Insights
Oct 25, 2025
Mackisen
CRA GST/HST Input Tax Credit Audit 2025 — Protect Your Business, Recover Denied Credits, and Stop CRA Penalties
In 2025, CRA’s Input Tax Credit (ITC) Audit Program has become one of the most aggressive enforcement initiatives in Canadian business taxation. CRA’s new AI-driven system compares every ITC claim against supplier invoices, registration numbers, and payment records. Even small documentation errors or supplier discrepancies can trigger a full reassessment — freezing refunds, denying credits, and adding compounded interest and penalties. At Mackisen CPA Auditors Montreal, we defend business owners, professionals, and corporations against unfair CRA ITC audits. Our CPA auditors and tax lawyers rebuild accurate documentation, file powerful objections, and prove that every dollar of tax you paid is rightfully yours. We don’t let CRA keep your money — we fight to get it back fast.
Legal and Regulatory Framework
Excise Tax Act (Canada)
Section 169: Grants registrants the right to claim Input Tax Credits for GST/HST paid on business expenses.
Section 286: Requires maintaining six years of records to substantiate ITC claims.
Section 296: Gives CRA reassessment authority but allows taxpayers to object and appeal.
Section 220(3.1): Enables CRA to cancel or reduce penalties and interest under the Taxpayer Relief Program.
Tax Administration Act (Quebec)
Revenu Québec conducts parallel QST ITC audits, often in conjunction with CRA. Mackisen coordinates both agencies to ensure a unified defense and consistent documentation.
Key Court Decisions
Les Entreprises XY v. The Queen (2020): CRA must recognize valid ITCs even when invoices are corrected after filing.
North Shore Power Group v. The Queen (2018): ITCs cannot be denied when the transaction’s business purpose is proven.
Guindon v. Canada (2015): Administrative errors or good-faith mistakes do not justify gross negligence penalties.
Bédard v. The Queen (2022): Proper evidence of supplier registration and payment secures ITC entitlement.
These cases confirm that CRA’s ITC audits can be successfully challenged with proper documentation and expert advocacy.
Why CRA Targets Input Tax Credits
CRA audits ITC claims because they are a common source of refund and cash flow. Common 2025 audit triggers include:
Missing or incomplete invoices.
Supplier GST/HST registration errors.
Large refund requests from new businesses.
ITCs claimed on mixed personal and business expenses.
Repeated late or amended GST/HST filings.
CRA assumes ineligibility — Mackisen proves entitlement.
Mackisen’s ITC Audit Defense Strategy
Audit Risk Review: Evaluate CRA’s findings and identify errors or misinterpretations in their calculations.
Document Reconstruction: Collect and verify invoices, supplier confirmations, and proof of payment.
Legal Justification: Apply statutory and case law to confirm ITC eligibility and business purpose.
Formal Objection: File a detailed Notice of Objection with supporting evidence and legal argumentation.
Relief and Resolution: Apply under Section 220(3.1) to remove penalties and restore your GST/HST refund.
Our audit defense transforms denied ITCs into recovered cash flow — with complete legal precision.
Real Client Experience
A Montreal construction company had $178,000 in ITCs denied for “supplier non-registration.” Mackisen obtained proof of GST numbers and CRA reversed the entire reassessment.
A Quebec importer’s $96,000 refund was frozen due to “documentation inconsistencies.” Mackisen rebuilt the records and secured full payment within 45 days.
Common Questions
Can CRA deny my ITCs if my supplier made a mistake? No — as long as you acted in good faith and have proof of payment, Mackisen can restore your credits.
Can I appeal a CRA ITC reassessment? Absolutely — Mackisen files objections and appeals that protect your refund rights.
How long should I keep my GST/HST records? At least six years, but Mackisen ensures they’re organized and audit-ready.
Can CRA audit both my GST and income tax returns together? Yes, and Mackisen ensures a consistent defense across both.
Why Mackisen
At Mackisen CPA Auditors Montreal, we specialize in defending businesses from CRA’s most complex ITC audits. Our combined accounting and legal expertise ensures every claim is backed by law, documentation, and strategy. We act quickly, argue decisively, and deliver real results. When CRA audits your credits, Mackisen audits their evidence.
Call Mackisen CPA Auditors Montreal today for your 2025 ITC Audit Defense Consultation. The first meeting is free, and your protection starts immediately.
