The March 31 GST/HST Deadline: Common Mistakes That Trigger CRA Audits

Your GST/HST return is due March 31. Most Ontario businesses file it without a second thought. That's when the mistakes happen—and when CRA audits start.

It’s early March 2026, and businesses with December 31 fiscal year-ends are approaching their GST/HST filing deadline.

For annual filers: Your GST/HST return is due three months after your fiscal year-end. December 31 year-end = March 31, 2026 filing deadline.

Most incorporated businesses file their GST/HST returns the same way every year. Same process, same assumptions, minimal review.

But what if the CRA sends THAT letter.

Audit notice. Reassessment. Request for documentation. Disallowed Input Tax Credits. Additional tax owing plus penalties and interest.

What happened?

Usually, it’s not fraud. It’s common mistakes that businesses make repeatedly without realizing they’re problems—until CRA flags them.

At KKCPA, March is when we see businesses rushing to file GST/HST returns before the deadline. It’s also when we catch errors that would trigger audits or reassessments.

Here’s what Ontario businesses need to know about the March 31 GST/HST deadline and the mistakes that bring CRA attention.

Who Needs to File by March 31, 2026

Annual GST/HST filers with December 31, 2025 fiscal year-end:

Your return (Form GST34) is due March 31, 2026 (three months after year-end).

If you owe GST/HST, payment is also due March 31.

Who files annually:

Businesses with annual taxable supplies of $1.5 million or less
Businesses that elected annual filing

Filing vs. Payment deadline:

Both are March 31, 2026 (same date, unlike corporate income tax).

Late filing penalty:

1% of the balance owing, plus 0.25% for each complete month the return is late (maximum 12 months).

If you’ve been charged a late filing penalty in the last 12 months, the penalty doubles.

Missing March 31 is expensive if you owe money.

Common GST/HST Mistakes That Trigger CRA Audits

Mistake #1: Claiming Input Tax Credits Without Proper Documentation

This is the most common audit trigger.

The rule:

You can claim Input Tax Credits for GST/HST paid on business expenses—but only with proper documentation.

What CRA requires for expenses over $30:

Supplier name and GST/HST registration number
Date and total amount
GST/HST amount charged
Description of goods/services

Where businesses fail:

Missing GST/HST registration numbers on supplier invoices. Credit card statements alone (not detailed receipts). Personal expenses claimed as business. Claiming ITCs on exempt supplies.

The consequence:

CRA reviews ITC claims, requests documentation, disallows claims without proper receipts. You owe back the ITCs claimed, plus interest and penalties.

For medical practices:

Most medical services are GST/HST exempt. If you’re providing exempt services, you can’t claim ITCs on related expenses. This catches many medical professionals who assume all business expenses qualify.

Mistake #2: Confusing Zero-Rated vs. Exempt Supplies

Both show 0% GST/HST to customers. But they’re treated differently for Input Tax Credits.

Zero-rated supplies:

GST/HST rate: 0%
Can claim ITCs on expenses: Yes
Examples: Basic groceries, prescription drugs, exports

Exempt supplies:

GST/HST rate: 0%
Can claim ITCs on expenses: No
Examples: Most medical/dental services, residential rent, educational services

The error:

Medical practices providing exempt services claiming ITCs on office expenses and equipment. CRA disallows these on audit.

Mistake #3: Not Charging GST/HST When Required

You provide services without charging GST/HST (you think you’re exempt, or forgot, or weren’t sure).

CRA audits and determines you should have charged it.

The consequence:

You’re liable for the GST/HST you should have collected—even though you didn’t collect it from customers.

Example:

You invoiced $10,000 for consulting. Didn’t charge GST/HST.

CRA says the service was taxable. You owe $1,300 (13% Ontario HST).

You can’t go back and collect from the client. You’re personally liable.

GST/HST registration threshold:

If your taxable supplies exceed $30,000 in a calendar quarter or over four consecutive quarters, you must register.

Many small businesses cross this threshold without realizing it. When CRA catches up, you owe all uncollected GST/HST retroactively.

Mistake #4: Misclassifying Employees as Contractors

You classify someone as a contractor. You claim ITCs on the GST/HST they charge you.

CRA audits and determines they’re actually an employee.

Result:

ITCs disallowed (you owe them back, plus interest).

AND payroll tax consequences (CPP, EI, source deductions).

This creates a double audit problem: GST/HST audit reveals worker misclassification, which triggers payroll audit.

