This sample invoice shows how to bill for a product with harmonized sales tax (HST) that is sold by an Ontario business. The HST is charged in provinces that have merged their provincial sales tax (PST) and the federal goods and services tax (GST) into a single tax. Businesses that are do not qualify for the small suppliers exemption must charge HST or GST and PST, depending on the province.
This invoice template can be used for your own small business. Change the HST rate to the HST rate applicable to your province, if necessary.
HST Rates for Various Provinces
Note that this invoice sample is set up for a business in the province of Ontario where the HST rate is 13%. There are currently five provinces that charge HST:
- Nova Scotia: 15%
- New Brunswick: 15%
- Newfoundland/Labrador: 15%
- Prince Edward Island: 14%
For tax rates for other provinces that charge PST and GST separately, review information on PST for small business.
Required Information on Your Invoice
Generally, customers need to be informed of the price of the goods or services they are purchasing and the amount of the GST or HST they are paying on those goods and services. HST should be listed as one tax rather than broken into its federal and provincial portions.
Invoices for GST and HST registrants need to include more information, so registrants can use them to verify their ITC claims. According to the Canada Revenue Agency, invoices for goods or services for sales between $30 and $149.99 must include:
- Business name
- Date of invoice
- Business number—sometimes called the GST registration number
- Total amount paid or payable
- Total amount of GST or HST charged—except for zero-rated goods or services, or a statement that the GST or HST is included and the total rate of tax
- An indication of which items are taxed at the GST rate and which are taxed at the HST rate when you supply some items that are taxable at the GST rate and others that are taxable at the HST rate
Invoices for goods or services for sales between $150 or more must also include:
- Purchaser's name—or trading name or the name of their authorized agent
- Brief description of the goods or services performed
- Terms of payment
|From: Cypress Technologies
Suite 7, 140 Atlantis Drive
Orillia, Ontario L3V 0A8
|Invoice No. 01234||Invoice Date: 4/1/2020||HST Registration No. 01234|
|To: Sarah's Computer Bin
8424 Traders Boulevard E
Mississauga, Ontario, L4Z 2H7
Attn: Sarah Norgaard
|HP OfficeJet Inkjet Color Printer||$583.97||1||$583.97|
|Payment Terms: To be paid within 30 days of invoice date.|
This sample invoice may be used by copying it into Word or another word processor or spreadsheet application. To do this, select the text in a browser and under Windows, type CTRL-C to copy and CTRL-V to paste. You can then substitute your relevant data, using your own customized business letterhead and styles.
This is a sample product invoice from one business to another in the same province; if you provide services, rather than sell products, you may wish to use the subheading "Description of the Work Performed" along with the "Invoice For" heading.
Specify definite payment terms. Note the statement at the bottom of the invoice, saying that the invoice amount is due within 30 days or payable upon receipt, will not guarantee a timely payment and may be costly if you then need to hire a collection agency. Using a specific terms such as "To be paid within 30 days of the invoice date" gives your customers a firm due date, and can help you avoid collection problems.
Include a clear return policy, if applicable. If you are selling returnable products, you should mention the return policy on the invoice. The return policy should specify:
- Whether an invoice must accompany returns
- Whether the product can be refunded or exchanged
- Any conditions that apply to damaged or defective goods
- Time limit for returns, for example "items can be returned within 30 days from the date of purchase"
Use accounting software to create invoices. Accounting software designed for small businesses is not only used for point of sale (POS) systems and to print invoices, but makes it easier to calculate and keep track of taxes, such as those showing GST and HST. There are a number of inexpensive, easy to learn, cloud-based accounting packages available for small businesses.