GST/QST Input Tax Credit (ITC/ITR) Denials: Why Revenu Québec Rejects Claims and How to Protect Yourself

Introduction

Input tax credits (ITCs for GST) and input tax refunds (ITRs for QST) allow businesses to recover the tax paid on legitimate business expenses. But they are also one of the most frequently denied claims by Revenu Québec and the CRA. Even when the expense is real, missing documentation, incorrect invoicing, or mixed personal use can lead to denied credits and painful reassessments.
This guide explains the most common reasons GST/QST credits are rejected, the legal requirements, and how to secure bulletproof documentation for every claim.

Legal and Regulatory Framework

Under the Excise Tax Act (GST) and the Quebec Taxation Act (QSTA), registrants may claim ITCs/ITRs only when:

• They are registered for GST and QST;

• The expense was incurred to make taxable supplies;

• The tax was paid to a registrant supplier;

• They have a valid invoice containing all mandatory elements under the ETA and QSTA;

• The amount claimed is supported by proof of payment;

• Mixed-use expenses are prorated based on business use percentages.

Authorities may deny claims under:

• ETA s. 169(4) — documentary requirements;

• QSTA s. 39 — ITR eligibility;

• ETA s. 286 / QSTA s. 24 — failure to maintain adequate books and records;

• Penalty and interest rules for false statements or negligence.

Key Court Decisions

Courts consistently reaffirm that:

• An ITC/ITR cannot be claimed without a valid invoice, even if the business actually paid the tax.

• Missing GST/QST registration numbers, vague descriptions, and unregistered suppliers are grounds for denial.

• Business owners must keep clear documentation proving that the purchase relates to taxable business activities.

• A taxpayer’s “good faith” does not override strict statutory requirements.

These rulings demonstrate that ITC/ITR eligibility depends on documentation, not intention.

Why CRA and Revenu Québec Target These Issues

Authorities prioritize ITC/ITR audits because:

• Many small businesses use personal accounts for business expenses.

• Online suppliers often issue incomplete or non-compliant invoices.

• Too many businesses overestimate business-use percentages.

• Large refunds automatically trigger risk indicators.

• Repeat errors, missing invoices, or receipts emailed in bulk are red flags.

High-risk sectors include hospitality, construction, trucking, retail, and self-employed service providers.

Mackisen Strategy

Our structured approach ensures your ITC/ITR claims survive any audit.

1. Invoice Compliance Verification

We review supplier invoices to ensure they include:

• Supplier name and address

• GST/QST numbers

• Description of goods or services

• Tax amounts

• Proof of payment

• Date of supply

2. Business-Use Percentage Analysis

We identify which expenses must be prorated (vehicle, cellphone, home office) and calculate defensible percentages.

3. Digital Documentation System

We implement:

• Monthly receipt logs

• Scanned or digital copies stored securely

• Supplier verification when needed

• Clear expense categorization

4. Refund Claim Review

Before filing, we validate:

• High-risk vendor invoices

• Claims exceeding industry averages

• Recurring mixed-use expenses

• Capital ITCs requiring specific rules

5. Audit Defence

If Revenu Québec questions your claims, we handle:

• Document submission

• Legal arguments referencing ETA/QSTA

• Supplier verification

• Full representation until resolution

Real Client Experience

A small construction company claimed over $22,000 in ITCs for subcontractor services. Revenu Québec denied nearly half due to missing GST/QST numbers and vague invoice descriptions.
Mackisen reconstructed compliant invoices, obtained corrected documents from suppliers, resubmitted the claim, and recovered more than 80% of the denied amount.

This proves that documentation — not the expense itself — determines success.

Common Questions

1. Can I claim ITCs/ITRs without an invoice if I have proof of payment?
No. Proof of payment is not enough; a compliant invoice is mandatory.

2. What if a supplier refuses to fix an incorrect invoice?
You must obtain a corrected or replacement invoice. Otherwise, the claim risks denial.

3. How long do I have to claim ITCs/ITRs?
Generally four years from the end of the reporting period for most businesses.

4. Does Revenu Québec check if suppliers are registered?
Yes. Supplier registration mistakes result in automatic denials.

Why Mackisen

With more than 35 years of combined CPA experience, Mackisen CPA Montreal helps businesses stay compliant while recovering the taxes they’re entitled to. Whether you’re filing your first GST/QST return or optimizing multi-year refunds, our expert team ensures precision, transparency, and protection from audit risk.

SEO Setup

Primary Keywords: ITC denial Quebec, ITR denial Revenu Québec, GST/QST audit, input tax credits Canada, Mackisen CPA Montreal
Secondary Keywords: denied ITCs, GST credit documentation, supplier invoice requirements, Quebec tax refund rules
Meta Description:
Learn why Revenu Québec denies ITCs/ITRs and how to avoid costly mistakes. Mackisen CPA Montreal provides invoice compliance systems, refund reviews, and full audit protection for Quebec businesses.