Professional services · 🇨🇦 Canada
One blended tax rate across three provinces
A Toronto firm operating across provincial lines applied a single sales tax rate, understating some filings and overstating others.
Canadian professional services firm, 14 staff, 3 provinces. Client identity withheld — we publish names only with written permission, so this engagement is described by its shape rather than by who it was.
3
Provinces separated
18
Months restated
Net refund
Position after restatement
The situation
- The firm had grown into two provinces beyond Ontario and continued applying HST at the Ontario rate to everything.
- Nobody had revisited the chart of accounts since incorporation.
What we found
- GST, HST and provincial sales taxes were being posted to a single account with one rate.
- Some filings had underpaid, others had overpaid — the net was closer to neutral than the firm feared.
- Input tax credits claimed at the blended rate rather than the actual rate paid.
What we did
- Rebuilt the chart of accounts with separate tax codes per province and per tax type.
- Restated eighteen months of filings at the correct jurisdictional rates.
- Filed amendments in both directions rather than only where a refund was due.
The outcome
- The restated position produced a modest net refund, and filings now reconcile to the ledger by province.
- The firm can now see profitability per province, which it could not before.
What we'd flag
Filing amendments where the firm had underpaid was not optional, and the firm initially wanted to file only the refund side. Doing both is the only defensible position.
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