Denied Input Tax Credits Audit Exposure Calculator
The auditor is disallowing credits for missing invoices and unverifiable suppliers. Work out what is at risk by documentary tier, how much you can recover by producing replacement documents, and what is genuinely lost.
total exposure
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What Is at Risk, and Why
| Category | The Problem | At Risk | Recoverable |
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The Three Documentary Tiers
| Supply Value | What the Document Must Show |
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The Assessment
| Item | Basis | Amount |
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What to Do About It
| Action | Why It Works |
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Points That Decide This
What to Do Next
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Disclaimer: Input tax credits must be supported by documentation containing the information prescribed by the Input Tax Credit Information (GST/HST) Regulations, and the requirements increase with the value of the supply. For a total consideration under $30, the supporting documentation must generally show the supplier’s or intermediary’s name or trading name, the date of the invoice or the date the tax was paid or payable, and the total amount paid or payable. Where the total is $30 or more but under $150, the supplier’s or intermediary’s GST/HST registration number and the amount of tax charged, or a statement that the amount includes GST/HST together with the applicable rate, are also required. Where the total is $150 or more, the recipient’s name or trading name or that of the recipient’s duly authorised agent, the terms of payment, and a description of the supply sufficient to identify it are required in addition. The CRA maintains a GST/HST registry allowing a registration number to be validated, and credits claimed on supplies from a person whose registration cannot be confirmed are commonly denied. Most registrants must claim an input tax credit in a return filed within four years after the due date of the return in which the credit could first have been claimed, with a two-year limit for certain listed financial institutions and larger registrants. Interest on GST/HST arrears is charged at the basic rate plus 4 percentage points, compounded daily, and is modelled here at a total of 8%. The penalty under section 285 of the Excise Tax Act, where a person knowingly or under circumstances amounting to gross negligence makes a false statement or omission, is the greater of $250 and 25% of the relevant amount. The CRA’s wash transaction policy may reduce interest in defined circumstances where tax was not collected by a supplier and the recipient would have been entitled to a full input tax credit; it is a limited administrative relief and generally arises on the supplier’s assessment rather than the recipient’s. This page is general information, not tax advice.
The Requirements Change at Thirty and at One Hundred and Fifty
This is what auditors work through, and most businesses have never seen it laid out. What a document must show depends on the value of the supply, and there are three tiers.
| Under $30 | $30 to $149.99 | $150 and over |
|---|---|---|
| Supplier name | Everything at left, plus | Everything at left, plus |
| Date | Supplier’s registration number | Your name as recipient |
| Total amount | Tax amount, or a statement it is included with the rate | Terms of payment |
| Description sufficient to identify the supply |
A credit card slip is usually enough under thirty dollars and usually not enough at one hundred and fifty. That single fact explains most denied credits. Small purchases are fine on a receipt. Larger ones need a real invoice showing your business name and what was actually supplied.
The Supplier’s Registration Number Is the Big One
At thirty dollars and above the supplier’s GST/HST registration number must appear on the document. No number, no credit, regardless of whether you genuinely paid the tax.
It gets worse where the number is present but does not check out. The CRA maintains a registry and auditors use it. A supplier who was never registered, or who was deregistered before the invoice date, produces a denial that is very difficult to argue with.
You are responsible for verifying your suppliers, not the CRA. That feels unfair to businesses who paid an invoice in good faith, and it is the law. A subcontractor who charged you HST while unregistered has cost you the credit, and recovering it from them is a commercial matter rather than a tax one.
Most of This Is Recoverable, With Work
Here is the part auditors do not emphasise. A missing document is not the same as an unavailable one. Where the supply genuinely happened and the supplier still exists, a replacement invoice with the right information generally restores the credit.
That is unglamorous work: identifying the suppliers behind the largest denied amounts, contacting them, and getting compliant copies. On a file with a hundred small items and six large ones, chasing the six recovers most of the money.
- Sort the denied credits by size, largest first
- Identify the suppliers behind the top of that list
- Request compliant replacement invoices showing everything the tier requires
- Verify each registration number in the CRA registry before submitting
- Submit in an organised schedule cross-referenced to the auditor’s own list
- Deal with the genuinely lost items last, and accept them
Auditors respond well to organisation. A clean schedule that ties to their working papers and concedes the indefensible items makes the defensible ones easier for them to accept. Arguing everything with equal energy is what makes a file adversarial.
Gross Negligence Changes the File
Where the auditor raises section 285, the penalty is the greater of two hundred and fifty dollars and twenty-five percent of the amount. That is a large addition to an assessment that was already unwelcome.
It requires a false statement made knowingly or in circumstances amounting to gross negligence, which is a higher bar than sloppy records. Poor bookkeeping alone should not attract it, and where an auditor is proposing it on a documentary file that is worth pushing back on properly rather than accepting.
The Four-Year Limit Cuts Both Ways
Credits generally have to be claimed within four years after the due date of the return in which they could first have been claimed. That matters here in a way businesses miss.
Where an audit denies a credit and you later find the document, you can only re-claim it if the period is still open. Beyond four years the credit is gone even with perfect documentation, so the age of the periods under audit determines whether time is on your side.
What Actually Prevents This
- Verify registration numbers when you onboard a supplier, not at audit
- Insist on proper invoices above one hundred and fifty dollars, with your business name on them
- Do not claim from a statement or a bank entry alone
- Keep the document, not the bookkeeping entry that references it
- Watch subcontractors, who are the most common source of registration problems
- Review annually rather than discovering the pattern across four years at once
Get representation before responding to the proposal. Our audit support service handles the document recovery, the schedule and the correspondence.
What This Calculator Does Not Cover
- Whether a specific credit is eligible on its own facts
- Restrictions on meals, entertainment and passenger vehicles
- Objections and appeals after an assessment issues
- Corporate tax consequences of the same expenses
- Simplified accounting methods where elected
- Provinces outside Ontario
Frequently Asked Questions
Common questions on denied input tax credits.
Related Calculators and Guides
More tools for HST audits and credits.
Most of This Is Recoverable If You Move Now
Send us the auditor’s schedule and your supplier list. We will sort the denials by size, chase compliant replacement invoices for the ones worth chasing, and put the response together properly.