Recent experience suggests that the CRA may have an ongoing project (internal code for either tax evasion special investigations, or civil auditing of possible sham transactions – or both) in the Staffing Agency context.
While the following example is totally hypothetical, it does tend to follow the situations first identified in recent Quebec jurisprudence, where GST/HST non-compliance by staffing agencies first came to light:
Aco, a GST Registrant, acquires temporary workers through a third-party Staffing Agency, Bco. The temporary workers are often undocumented, for whatever reason, and are unknown to Aco, other than through its relationship to Bco. Bco charges Aco for the cost of the workers, plus a profit element, plus GST/HST. Aco pays that, and takes an ITC for the GST/HST on the strength of the invoice from Bco. Bco later absconds with the GST/HST (does not remit it to the CRA), and CRA finds reason to deny the ITCs in the hands of Aco (perhaps Bco was not validly registered for the GST/HST at the time that Aco was invoiced for it).