The document discusses potential areas where Canadian companies may have overpaid goods and services tax (GST) and be eligible for refunds. It notes that 9 out of 10 companies audited recovered significant overpayments going back 4 years. Some key areas where overpayments may have occurred include missed input tax credits, treatment of employee expenses, mail-in coupons, warranty expenses, foreign exchange issues, general ledger anomalies, and bad debts. The document emphasizes that competent tax reviews are important due to the complex nature of GST rules and the lack of time or expertise of most company tax departments to fully ensure compliance.

1. CANADIAN GST (GOODS AND SERVICES TAX)
THINGS GOOD TO KNOW
Often when we approach potential clients to provide Canadian sales tax
recovery services and we hear the following reasons why they believe this
service is not needed.
We must emphasize that 9 out of 10 companies we have done GST reviews
for have benefitted significantly.
We can go back for a period of FOUR years and recover any overpaid GST
with no risk and no
stress to anyone.
GST is a value
added tax. No
business is
supposed to lose
because of this tax.
This tax is a flow
through tax which
finally ends up in the end consumer. All other entities in between are
supposed to flow through the GST related costs to the next level in the
chain until it is all cumulatively paid by the end user.
THINGS GOOD TO KNOW
So then, where do refunds come from? Here are some areas that one
should be aware of. Although this is not an exhaustive list of refund areas,
some of these are significant to know about:
No matter how smart a company’s accounting and
business functions are organized and controlled,
incidences of error and omissions are ever present. This
happens as a result of inadequate enforcement of
internal controls, lack of trained staff, staff turnover, over
load of work etc. in the present day business
environment.
Canadian Sales Tax News
by
Tax Recovery Solutions
Inc.
Sales Tax Rules and Regulations
are in a constant state of flux
and, we understand that
keeping abreast with changes in
tax regimes is a daunting
challenge for those who work
with them.
It is our intent to bring to your
awareness matters that may
require your attention.
Tax Recovery Solutions Inc.
cautions the readers to confirm
the opinions expressed herein
with government sources prior
to acting on any of its contents.
This document is merely a
pointer towards items of
information the readers should
be aware of.
Published by:
ROGER SINNIAH
TAX RECOVERY SOLUTIONS
INC.
6698 GANYMEDE ROAD,
MISSISSAUGA, ONTARIO.
L5N 6R1
CANADA.
www.taxrecoverysolutionsinc.com
WE PROVIDE TAX RECOVERY
SOLUTIONS IN CANADIAN
SALES TAXES AT A
COMPETITIVE FEE.
PHONE: 416 838 3745
MISSED INPUTS:
Businesses are permitted to set off the GST paid on all
the business related inputs such as goods and services
purchased from vendors in the process of doing business.
These amounts can be deducted from GST collected on
sales to customers. This may sound simple to anyone.
There are however rules to follow to avoid assessment of
penalties and interest where a business claims inputs
contrary to the rules.

2. EMPLOYEE EXPENSES:
Did you know that Canadian travel related expenses,
allowances and similar payments made to
employees may have eligible GST inputs that a
company is entitled to? Many businesses are not
sure as to how to claim those credits. There are
restrictions and rules that one should be aware of.
MAIL IN COUPONS:
Some businesses (especially manufacturers) offer consumers mail in
rebate coupons that they can use to obtain refunds of the coupon
value obtained at the time of purchase in retail stores. These coupons
have the potential for GST credits. Many are not aware of this issue.
WARRANTY RELATED EXPENSES:
Companies who provide warranty services to their
customers often ignore the GST credits embedded in
those services.
FOREIGN EXCHANGE ISSUES:
Incorrect conversion of currencies cause
anomalies in the data carried into the GST
Returns. Many businesses use incorrect
conversion rates that cause over or under
payment of tax.
GL GST ACCOUNT ANOMALIES:
The figures reflected in the GST Return should align with the GL entries. It is
surprising that some businesses have issues in this area. The GL totals do
not sometimes tally with the GST Return data.

3. Here are more reasons why GST tax review by a competent consultant is a must.
1. Tax departments of a company are mostly mired in the monthly filing of tax returns with
many different tax authorities. They usually have no time to check the accuracy of each AP and
AR transaction for legitimacy of tax treatments and the accuracy of data input of the source
documents. The data on the reports generated for compiling tax returns are seldom checked for
accuracy.
2. The belief that internal controls are in place does not mean that the controls are properly
implemented or enforced on a day to day basis.
3. No legitimate claim would normally trigger an audit by tax authorities. Whether claims are
filed or not, governments carry out audits as a routine based on their own time tables. It is an
advantage for a company to recover the overpayments on a timely basis to avoid losses as a
result of items falling into the time barred zone. Also, companies can benefit by knowing their
exposure areas in advance of an audit and rectify them before an audit ever takes place.
4. No responsible officer of the company should ever say that they do not have the time to take
care of business. That is not a reason that can be relied on if the government is the one calling
to do an audit.
DOCUMENTARY REQUIREMENTS:
There are rules pertaining vendor invoices and other
documents on which GST inputs are relied upon.
There is a widespread lack of knowledge in this area.
Any credits taken without proper documentation
can results in assessments, penalties and interest to
be paid back to the CRA.
BAD DEBTS:
If a business has written off Bad Debts in the
past 4 years, certain adjustments to GST are
permitted. There is a prescribed method to
follow to take advantage of the adjustment.