance analysis” and looks for stability in your reported amounts, thus inconsistent reporting can raise a red flag
  • having a discrepancy between the sales reported on your GST/HST return and the sales reported on your corporation’s financial statements
  • failing to file your GST/HST return on the due date can raise flags that lead to an audit

If you find yourself in a position where the CRA selects you for an audit or a review, and would like help, contact an HSTRebate advisor.