VATupdate

Canadian GST/HST Tax Trap: ITC Record-Keeping Requirements for Canadian Businesses

The Canada Revenue Agency isn’t shy about pursuing a tax audit. But the CRA invokes its most aggressive tactics when auditing groups that the CRA’s tax auditors perceive as most likely to retain poor records. Indeed, Canada’s Excise Tax Act, which governs GST/HST, precludes a GST/HST registrant from claiming input tax credits (ITCs) unless “before filing the return for which the credit is claimed, the registrant has obtained sufficient evidence in such form containing such information as will enable the amount of the input tax credit to be determined.” In other words, not only must the registrant obtain evidence supporting the ITC, but the registrant must also obtain those records before attempting to claim the ITC.

Source: goodservicetax.com

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