Canada is gearing up to adopt electronic invoicing in the public and private sectors fully. The country is a member of the PEPPOL network, allowing trading partners to transmit electronic invoices beyond the country’s borders. The Canada Revenue Agency (CRA) has released an electronic invoicing guide (IC05-1RA) outlining the legal e-invoice requirements in Canada.
And, given the numerous benefits of e-invoices, it makes perfect sense to prepare your small business, company, or organization to embrace e-invoicing as a way of streamlining transactions.
Canada’s Journey Towards E-invoicing
While e-invoicing isn’t new in Canada, the actual adoption of e-invoices began on February 17, 2017, when the country formally adopted the Universal Business Language (UBL) 2.1 as a national standard CAN/CSA-ISO/IEC 19845:16. 2018 saw the formation of the Business Payments Coalition e-Invoicing Subcommittee. The committee, sponsored by the United States Federal Reserve Bank of Minneapolis, sought to look at the US, Mexico, and Canada’s electronic invoices. The team released its first review of the semantic evaluation of e-invoices represented as OASIS UBL 2.2. Meanwhile, the CRA published a run of circulars on e-invoices, including the electronic invoicing guide (IC05-1RA), to encourage the use of e-invoices in the country.
Legal Requirements in e-Invoicing 2021 in Canada
According to CRA’s circular, here’s a breakdown of e-invoice regulations in Canada.
- Before exchanging invoices, the storage process must guarantee the processed data's accuracy, security, and integrity and save it in a system.
- Trading partners must store the documents outlining the relevant business and operating system, including how transactions are processed and managed.
- Documents will use data interchange standards compatible with the CRA audit software.
- Businesses and organizations must store backup data.
How Invoicing Will Impact Payment of GST/HST
Indeed, the feasibility of e-invoicing in Canada isn’t in doubt if international success is anything to go by. Besides, the European Union directive has set the stage for using electronic invoicing to conduct business-to-business transactions. E-invoicing standardization in Canada could go a long way in helping resolve disputes with suppliers regarding the documents required to input tax credits (ITCs). Embracing e-invoices means that CRA can verify GST/HST business names and numbers. The CRA’s registrant can validate invoices from the tax administration before claiming the ITCs, streamlining the process.
You see, e-Invoicing helps deal with a fundamental weakness in the system. The rules require suppliers to include specific information in their invoices to allow their buyers to claim ITC. This means that the buyers must verify the information on every invoice. If the supplier isn’t tax-compliant, it implies that a purchaser will have problems claiming ITCs. That will leave the purchaser feeling mistreated, especially if they pay GST in good faith. Besides, this exposes Canadian businesses to identity theft, fraud, and possible accusation of misconduct.
Electronic Invoicing for Canadian Businesses
Businesses stand to benefit from a stable Canadian e-invoicing system.
Here’s how;
- Reduced compliance costs since information in an e-invoice are directly transferable in a business’s ERP system.
- Swift, error-free tax filing. CRA officials can pre-fill tax returns and send them to the taxpayer for approval or amendment.
- Digital documents are easy to access without compromising security. Business owners can search for documents from anywhere per category.
- E-invoicing reduces the chances of document forgery or fraud.
- Electronic invoicing allows for data encryption, helping maintain a document’s readability for years.
- E-invoicing solutions ensure the accuracy of information by eliminating manual data entry, classification, and labeling.
Finding the Best e-Invoicing Solution for Canada
Here’s the thing;
If you’re not using electronic software, you’re missing out. Still, not every e-Invoicing solution for Canada is worth your attention.
UNIMAZE is your number-one Canadian-based EDI provider with a rich history of powering seamless e-invoicing for businesses in multiple locations worldwide.
Our electronic invoicing software will help you connect with your trading partners, whether you’re a small business or a large organization with a large international customer base.
You shouldn’t have a problem managing your e-invoices requirements, from format conversions to ensuring that your business is tax compliant with us by your side.
We provide a single, all-in-one e-invoicing solution to meet your business’s needs. Our cloud-based software;
- Integrates seamlessly with your ERP system without interfering with your current billing process.
- It gives you a central access point to send, save, and monitor your invoices in real-time.
- It will increase transparency in your business and foster a healthy relationship with your trading partners.
- We will ensure you meet local and international tax compliance via the trusted PEPPOL network.
UNIMAZE offers e-invoicing services in Canada that are user-friendly and scalable. We commit to providing reliable, safe, and tax-compliant global electronic invoicing in a universal standard compatible with all ERP systems and software.
How to Get Started
Getting started with electronic invoicing in Canada is easy. All you need to do is contact UNIMAZE support, and one of our e-invoicing Canadian-based e-invoicing experts will get in touch.
We'll start by understanding your business and technical requirements, evaluating them against UNIMAZE capabilities, and then we can then develop an all-inclusive e-Invoicing solution for your needs.
FAQs
What is e-invoicing GST?
GST e-invoice is a system that allows for digital invoices for goods and services offered by businesses. The government generates these invoices at its GST portal.
The primary reason for creating the GTS electronic invoice system is to eliminate GST evasion by businesses and suppliers.
How do I invoice in Canada?
The legal requirement for invoicing in Canada 2021 dictates that;
- Your info as the supplier.
- The GST/HST and or QST registration number of the supplier.
- Banking details of the supplier.
- The date of invoicing.
- The description of goods or services offered.
- The quantity of goods supplied.
- The services that the supplier offers either within Canada or outside.
- A statement promising refunds if the invoice is from a non-Canadian seller.
- Payment terms as indicated on the purchase order.
- The taxable amount is based on HST, Goods, and Services Tax.
- The goods are taxed at the GST rate and those at the HST rate.
- The unique identification number for your business.
- The total amount owed and tax charges.
Can you invoice someone without a company in Canada?
While the Canada Revenue Authority may not come after you, we recommend that you send an invoice to the person you’re doing business with. However, it is essential to mention that the law in Canada doesn’t require you to register your business as long as you’re invoicing under your name. Even then, if you prefer to invoice under your business name, the law states that you register your name on your business.
