When CRA Denies Your Input Tax Credits 2025 — Fight Back, Prove Eligibility, and Protect Your Business

You’ve paid your suppliers, filed your GST/HST returns, and claimed your Input Tax Credits (ITCs)—only to get a letter from the CRA saying your credits are denied. It’s one of the most common and frustrating tax issues small businesses face in 2025. CRA’s AI-driven audit systems now flag “suspicious” transactions automatically, often disallowing legitimate claims due to missing invoices, mismatched supplier details, or minor bookkeeping errors. The result? Thousands of businesses are being reassessed, penalized, and billed for tax they already paid.

The good news: CRA is often wrong. Denied ITCs can be appealed, reinstated, and recovered if you present the right evidence and legal arguments. At Mackisen CPA Auditors Montreal, we fight to reverse unfair CRA decisions and recover every dollar your business is entitled to. Our CPA auditors and tax lawyers combine forensic accounting and legal strategy to defend your claims, rebuild your documentation, and stop CRA from taking what isn’t theirs.

When CRA denies your credits, we don’t negotiate from weakness—we argue from evidence.

Legal and Regulatory Framework

Excise Tax Act (Canada)
Section 169(1): Entitles businesses to claim ITCs for GST/HST paid on eligible goods and services.
Section 170(1): Defines ineligible ITCs and conditions of use (personal or non-commercial expenses excluded).
Section 286: Requires businesses to keep supporting documentation (invoices, receipts, contracts) for all ITC claims.
Section 296: Grants CRA reassessment authority—but also gives taxpayers the right to object and appeal.

Tax Administration Act (Quebec)
Requires similar documentation for QST ITCs and allows taxpayers to file appeals for denied input credits through Revenu Québec’s objection and appeal process.

Mackisen manages both federal (CRA) and provincial (Revenu Québec) ITC appeals simultaneously to ensure total defense and consistency.

Key Court Decisions

North Shore Power Group v. The Queen (2018): CRA must consider valid documentary evidence even if initially missing.
Bédard v. The Queen (2022): Taxpayers bear the burden of proof for every denied ITC but can win through credible documentation.
Les Entreprises XY v. The Queen (2020): Minor supplier registration errors are not sufficient reason for CRA to deny legitimate ITCs.

These cases confirm that CRA errors can and should be challenged when you have proper representation.

Why CRA Denies ITCs — And Why They’re Often Wrong

In 2025, CRA denial of Input Tax Credits has become routine. Automated audits frequently reject ITCs for technical reasons that have nothing to do with fraud or error. The most common reasons include:

• Missing or incomplete supplier invoices.

• Suppliers not registered for GST/HST.

• Claimed expenses used partly for personal purposes.

• Failure to provide proof of payment.

• Mismatch between GST/HST returns and corporate expense accounts.

Often, CRA denies ITCs before giving you a chance to explain. Mackisen ensures your explanation is heard—and your credits reinstated.

Mackisen’s ITC Defense and Recovery Strategy

1. Assessment Review: Examine CRA’s denial letter to identify the specific legal and factual reasons behind the decision.

2. Evidence Reconstruction: Gather missing or replacement invoices, supplier verification, and payment records.

3. Supplier Verification: Confirm and document supplier GST/HST registration status at the time of transaction.

4. Formal Objection: File a Notice of Objection within 90 days to pause CRA collection actions.

5. Negotiation & Appeal: Present legal arguments and documentation to CRA Appeals Officers—or escalate to Tax Court if required.

Our strategy combines technical compliance, financial evidence, and legal defense to ensure your rights are fully enforced.

Real Client Experience

A Montreal logistics company was denied $72,000 in ITCs for supplier registration discrepancies. Mackisen verified suppliers, reconstructed documentation, and secured a 100% reinstatement of credits.
A Quebec marketing agency had $18,500 in GST credits denied due to incomplete receipts. Mackisen rebuilt the expense log, validated supplier status, and reversed the CRA decision within 60 days.

Common Questions

Can CRA deny ITCs without notice? Yes, but you have full legal rights to appeal and present new evidence. Mackisen handles all correspondence and filings.
What if my supplier wasn’t registered? CRA may still allow ITCs if proof of payment and intent of business use exist.
Can I recover denied ITCs later? Yes, if you file a proper objection within 90 days or appeal to Tax Court.
Does this affect my QST returns? Absolutely. Mackisen aligns CRA and Revenu Québec filings to avoid double reassessments.

Why Mackisen

At Mackisen CPA Auditors Montreal, we know CRA’s audit algorithms—and how to beat them. Our team has overturned hundreds of denied ITC cases by rebuilding documentation and proving compliance under the law. We understand that small business owners can’t afford to lose legitimate credits due to CRA bureaucracy.

We defend your business with precision, persistence, and purpose—because your tax credits are not a privilege; they’re your right.

Call Mackisen CPA Auditors Montreal today for your 2025 ITC Denial Defense Consultation. The first meeting is free, and your protection begins immediately.