Invoicing and Tax regulation in Canada
Invoicing Regulation in Canada
In Canada, businesses engaging in B2B, B2C or B2G transactions are required by law to issue invoices for goods and services sold. An invoice must contain specific information including, but not limited to, the name and address of the seller and buyer, description of goods or services, and the document date. Penalties may apply for non-compliance.
Real-time reporting / Fiscalization in Canada
Real-time reporting or fiscalization is not mandatory for businesses in Canada. Instead, businesses are required to keep records and supporting documents for six years following the end of the last tax year to which they relate. All businesses need to annually submit their income and expenses details to the Canada Revenue Agency.
E-Invoicing in Canada
While e-invoicing is not compulsory in Canada, it is widely accepted and increasingly preferred due to its convenience and eco-friendliness. An electronic invoice must meet the requirements of being an authentic invoice and maintain its integrity and legibility. Businesses are encouraged to adopt e-invoicing to streamline their billing operations.
VAT/GST/Tax Compliance in Canada
In Canada, businesses are required to comply with the applicable tax laws, which includes the collection of Value-Added Tax (VAT), Goods and Services Tax (GST), and Harmonized Sales Tax (HST), depending on the province or territory. The standard GST rate is 5% and it is applicable nationwide. The combined GST/HST rates range from 5% to 15% depending on the location of the business. Compliance with these tax rules is mandatory and businesses must report and remit the correct amounts to the Canada Revenue Agency.