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GST/HST Audit Assistance
Undergoing a GST/HST audit can be daunting, but we’re here to help. Schedule a free 30-minute discovery or second-opinion call to address your concerns and understand the process.
Types of GST/HST Audits
1. Desk Audit
A desk audit focuses on specific return periods, typically triggered by:
• First-time refund claims.
• Unusually high refund amounts.
• Inconsistencies with historical return trends.
• Late-filed returns.
Audit Period: Usually covers one to three return periods.
Common Information Requests:
• Business activity description, including taxable and non-taxable revenue summaries.
• Sales listings and GST/HST collected or collectible.
• 10 largest invoices issued to different customers.
• Detailed ITC listings.
• Copies of 10 largest supplier invoices.
• Construction businesses may receive a specialized questionnaire.
CRA’s Approach:
The CRA verifies the accuracy of returns for the audited periods. Discrepancies may lead to a proposal letter outlining adjustments, followed by a notice of assessment. Mishandling a desk audit can trigger a full audit.
2. Full GST/HST Audit
A full audit examines broader business operations beyond return data, often including a site visit.
Audit Period: Typically limited to two years, even for significant issues.
Common Information Requests:
A three-hour initial call to understand business operations, covering:
• Types of supplies made.
• Accounting systems used.
• Facility details.
• Roles and responsibilities within the organization.
• Data used for return preparation.
• Accounting system walkthrough.
• Sample invoices for sales and ITCs.
• Reconciliation of trial balance, income tax returns, and GST/HST returns, with explanations for variances.
• Bank statements of owners or close family members if the business lacks clear separation from personal finances. (Unexplained deposits may be treated as taxable supplies.)
CRA’s Approach:
The CRA seeks comprehensive insights into your business to identify GST/HST issues. Adjustments may increase GST/HST revenue and lead to corresponding income tax adjustments.
How to Handle a GST/HST Audit
Maintain open, prompt communication with the CRA auditor. Avoid withholding information, and request extensions if needed. For detailed guidance, refer to our blog, “How to Handle a CRA GST/HST Audit.”
What to Expect from TaxEdge Accounting Inc.
• CRA Authorization: We secure authorization to communicate with the CRA on your behalf.
• Professional Submissions: All submissions are made on our letterhead, and we handle auditor discussions.
• Data Review: We collaborate with you to gather and review relevant data, identifying potential issues and mitigation strategies.
• Proposal Response: We prepare a robust response to the CRA’s proposal letter.
• Transparency: We keep you informed at every step.
FAQ
You can manage initial desk audit submissions, but clear communication with the CRA is crucial to avoid escalation to a full audit. We recommend professional assistance for responding to proposal letters.
A tax lawyer is not required for audits or notices of objection. We have extensive experience in resolving factual disputes at the appeals stage. If a matter proceeds to tax court, we can refer you to trusted tax lawyers
We require a $1,000 retainer fee to begin. After reviewing your data, we provide a fee quote for work up to the proposal letter stage. Fees vary based on data complexity and CRA follow-up requests. For non-fact-heavy proposal responses, we can offer an upfront fee range.
We confirm the visit’s agenda with the auditor and communicate any specific record requests to you. Typically, the CRA inspects business facilities and may not review documents on-site. Visits last one to two hours.
The CRA may issue a notice of assessment with GST/HST adjustments, potentially increasing revenue and triggering income tax adjustments.