What happens if the CRA audits my HST filings in Ontario?
A GST/HST audit by the CRA is an examination of your HST records to verify that you correctly reported and remitted the tax you owe and that your ITC claims are supported. Audits can be triggered randomly, by unusual patterns in your returns (e.g., consistently high ITC refunds), or by industry-wide initiatives.
You will receive written notice of the audit and be asked to provide records for a specific period — typically four to six years. The auditor will review your sales invoices, purchase invoices, bank statements, contracts, and bookkeeping records. It is important to respond promptly and produce well-organized records. If you cannot locate invoices supporting ITC claims, those claims may be disallowed.
At the end of the audit, the CRA may issue a Notice of (Re)Assessment if it finds additional tax owing. You have the right to object to the assessment through a formal Notice of Objection, and if unsuccessful, to appeal to the Tax Court of Canada. Given the technical nature of HST law and the document-intensive nature of audits, having a tax lawyer or accountant represent you from the start of an audit is strongly advisable.
Key takeaways
- The CRA can audit HST filings and ITCs for up to four years (longer in some cases).
- Produce organized records; disorganized records make audits longer and riskier.
- Disallowed ITCs plus interest are the most common audit outcome.
- You can object to a reassessment and appeal to the Tax Court if needed.