How do I correct GST/HST after refunding a customer?

Arsen Accounting Services · Question 144 · Sources checked October 29, 2026

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When a sale price is reduced or excess GST/HST was charged, the correction should be supported by the appropriate credit or debit note and reflected in the correct return period. A bank refund alone may not provide the complete tax record.

Identify the reason for the adjustment

CRA distinguishes excess tax from a later reduction in the price of a supply. Different time limits apply. The seller's tax adjustment and the customer's treatment must be coordinated where the customer previously claimed an input tax credit.

Do not simply delete an old invoice after it was reported. Preserve the original sale and show the later adjustment, including the amount of tax refunded or credited.

Official guidance: [1].

Follow the transaction through

Suppose a customer returns part of an order after the original invoice and tax were reported. Issue documentation identifying the returned items and the related tax adjustment. The sales ledger, customer balance, payment record, and GST/HST working papers should tell the same story.

Keep these items together

• Original invoice and evidence of the original tax charged.
• Reason for the price reduction or tax correction.
• Credit note or other required adjustment document.
• Refund or credit date and amount.

Ask your preparer which reporting period and adjustment line apply under your method. If the customer is a registrant, provide clear documentation so they can review any ITC adjustment. Where the issue is tax charged in error, confirm the available correction route and deadline before promising a refund. Keep the transaction history intact for both parties.