A Canadian Invoice is a commercial document issued by a business or individual (the supplier) to a client (the buyer) requesting payment for goods delivered or services rendered. In Canada, invoices serve both as a request for payment and as essential tax documentation for GST/HST compliance under the Excise Tax Act (R.S.C. 1985, c. E-15). The Canada Revenue Agency (CRA) requires businesses to maintain proper invoicing records for audit purposes and to substantiate input tax credit (ITC) claims.

Canada has a multi-layered sales tax system. The federal Goods and Services Tax (GST) applies at a rate of 5% across the country. In participating provinces, the GST is harmonized with provincial sales taxes into the Harmonized Sales Tax (HST): 13% in Ontario and 15% in New Brunswick, Nova Scotia, Newfoundland and Labrador, and Prince Edward Island. In other provinces, the GST is charged separately from Provincial Sales Tax (PST) in British Columbia (7%), Saskatchewan (6%), and Manitoba (7%), or Quebec Sales Tax (QST) at 9.975%. Alberta, Yukon, Northwest Territories, and Nunavut have no provincial sales tax.

Businesses with total taxable revenues exceeding $30,000 over four consecutive calendar quarters must register for and charge GST/HST. The CRA requires different levels of invoice detail depending on the transaction amount. For amounts of $30 or less, no invoice is technically required for ITC claims. For amounts between $30 and $150, a simplified invoice is acceptable. For amounts exceeding $150, a detailed invoice must include the supplier's name and GST/HST registration number, the invoice date, the buyer's name, a description of the goods or services, the total amount, and the GST/HST charged or a statement that it is included in the price.

A Canadian Invoice is needed whenever a business or individual provides goods or services to a client and requires payment. Invoices are essential for maintaining proper business records, complying with CRA tax obligations, and supporting claims for input tax credits. Common scenarios include billing clients for professional services (consulting, legal, accounting, design); charging for goods sold or delivered; requesting payment for construction or renovation work; billing for freelance or contractor services; invoicing for subscription or recurring services; and requesting payment for creative or artistic work.

Under the Excise Tax Act, GST/HST registrants must issue invoices that contain the prescribed information to enable their clients to claim input tax credits. Failure to issue proper invoices can result in the denial of ITC claims during CRA audits. Invoices must be issued in a timely manner and retained for at least six years after the end of the tax year to which they relate, as required by the Income Tax Act (R.S.C. 1985, c. 1 (5th Supp.), s. 230).

Freelancers and independent contractors in Canada should issue invoices for all services to maintain clear records for income tax purposes and to support GST/HST filings. Even small suppliers not registered for GST/HST benefit from professional invoicing for record-keeping and tax reporting.

An effective Canadian Invoice must include the supplier's legal business name and complete address, including city, province, and postal code. The supplier's GST/HST registration number must be displayed if the supplier is a GST/HST registrant. The invoice should include a unique invoice number for tracking purposes, the invoice date, and the payment due date. The client's name and address should also be included.

A clear and itemized description of the goods or services provided is essential, along with the quantity, unit price, and total for each line item. The financial summary should clearly show the subtotal, any applicable discounts, GST/HST at the applicable rate, PST/QST if applicable in the province of supply, and the total amount due in Canadian dollars (CAD). Payment terms must specify accepted methods (e-transfer, cheque, wire transfer, credit card) and provide banking details if applicable.

Optional but recommended elements include a purchase order reference number, late payment fee terms (ensuring compliance with the Interest Act (R.S.C. 1985, c. I-15) and the Criminal Code maximum of 60% annual interest), early payment discount provisions, and any additional notes or special instructions. The invoice should also specify the governing province for any disputes related to the billing.