Compliance Trends in 2026-27
In its 2026-27 Departmental Plan, the Canada Revenue Agency (CRA) lays out major priorities, including tightening compliance, particularly around GST/HST refund schemes and aggressive tax planning. (canada.ca) According to the plan, notable strategic focuses include:
- Combating high-risk sectors for tax evasion and GST/HST fraud (including carousel schemes). (canada.ca)
- Using data analytics and international co-operation to uncover non-compliance. (canada.ca)
- Improving processes for SR&ED claims and making technical eligibility more transparent via an elective pre-claim approval, aimed at cutting review time from 180 days to 90 days for certain claims. (canada.ca)
Business Exposure Points
Here are areas where Canadian businesses are being watched closely:
- GST/HST refund schemes: Businesses claiming large or sudden input tax credit refunds without corresponding output tax are under greater scrutiny. Ensure documentation is solid and claims are defensible. (canada.ca)
- Aggressive inter-company or affiliate transactions: Transfer pricing, interposed corporations, and deferral of corporate income via investment income are flagged. The draft legislative proposals from Finance indicate changes here. (canada.ca)
- SR&ED claims: Without sufficient technical justification and documentation, claims may be delayed or rejected. The new elective pre-claim approval process will require clear project definitions. (canada.ca)
Practical Compliance Steps Businesses Should Take
- Review GST/HST practices: Be ready for audits. If using input tax credits, maintain matching sales records and verify registration and filing compliance.
- Document inter-company transactions carefully: If deferring income or using affiliate structures, ensure transfer pricing policies are documented and defensible. Avoid surprises in filings.
- Prepare SR&ED claims proactively: For any project, map out eligible activities, their technical uncertainty, and keep contemporaneous documentation. Consider the new pre-approval elective route.
- Model cash flows under new personal tax rate structure: If owner-managed corporations or sole proprietorships affected by changes in personal tax rates, review compensation strategy to optimize net take-home amounts.
- Monitor legislative consultations: Tax rules on fuel charge rebates, global minimum tax, and income inclusions are under consultation. Participating in these can help shape outcomes. (canada.ca)
Case Study: A Medium-size GST Refund Claim Audit
Scenario: A manufacturing firm claims a large input tax credit in Q1 2026 for machinery purchased, but failed to track usage properly or ensure enough taxable sales in related periods.
Consequences: CRA identifies inconsistency, requests supporting records; delays during audit, possibly penalties or reassessments. Refunds held up.
Preventive Measures:
- Ensure matching of purchases to taxable sales, usage logs, certificates if needed.
- Seek professional advice if undertaking large capital purchases that have mixed usage (exempt vs taxable).
Conclusion
CRA is pushing for greater transparency, accuracy, and alignment with legislative policy. For businesses, the cost of non-compliance could be significant—not just monetary penalties, but lost opportunity costs. Updating internal compliance systems, documentation, and staying current with legislative developments is essential for risk mitigation.