How to Invoice: Sales Tax Rates for GST, HST, and PST in Canada
When doing a Canadian invoice, how to invoice the customers who buy your products and services depends on your Canadian small business's tax situation.
Because of the different tax requirements of various 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 has different requirements than an invoice from a business in Ontario that doesn't.
So here is a collection of invoice templates that provide models of the different invoices that different tax scenarios require. Just pick the one that matches the tax situation for your business.
Below the links to the different Canadian invoice templates, there's a list of which provinces and territories charge which taxes for your convenience.
- How to Invoice Selling Products With No Taxes (Simple Invoice Template)
- How to Invoice Selling Services With No Taxes (Simple Invoice Template)
- How to Invoice With HST (Harmonized Sales Tax)
Canadian Taxes: Which Province Charges Which Taxes & How Much?
|BC||GST 5% & PST 7 %||As of April 1, 2013.|
|Saskatchewan||GST 5% & PST 5%|
|Manitoba||GST 5% & PST 7%|
|Quebec||GST 5% & QST 9.975%(Quebec Sales Tax)||As of January 1, 2013, the QST will no longer be charged on GST.|
|New Brunswick||HST 15%||Increased from 13% to 15% July 1, 2016|
|Nova Scotia||HST 15%|
|Newfoundland & Labrador||HST 15%||Increased from 13% to 15% July 1, 2016|
|Prince Edward Island||HST 15%||Increased from 14% to 15% October 1, 2016|
|Northwest Territories||GST 5%|
How to Invoice: Invoice Requirements
Generally, Canadian invoices need to inform customers of the price of the goods and/or services they are purchasing and the amount of tax they are paying on those goods and/or services.
If you are charging GST/HST on your goods and/or services, you need to follow the Canada Revenue Agency's requirements for what information has to be on your invoices.
How to Invoice: Rules for Charging PST
In Saskatchewan, Manitoba and British Columbia, PST, like GST, is charged on the total selling price of the merchandise.
In Quebec, PST is charged based on the total of the selling price plus GST. For examples see How Do I Calculate GST/HST?
The Small Supplier Exception - Do You Even Have to Charge GST/HST/PST?
If your business revenues (before expenses) are $30,000 or less in the previous four calendar quarters you do not have to register for and charge GST/HST. However, you may still wish to do so in order to claim input tax credits (see the Canada Revenue Agency (CRA) Small Supplier Definition for more details).
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 revenues are less than $10,000 per year. However, it does not apply to rental accommodation, vehicle sales, etc.
Exempt and Zero-Rated Goods and Services
There are many GST/HST/PST exempt goods and services which you do not 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: Quebec, Manitoba, Saskatchewan, British Columbia). Examples of GST/HST exempt goods and services include child-care services, music lessons, and used residential housing.
There are also items which you do not tax on invoices but can claim input tax credits (zero-rated goods and services). For an explanation of exempt vs zero-rated goods see GST/HST Exempt and Zero-Rated Goods and Services in Canada.
Accounting Software & Invoices
Accounting software makes doing invoices easy. Accounting software designed for small businesses can not only be used as POS (Point of Sale) systems and print out invoices on the spot but makes it easier to calculate and keep track of taxes, such as the GST/HST.