CRA GST/HST Small Business Audit — Montreal CPA Firm Near You: Protecting Your Sales Tax Compliance for Small Enterprises

A CRA GST/HST Small Business Audit focuses on verifying that your small business has correctly charged, collected, reported, and remitted GST/HST on taxable supplies. CRA audits small businesses frequently because they often face documentation challenges, cash-flow pressures, and rapid growth that can lead to inaccurate tax filings.

Mackisen CPA Montreal specializes in helping small businesses navigate GST/HST audits by organizing documentation, reconciling tax filings, validating Input Tax Credit (ITC) claims, and defending all sales-tax-related entries. We ensure your business remains fully compliant and protected from penalties and reassessments.

Legal Foundation

Excise Tax Act s.165 — establishes the rules for collecting and remitting GST/HST.
Excise Tax Act s.169 — governs the eligibility criteria for claiming Input Tax Credits (ITCs).
Excise Tax Act s.286 — mandates accurate and complete sales tax recordkeeping.
Jurisprudence: Northwest Company Inc. v. Canada — confirms that ITCs can be denied if invoices lack mandatory information, regardless of whether GST/HST was paid.

Learning insight: GST/HST for small businesses is documentation-driven. CRA denies what you can’t prove.

Why CRA Audits Small Businesses for GST/HST

CRA’s audit algorithms frequently select small businesses due to:
• high or recurring GST/HST refund claims
• cash-heavy business models (restaurants, construction, salons, retailers)
• inconsistent sales records vs. bank deposits
• ITC claims based on incomplete invoices
• place-of-supply mistakes (wrong tax rate applied)
• late or missing GST/HST filings
• improper GST charged on exempt or zero-rated goods/services
• supplier issues — unregistered vendors charging GST/HST

Learning insight: Small businesses get audited not for wrongdoing — but for inconsistency.

CRA GST/HST Small Business Audit Process

1. CRA issues an audit letter requesting sales data, invoices, receipts, and bank statements.

2. CRA tests whether GST/HST collected matches what was remitted on your returns.

3. CRA reviews ITC claims by sampling supplier invoices and validating their GST/HST registration.

4. CRA may perform a gross margin or markup test to detect possible unreported sales.

5. CRA issues proposed adjustments if discrepancies appear.

6. Mackisen CPA prepares a structured audit defense showing your tax logic, transaction traceability, and compliance.

Learning insight: The first response determines whether the audit stays small or escalates.

Mackisen CPA’s Small Business GST/HST Defense Strategy

• reconcile sales, POS records, and bank deposits
• verify supplier registration numbers for all ITC claims
• validate invoices for all mandatory data under ETA s.169
• correct place-of-supply mistakes for multi-province sales
• prepare a complete CPA-certified audit binder
• identify and fix classification errors (zero-rated, exempt, taxable)
• negotiate with CRA to reduce penalties and interest
• file amended returns when necessary

Learning insight: CRA accepts organized facts. Disorganization creates reassessments.

Common CRA Findings in Small Business GST/HST Audits

• ITCs denied due to missing or incomplete invoices
• GST/HST under-remitted on sales
• unreported revenue detected through bank deposits
• incorrect GST charged on exempt or zero-rated items
• invalid supplier GST numbers
• cash sales not recorded
• mixing personal and business expenses in ITC claims

Learning insight: 90% of small business GST/HST issues are paperwork problems, not tax problems.

Real-World Results

• A Montreal contractor reversed a $62,000 GST reassessment after Mackisen CPA validated subcontractor GST registrations and matched receipts to payments.
• A restaurant avoided a $94,000 tax bill when we reconciled POS data, Uber Eats statements, and bank deposits for CRA.
• A salon cleared a CRA audit after we proved GST was properly excluded from exempt beauty services.

Learning insight: If documentation is clear, CRA backs down. If unclear, CRA assumes the worst.

SEO Optimization and Educational Value

Primary keywords: CRA GST/HST small business audit, small business tax audit Montreal, Mackisen CPA, CRA sales tax audit help, GST refund audit
Secondary keywords: ITC verification small business, GST/HST compliance audit, CRA markup test, CRA POS verification

Learning insight: Strong documentation helps during audits — and strong content helps clients find the right CPA online.

Why Mackisen CPA Montreal

With over 35 years of small business audit-defense experience, Mackisen CPA Montreal is a trusted ally for entrepreneurs across Québec. We understand how small businesses operate and how CRA interprets cash flow, sales, ITCs, and documentation. Our bilingual team ensures your GST/HST filings are accurate, consistent, and audit-ready.

Learning insight: Small business success depends on clean books. We make your books defensible.

Call to Action

If CRA has launched a GST/HST audit on your small business or asked for records, contact Mackisen CPA Montreal immediately.
Phone: 514-276-0808 | Email: info@mackisen.com | Website: mackisen.com

Learning conclusion: A CRA GST/HST Small Business Audit tests your recordkeeping and compliance, not your honesty. Mackisen CPA Montreal ensures your documentation is strong enough to pass — every time.