Don't Let These Simple Errors Trigger an Audit
Tax compliance is about details. Here are the most frequent mistakes small business owners make in Canada.
1. The $30,000 Oversight
Many forget that the $30k limit applies to revenue, not profit. CRA checks both a single calendar quarter and four consecutive calendar quarters, and late registration can trigger penalties.
2. Wrong "Place of Supply" Rates
Charging your local tax rate to a customer in another province is illegal. You must charge based on where the customer is located.
3. Claiming ITCs Without Receipts
The CRA requires physical or digital receipts for every cent of ITCs claimed. Credit card statements are often not enough during an audit.
4. Personal Expenses
Waiters, dry cleaning (usually), and personal gym memberships are NOT business expenses and cannot generate ITCs.
5. Mixing Zero-Rated and Exempt
Confusing these two (see our guide) leads to incorrect ITC claims, which the CRA will claw back with interest.
6. Missing Filing Deadlines
Even if you can't pay, always file on time. The late-filing penalty starts at 1% of the balance plus 25% of that penalty.
Avoid rate mistakes by checking our Province Reference →
Run the Canada GST/HST calculator for province-based totals →