Fraud and Compliance
GST/HST Audits: 3 things CRA inspectors look for
The CRA completes approximately 70,000 GST/HST audits every year. Eeks, right? Though no one enjoys receiving an audit notice, when you know what inspectors are looking for, it’s much easier to prepare for—and yes, even sail through—the process.
Here’s what CRA inspectors are interested in when it comes to an audit:
1. Your expense policy: Having an up-to-date expense policy is an easy way to minimize out-of-policy claims and stay compliant with the CRA. Expense policies typically outline allowable expenses to employees in straightforward terms as well as documentation required in order to submit a claim.
When your policy is clear and enforced, your employees are more likely to be submitting compliant expenses with full documentation already. That sure makes for a faster, smoother audit!
Need to create or update your expense policy? Download our free Expense Policy Template.
2. Your expense approval process: The CRA will check that every expense claim is appropriately signed off. Make sure you have an approval process in place even for the most senior-level employees. A CRA inspector will look to ensure:
- People at the right level are approving expenses
- A fully-traceable audit trail
- Valid receipts have been provided
3. Your documentation: You can provide documentation to the CRA electronically or on paper. An auditor will likely want to look at a variety of records, including:
- Ledgers and journals
- Invoices and receipts
- Expense reports
- Contracts
- Bank statements
When it comes to expenses, ensure you can provide the CRA with a business reason for every expense. You’ll also need a corresponding receipt that includes the supplier name, applicable taxes and registered tax number as well as a signature to show approval of the expense.
Not surprisingly, the more automated your expense and invoicing processes currently are, the smoother an audit should be. SAP Concur automated expense and invoice solutions have compliance rules tailored to your business and CRA requirements built right in.
Want to learn more about keeping the CRA happy?
As experts on that subject, we’ve created a go-to resource for Canadian businesses: Expense and Tax Compliance in Canada: A Comprehensive Guide. This complimentary guide provides further details on what auditors look for, tax rates by province and answers to some of the top expense-related tax FAQs we receive at SAP Concur.
