COUNTRY GUIDES / Canada

Canada tax guide for businesses

VAT Rate
Starts at 5%
E-Invoicing
Allowed
Real-Time Reporting
No
Digital Service Tax
No
Products supported
Lookup
Tax ID validation
Tax
Tax amount calculation
Invoicing
Compliant invoice generator
Reporting
Real-time transaction reporting

Compliance And Rates

Tax Number Format In Canada

Canadian tax number contains 9 characters (i., 012345678).

GST, HST, QST, and PST rates in Canada

The standard VAT rate (GST tax) in Canada starts at 5%. Also, there are some other tax types like Harmonized sales tax (HST), Québec sales tax (QST), and Provincial sales tax (PST) that are in force in some provinces in Canada.

  • 5% Goods and services tax (GST) – General tax applies to most supplies of goods and services made in Canada. The GST also applies to many real property supplies (for example, land, buildings, and interests in such property) and intangible personal property such as trademarks, rights to use a patent, and digitized products downloaded from the internet and paid for individually.
  • 13% and 15% Harmonized sales tax (HST) – Blended federal/provincial sale tax that includes 5% federal component and a provincial component of 8% or 10%. HST applies in Ontario, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland, and Labrador.
  • 9.975% Québec sales tax (QST) – Provincial tax which applies only in the province of Québec
  • 6-8% Provincial sales tax (PST) with reduced rates up to 20% on certain goods – Also known as retail sales tax, this tax applies in the provinces of British Columbia, Saskatchewan, and Manitoba Levy.

VAT Payments And Returns In Canada

For GST/HST and QST purposes, the reporting periods of a business vary according to the total annual revenues from taxable supplies made in Canada.

Revenues per annum and reporting frequency:

  • Up to CAD 1.5 million – Annually.
  • From CAD 1.5 million to CAD 6 million – Quarterly.
  • Over CAD 6 million – Monthly.

Penalties In Case Of Late Filings Or Misdeclarations

There are a couple of penalties that can be charged by Canadian Tax Authorities:

  • Failure to file – A penalty will apply to any return you file late unless there is a $0 amount owing or we owe you a refund on that return.
  • Demand to file – If you receive a request to file a return and do not do so, authorities will charge a penalty of CAD 250.
  • You cannot claim an income tax deduction for any penalty you paid or owe for failing to file a GST/HST return.
  • Failure to file electronically – Certain registrants must file their returns electronically. The first time you fail to file your return electronically, you will be charged a $100 penalty. Each later occurrence will result in a $250 penalty.

Invoice Requirements

Invoices with HST tax requirements

According to the Canada Revenue Agency, invoices for goods or services for sales between $30 and $149.99 must include:

  • Seller’s data (name, address)
  • Date of invoice issuance
  • Business number⁠ (GST registration number)
  • Gross amount of the invoice
  • The total amount of GST or HST charged⁠

Invoices for goods or services for sales between $150 or more must also include:

  • Buyer’s name⁠
  • Description of the goods or services provided (quantity, the price per unit)
  • Payment terms


Invoices With GST Or PST Taxes Requirements

  • Seller’s data (name, address)
  • Date of invoice issuance
  • Business number⁠ (GST registration number)
  • Buyer’s data
  • Description of the goods or services provided (quantity, the price per unit)
  • Gross amount of the invoice
  • Payment terms

E-Invoicing

Allowed, but currently not mandatory.

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