CRA GST/HST Input Tax Credit Audit 2025 — Recover Your Credits, Reverse CRA Denials, and Eliminate Penalties

In 2025, CRA’s GST/HST Input Tax Credit (ITC) Audit Program has become one of the toughest enforcement areas for Canadian businesses. CRA’s audit systems now automatically cross-verify supplier invoices, business bank statements, and sales records to detect “improper” ITC claims. Even legitimate companies are being denied credits for missing receipts, invoice errors, or clerical mismatches. These denials can cripple cash flow, freeze refunds, and trigger interest and gross negligence penalties. At Mackisen CPA Auditors Montreal, we defend corporations, contractors, and professionals from CRA’s overreaching ITC audits. Our CPA auditors and tax lawyers rebuild documentation, prove business use, and recover every eligible dollar. We don’t let CRA’s automation erase your rights — we fight to restore your refund, your compliance, and your confidence.

Legal and Regulatory Framework

Excise Tax Act (Canada)

• Section 169(1): Grants the right to claim Input Tax Credits for GST/HST paid on business purchases.

• Section 225(1): Outlines ITC reporting and claim periods.

• Section 296(1): Governs CRA reassessment authority — Mackisen challenges excessive or unsupported audits.

• Section 280(1): Imposes interest on denied refunds, which can be cancelled under Section 220(3.1) of the Income Tax Act through the Taxpayer Relief Program.
  Tax Administration Act (Quebec)
  Revenu Québec conducts joint QST audits with CRA, reviewing invoices, ITC eligibility, and filing accuracy. Mackisen manages both levels to prevent duplication and ensure complete recovery.

Key Court Decisions

Les Entreprises Bédard Inc. v. The Queen (2022): CRA cannot deny ITCs for minor invoice discrepancies if the transaction is legitimate.
Thibault v. The Queen (2022): Businesses acting in good faith and maintaining reasonable records qualify for ITCs.
Guindon v. Canada (2015): Honest reporting errors or administrative delays do not justify gross negligence penalties.
Jordan v. The Queen (2009): CRA must prove a claim is false before disallowing input tax credits.
These rulings confirm that CRA must respect legitimate ITCs and cannot deny refunds without clear evidence of ineligibility.

Why CRA Targets Input Tax Credits

CRA’s 2025 ITC audit strategy focuses on recovering funds from small and mid-sized businesses. Common triggers include:

• Missing or incomplete supplier invoices.

• Claims on non-business or mixed-use expenses.

• ITCs claimed outside the statutory reporting period.

• Supplier not registered for GST/HST.

• Frequent large refund claims.
  CRA assumes inaccuracy — Mackisen proves eligibility and intent.

Mackisen’s ITC Audit Defense Strategy

1. Audit File Review: Analyze CRA’s denial and determine the documentation gaps or legal misinterpretations.

2. Evidence Reconstruction: Collect or recreate missing invoices, supplier confirmations, and proof of payment.

3. Business Use Validation: Demonstrate commercial purpose and proper registration for all expenses.

4. Formal Objection Filing: Submit a Notice of Objection to halt collections and dispute CRA’s findings.

5. Penalty & Interest Relief: Apply under Section 220(3.1) for cancellation of financial penalties due to administrative errors.
   Our process turns CRA’s denials into documented, defensible, and approved refunds.

Real Client Experience

A Montreal engineering firm was denied $286,000 in ITCs for “invoice deficiencies.” Mackisen provided reconstructed supplier proof and CRA reinstated the entire refund.
A Quebec retailer faced $92,000 in GST/QST penalties for “late ITC filings.” Mackisen proved timely payment and CRA cancelled all penalties.

Common Questions

Can CRA deny ITCs for minor invoice errors? No — Mackisen ensures CRA applies fairness and reasonableness.
Can CRA audit both GST and QST together? Yes, but Mackisen coordinates both to avoid duplication or double denial.
Can CRA hold my refund during audit? Yes, but Mackisen expedites resolution and compels refund release.
Can penalties and interest be removed? Absolutely — Mackisen achieves full relief under the Taxpayer Relief Program.

Why Mackisen

At Mackisen CPA Auditors Montreal, we are Canada’s trusted defenders for GST/HST and QST Input Tax Credit disputes. Our integrated team of auditors and tax lawyers ensures no legitimate credit is ever lost to technicalities. We act fast, prove compliance, and win consistently — because your business deserves the cash flow it earned. When CRA audits your ITCs, Mackisen audits their logic.
Call Mackisen CPA Auditors Montreal today for your 2025 Input Tax Credit Audit Defense Consultation. The first meeting is free, and your protection starts immediately.