When you're operating a small business in Canada, how you invoice the customers who buy your products or services depends on your business's tax situation.
Because of the differing tax requirements of the provinces and the rules surrounding the Goods and Services Tax (GST) and Harmonized Sales Tax (HST), an invoice from a business that qualifies as a Small Supplier in Alberta, for example, has different requirements than an invoice from a business in Ontario that doesn't qualify.
Using an invoice template helps you to streamline the process of billing customers by providing a model of the components required in your provincial tax scenario. Choose the template that matches the tax situation for your business and refer to the table for your province's tax rates:
- How to Invoice Nontaxable Product Sales (Simple Invoice)
- How to Invoice Nontaxable Services (Simple Invoice)
- How to Invoice With HST (Harmonized Sales Tax)
|British Columbia||GST 5% + PST 7%||The HST rate no longer applies as of 1 April 2013.|
|Manitoba||GST 5% + PST 8%|
|New Brunswick||HST 15%||Increased from 13% to 15% as of 1 July 2016.|
|Newfoundland & Labrador||HST 15%||Increased from 13% to 15% as of 1 July 2016.|
|Northwest Territories||GST 5%|
|Nova Scotia||HST 15%|
|Prince Edward Island||HST 15%|
|Quebec||GST 5% + QST 9.975%||QST is charged only on the sales price and is no longer charged on the GST as of 1 January 2013.|
|Saskatchewan||GST 5% + PST 6%|
How to Invoice: Requirements
Generally, Canadian invoices should inform customers of the price of the goods or services they're purchasing and the amount of tax they're paying on those goods or services.
If you're charging GST/HST on your goods or services, follow the Canada Revenue Agency's requirements for the information that must be provided on your invoices, as explained in detail in How to Invoice With HST and How to Invoice With GST and PST.
How to Invoice: Rules for Charging Provincial Sales Tax
In Saskatchewan, Manitoba, and British Columbia, Provincial Sales Tax (PST), like GST, is charged on the total sales price of the merchandise or service. In Quebec, PST is charged on the total of the sales price plus GST, as shown in How Do I Calculate GST/HST?
The Small Supplier Exception: Do You Have to Charge GST/HST/PST?
If your business revenue (before expenses) was $30,000 or less in a calendar quarter ($50,000 or less for public service organizations) and during the previous four consecutive calendar quarters, you don't have to register for and collect GST/HST. However, you may still wish to do so to claim input tax credits.
If you do business in a province that charges GST and PST, you may also qualify for a provincial small supplier exception. For example, in British Columbia, you can qualify as a "Small Seller" if your gross revenue is less than $10,000 per year. However, it doesn't apply to sales of certain products, including liquor, cannabis products, liquor, vehicles, boats, and aircraft.
Exempt and Zero-Rated Goods and Services
There are many GST/HST/PST-exempt goods and services that you don't tax on invoices. To add to the complexity, in provinces that charge GST/PST, some items are exempt from the GST but not from the PST and vice versa (if in doubt, check the provincial sales tax information bulletins for Quebec, Manitoba, Saskatchewan, and British Columbia). Examples of GST/HST-exempt goods and services include childcare services, music lessons, and used residential housing.
There are also items that you don't tax on invoices but can claim as input tax credits (zero-rated goods and services). For an explanation of exempt versus zero-rated goods, see GST/HST Exempt and Zero-Rated Goods and Services in Canada.
Accounting Software and Invoices
Accounting software makes doing invoices easy. Accounting software designed for small businesses can not only be used as a POS (Point of Sale) system and print out invoices on the spot but makes it easier to calculate and keep track of taxes, such as the GST/HST.
- “Basic Rules for Applying the GST/HST and QST.” Revenu Québec, 2018.
- Canada Revenue Agency. “Doing Business in Canada – GST/HST Information for Non-Residents.” Doing Business in Canada - GST/HST Information for Non-Residents - Canada.ca, 11 Feb. 2019.
- “Provincial Sales Tax Bulletin PST 003: Small Sellers: Provincial Sales Tax Act.” British Columbia, Apr. 2019.
- “Sales Tax Rates by Province in Canada.” Retail Council of Canada.