GST/HST fraud is a significant problem in Canada. It is estimated that the Canada Revenue Agency (CRA) loses billions of dollars each year because of fraudulent GST/HST refund claims and other fraudulent activities related to GST/HST. Canadian businesses also suffer. The CRA’s tax auditors routinely deny the input tax credits (ITCs) of legitimate businesses because a third-party supplier didn’t possess a valid GST/HST registration number. This remains the case even if the legitimate Canadian business was the victim of fraud and can prove that it did in fact pay GST/HST to that supplier.
Source Mondaq
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