What Actually Gets an Input Tax Credit Denied in a CRA Review (And How to Catch It First)

Most ITC denials aren't about fraud. They're about a receipt that looked fine when it was filed and fell apart the moment someone asked to see it again. Here's what actually triggers a denial, ranked by how often it shows up in practice — and how to catch each one before a reviewer does, not after.

1Missing or expired supplier registration number

The single biggest cause. CRA can deny the credit outright if the supplier's GST/HST number isn't on the invoice for amounts over $30, full stop — it doesn't matter how legitimate the expense was. Registration numbers can also lapse if a small supplier deregisters; a number that was valid last year isn't a guarantee it's valid on this year's receipt.

Catch it: check the number is present and legible on every claim over $30, not just the big ones. The $45 receipt from a supplier that only lasted six months is exactly the one that gets picked in a sample review.

2The tax charged doesn't match what the receipt actually shows

A reviewer reconciles your claimed ITC against the number printed on the document. If your ledger shows $13.00 in HST and the receipt shows $11.96, that gap needs an explanation — and "our software calculated it" isn't one. This happens constantly with rounding, with receipts that show a bundled discount applied after tax, and with multi-item receipts where only some lines are taxable.

Catch it: the rule that actually holds up is simple — never claim a number the paper doesn't show. If a receipt is ambiguous, that's a flag for review, not a rounding decision.

3Personal expense booked as business

This is the fastest way to lose credibility in a review, not just one claim. Once a reviewer finds one personal charge coded as a business expense, they stop trusting the rest of the file and start pulling a wider sample. A single restaurant receipt on a Saturday for a business that doesn't operate weekends is exactly the kind of thing that gets noticed.

Catch it: route anything ambiguous to owner draw and ask, rather than defaulting to "expense it and see." One flagged question is cheaper than a widened audit.

4Meals and entertainment claimed at 100%

CRA's 50% limitation on meals and entertainment is well known, which is exactly why reviewers check it first — it's an easy, fast finding. A bookkeeper who's careful about the ITC threshold but misses the 50% cap on a batch of restaurant receipts hands over an easy correction, and easy corrections invite a closer look at everything else.

Catch it: apply the cap at data entry, every time, not as a year-end adjustment someone might forget to make.

5No paper trail for a claimed input tax credit at all

Sometimes the expense is real and the tax was genuinely paid — but the actual receipt was lost, and what's on file is a bank statement line or a hand-written note. A bank line proves a payment happened; it doesn't prove HST was charged or what rate applied. Without the original document, there's nothing to reconcile the claim to.

Catch it: a missing receipt is not a $0 problem to paper over — flag it as unsupported and decide deliberately whether to claim it, rather than letting software fill in a plausible-looking number.

Why we wrote this

Meridian Books won't book a number that isn't printed on the paper — no tax line means no tax claimed, and an unreadable receipt gets flagged in red instead of guessed at. That's the same discipline this list describes; we just apply it automatically to a full year of files instead of one review at a time.

See how it handles a real file →

General information for Canadian bookkeepers, current as of the date published. Not tax advice — CRA rules change and every file is different.

← All guides