For medical practices:

The associate vs. employee issue affects GST/HST. If your “associate contractor” is actually an employee, you can’t claim ITCs on payments to them.

Mistake #5: Improper Allocation of Mixed-Use Expenses

You have expenses used for both business and personal (vehicle, home office, phone).

You claim 100% of the GST/HST paid as ITCs.

The rule:

You can only claim ITCs for the business portion.

Example:

Vehicle used 60% business, 40% personal.

GST/HST paid on vehicle expenses: $2,000

ITC you can claim: $1,200 (60% of $2,000)

If you claimed the full $2,000, CRA disallows $800 plus interest.

Documentation required:

Vehicle logs, home office calculations, phone records showing business vs. personal use.

Without documentation, CRA can disallow the entire claim.

Mistake #6: Errors in Reporting Period or Filing Frequency

You think you’re an annual filer. You file annually. CRA says you should have been filing quarterly or monthly.

When filing frequency changes:

Over $6 million in taxable supplies: Monthly required
$1.5M – $6M: Quarterly (unless you elect annual)
Under $1.5M: Annual allowed

The problem:

Your revenue increased. You crossed thresholds. You should have switched to quarterly filing but didn’t realize it.

Result:

Late filing penalties for each missed quarterly return. Interest on amounts that should have been remitted quarterly.

Mistake #7: Forgetting to Report Sales of Capital Property

When you sell capital property (equipment, vehicles, real estate) that you claimed ITCs on, you may need to report it on your GST/HST return.

Where businesses forget:

Sold old equipment during 2025. Claimed ITCs when purchased. Forgot to report the sale on the 2025 return.

CRA cross-references asset disposals from your income tax return with your GST/HST return.

Result:

Reassessment for unreported GST/HST on the sale, plus penalties and interest.

What Triggers a GST/HST Audit

CRA’s automated systems flag returns for:

Large or unusual ITC claims disproportionate to revenue
High-risk industries (construction, restaurants, retail, medical practices)
Repeated late filing or payment
Discrepancies between income tax and returns
Tips or complaints from customers, competitors, employees

The Consequences of GST/HST Errors

Reassessment: CRA adjusts your return. You owe additional amounts.

Interest: Accrues daily from the original due date.

Penalties: Late filing, gross negligence (if knowingly false), repeated failures.

Audit: Full review covering multiple years. Documentation requests, interviews, site visits.

What You Should Know Before March 31

Don’t just file based on last year’s approach.

Your business changes. Revenue shifts. Expense categories change. Mix of taxable vs. exempt supplies evolves.

Questions that require answers:

Are all your ITC claims properly documented with supplier GST/HST registration numbers?
Did you sell any capital assets in 2025 that need to be reported?
Did your revenue cross thresholds that change your filing frequency requirements?
If you provide both exempt and taxable supplies, are ITCs properly allocated?
Are mixed-use expense allocations documented and reasonable?

This isn’t routine data entry. It requires actual review of whether your 2025 transactions are being reported correctly.

When Professional Review Makes Sense

GST/HST rules are complex for businesses with:

Mixed taxable and exempt supplies
Significant exports or imports
Recent changes in business structure
Prior audit or reassessment issues
Medical, educational, or financial services (exempt supply rules)

The cost of professional review is typically far less than CRA reassessments, penalties, and audit defense costs.

The Bottom Line

GST/HST filing seems routine. For many businesses, it’s a checkbox on the tax season to-do list.

But common mistakes—missing documentation, incorrect allocations, misclassifying supplies, wrong filing frequency—trigger CRA audits and reassessments.

March 31 is approaching. If you’re uncertain about your GST/HST return, the time to get it reviewed is before you file, not after CRA sends a reassessment notice.

Need Help With Your GST/HST Return?

At KKCPA, we help Ontario businesses file accurate GST/HST returns and avoid the common mistakes that trigger CRA audits.

We can help you:

Review 2025 transactions for proper GST/HST treatment
Verify ITC claims are documented and allowable
Determine correct filing frequency based on revenue
Allocate ITCs for mixed taxable/exempt supply businesses
Ensure compliance with documentation requirements

Don’t file a return you’re uncertain about. Get it reviewed before the March 31 deadline.

Contact KK CPA

📍 Serving Ontario businesses including Hamilton, Ancaster, Burlington, and the Greater Toronto Area
📞 Toll Free: 855-667-1727

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