CLIENT
Our client is a large, U.S.-based downstream petroleum company with operations and a sophisticated supply chain across North America, including Canada.
CHALLENGE
The client received a staggering proposed assessment of over $125 million from the Canada Revenue Agency (CRA) related to GST/HST. The initial audit suggested the company had significant tax obligations on both the collection (sales) side and the input tax credit side. The CRA believed the company had improperly zero-rated certain transactions that occurred in Canada and had not met documentation requirements to support input tax credit claims.
If upheld, the assessment could have caused severe financial distress.
SOLUTION
DMA’s Canadian indirect tax team, including GST/HST specialist Andrew Davis and Fuel Tax specialist Rob Mandeville, was brought in at the proposed assessment stage, with just 30 days to respond to the initial assessment.
The team quickly engaged with CRA auditors to:
- Educate the audit team on the client’s complex business model and Canadian supply chain
- Break down the proposed assessment into two components for targeted resolution
- Provide a thorough legislative and documentation analysis to prove the zero-rated treatment was correct
- Prepare detailed, regulation-supported documentation to justify the input tax credit claim
DMA worked closely with the audit team and audit supervisor to resolve all major points of contention within the limited timeframe.
RESULT
Thanks to DMA’s rapid response and targeted audit strategy, the client avoided what could have been a devastating financial outcome. Our efforts led to significant reductions in both components of the proposed assessment:
- The client’s assessment was reduced from over $125M to just $123,000—a massive win that protected the company’s financial standing
- Over $4 million in disputed input tax credits was accepted following DMA’s legislative and documentary support
WHY DMA?
DMA’s unmatched GST/HST expertise and strategic approach during the audit phase was the key differentiator. By engaging DMA early:
- The client gained immediate access to experts who could interpret and apply legislation accurately and persuasively
- DMA worked directly with CRA auditors—before the assessment was finalized—to resolve the issues and avoid escalation to collections or appeals, which can take years to resolve
- Our team delivered a compelling combination of legislative clarity and detailed documentation that led CRA to withdraw nearly the entire proposed assessment
This case demonstrates why companies facing a proposed CRA assessment should act quickly and bring in DMA at the audit stage—when there’s still time to influence a favorable outcome.
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