And how Canadian manufacturers can squash them before the auditor calls
Why this matters now
The Canada Revenue Agency (CRA) has ramped up risk-based GST/HST audits for 2024-25. Files are being selected by data-matching algorithms that compare your sales, GST returns, and even third-party supplier data. When the numbers don’t line up, minor errors in Accounts Payable (AP) can snowball into denied input-tax credits (ITCs), penalties, and weeks of disruption.
1 | Invoices with missing—or bogus—GST/HST registration numbers
Why does it trigger an audit
- Claiming ITCs without a valid supplier registration number is the CRAs #1 red flag. djb.com
- Auditors will disallow the credit if the number is wrong, expired, or missing, even if the expense itself is legitimate. goodservicetax.com
How it hides in AP
- Rush orders paid on the shop floor never make it through vendor onboarding.
- Credit-card receipts are forwarded as “invoices”, but card slips don’t contain registration data.
Quick fix
- Mandatory field check in your invoice-capture workflow: no GST/HST number, no posting.
- Real-time lookup against the CRA’s Business Number database (Plutus can automate this in the capture step).
- Auto-e-mail the vendor requesting a corrected invoice; park the transaction until the update lands.
2 | Invoices addressed to the wrong legal entity
Why it triggers an audit
- The CRA allows ITCs only to the entity that actually received—and is liable to pay for—the supply.
- “Holding Co. invoice, Operating Co. claim” scenarios are routinely denied.
djb.com
How it hides in AP
- Purchase orders are raised by Plant A but the vendor still bills the head office entity.
- Internal cost-allocation journals re-book the expense, but the invoice image never follows—leaving a mismatch trail for auditors.
Quick fix
- Add a PO-to-legal-entity cross-check in your three-way-match rules.
- Build a one-time mapping table of “acceptable trading names” to each BN.
- When the names don’t match, divert to an exception queue instead of letting the ERP post it.
3 | Misaligned numbers between GST/HST returns and income-tax filings
Why it triggers an audit
- The CRA cross-references your GST/HST sales with the revenue you report on T2/T5013 returns. Discrepancies suggest under-reported income or overstated ITCs. rosentaxlaw.com
- Large ITCs relative to revenue can also signal duplicate invoices or personal expenses mistaken for business costs. rosentaxlaw.com
How it hides in AP
- Duplicate vendor invoices enter the system under different document numbers.
- Invoices dated in March are posted in April, creating timing gaps between financials and GST filings.
Quick fix
- Run a duplicate-invoice hash check (supplier + invoice # + amount) before approval.
- Sync AP aging to GST cutoff: close March AP before filing the March GST return.
- Reconcile total ITC value in AP vs. the figure reported on the GST/HST return each period—Plutus can surface variances instantly.
A 5-minute monthly sanity checklist
| Step | What to look for |
| 1. Vendor list scan | Any invoices missing GST/HST BN or showing outdated numbers |
| 2. Entity match report | Invoices where supplier »legal entity« ≠ PO company |
| 3. Duplicate test | Same supplier, same amount, ≤ 5-day date window |
| 4. Sales vs. GST tie-out | Revenue in ERP equals line 101 of GST/HST return |
| 5. ITC variance | AP-booked ITCs ⟷ GST return line 108 difference ≤ 2 % |
Automating these five checks inside your AP workflow keeps 90 % of audit triggers from ever making it to the CRA—and frees your two-person AP desk for higher-value tasks.
Next steps
Download our 1-page GST/HST Self-Audit Sheet or book a 20-minute walkthrough of how Plutus validates GST fields and entity names in real time. One proactive review today is better than six weeks of audit queries next quarter.
