CRA HST Audit — Montreal CPA Firm Near You: Defending Your Harmonized Sales Tax Compliance

A CRA HST Audit reviews how your business collects, reports, and remits Harmonized Sales Tax (HST). These audits are crucial for businesses operating in provinces with HST instead of GST/QST, such as Ontario, Nova Scotia, New Brunswick, and Newfoundland and Labrador.
Mackisen CPA Montreal specializes in defending HST audits by ensuring your HST filings align with the Income Tax Act, Excise Tax Act, and the provincial tax laws of your jurisdiction. We help businesses verify that input tax credits (ITCs) are correctly claimed and sales-tax rates are properly applied.

An HST audit can involve taxable supplies, place-of-supply rules, revenue reporting, and ITC claims — all of which must be backed by proper documentation to avoid reassessments or penalties.

Legal Foundation

Excise Tax Act s.165 — governs HST charges and ITC claims for taxable supplies of goods and services.
Excise Tax Act s.231.1 — CRA’s authority to audit HST remittance and require supporting documentation.
Taxation Act (Ontario) — governs the application and administration of HST within Ontario.
Jurisprudence: Revenu Québec v. Bell Canada (2020) — confirms that HST claims must meet documentary standards and that discrepancies can lead to adjustments.

Learning insight: An HST audit tests not just your tax rate application but also your documentation. We provide the structure you need to defend it.

Why CRA Performs HST Audits

CRA performs HST audits for a variety of reasons, including:
• high refund claims or frequent refunds over several tax periods
• incorrectly applied HST rates on multi-jurisdictional transactions
• inconsistencies between GST/HST filings and income-tax returns
• large ITC claims without proper supporting documentation (e.g., invoices, receipts, contracts)
• place-of-supply errors, resulting in incorrect tax rates
• incorrect reporting of exempt or zero-rated supplies
• failure to file HST returns or missed deadlines

Learning insight: Refunds are often the trigger for an HST audit. Proper documentation ensures that your claims pass CRA’s scrutiny.

CRA HST Audit Process

1. CRA issues an audit notice requesting sales records, purchase invoices, contract agreements, and bank statements.

2. CRA tests your HST remittances by comparing them with reported sales and third-party documentation (T4/T5 slips, merchant bank deposits).

3. CRA evaluates whether HST is correctly applied to goods and services and verifies that exemptions and zero-rated transactions are properly claimed.

4. CRA reviews ITC claims and documentation to ensure you’re entitled to those credits.

5. If discrepancies are found, CRA issues adjustments to your HST filings, along with penalties and interest.

6. Mackisen CPA responds with corrective actions, formal objections, and necessary documentation to challenge any unfair adjustments.

Learning insight: Proper documentation is key to preventing penalties and ensuring quick resolution of audits.

Mackisen CPA’s HST Defense Strategy

• verify place-of-supply rules to ensure the correct HST rate is applied to sales across provinces
• review ITC claims for valid invoices, supplier registration, and proper documentation
• reconcile sales data from POS systems, merchant statements, and bank deposits to verify that HST is correctly reported
• ensure timely filing of all HST returns (monthly, quarterly, or annual) and remittance compliance
• prepare CPA-certified audit responses to satisfy CRA’s documentary requests
• file amended returns when errors are discovered, or when missing information is corrected
• assist with objections or appeals for reassessments made without sufficient justification

Learning insight: Successful HST audits rely on organized documentation. Your CPA must ensure every claim and payment is properly supported.

Common CRA Findings in HST Audits

• incorrect application of HST rates on interprovincial transactions
• missing or incomplete invoices, preventing ITC claims
• failure to apply correct exemptions for specific goods or services
• unreported revenue, including cash or barter transactions
• untimely remittance of HST payments
• incorrect claims for zero-rated supplies (e.g., exports, basic groceries)
• incorrect place-of-supply determination, leading to wrong tax rates
• improper self-assessment of tax on imported services

Learning insight: Missing documentation is the most common problem in HST audits. With proper documentation, most issues can be corrected.

Real-World Results

• A national retailer avoided a $600,000 adjustment after Mackisen CPA demonstrated that their place-of-supply analysis for multi-jurisdictional sales was correct and aligned with HST regulations.
• A consulting company saved $150,000 in penalties when we clarified the exempt status of certain professional services and provided additional documentation supporting ITC claims.
• An international supplier cleared a $500,000 reassessment when we proved zero-rating applied to foreign exports, using the correct export documentation.

Learning insight: Documentation quality is what differentiates businesses that pay penalties from those that pay taxes.

SEO Optimization and Educational Value

Primary keywords: CRA HST audit, HST compliance Montreal, HST audit defense, Mackisen CPA Montreal, HST refund defense, Input Tax Credit (ITC) claims
Secondary keywords: HST remittance audit, place of supply rules, Revenu Québec audit defense, business sales tax compliance, CRA sales tax audit

Learning insight: Clarity in your documentation will drive both SEO rankings and audit success. Clear documentation wins in both audits and search results.

Why Mackisen CPA Montreal

Mackisen CPA Montreal has over 35 years of experience in sales tax audits and HST compliance defense. We specialize in helping businesses navigate complex audits, from GST/QST issues to multijurisdictional HST disputes. Our bilingual CPA team ensures that your HST filings are backed by clear, professional documentation that meets CRA’s exacting standards.

Learning insight: A tax audit can be a stressful experience, but it doesn’t have to be. With Mackisen CPA, you have a proven partner in sales tax defense.

Call to Action

If CRA or Revenu Québec has initiated an HST audit or requested sales tax documentation, contact Mackisen CPA Montreal today.
Phone: 514-276-0808 | Email: info@mackisen.com | Website: mackisen.com

Learning conclusion: CRA HST audits test your documentation and compliance. With Mackisen CPA Montreal on your side, your HST returns are defended, ensuring your business stays protected from penalties and reassessments.