Invoice
A document a seller sends to a buyer listing what was supplied, what it costs, the tax charged and when payment is due.
In short
- For the seller it creates a receivable. For the buyer it creates a payable.
- It asks for payment. A receipt confirms payment has been made.
- In Canada, the details an invoice must show for an input tax credit grow with the amount: under $100, $100 to $499.99, and $500 or more.
An invoice is a request for payment. It tells the buyer what they received, the price, the sales tax, the total and the terms, such as net 30. Once issued, it becomes an account receivable in the seller's books and, once approved, an account payable in the buyer's.
Invoice versus receipt
The two are often confused. An invoice is sent before payment and says what is owed. A receipt is issued after payment and says what was paid. At a shop counter both happen at once, so the receipt does both jobs. In business-to-business sales they are usually separate documents weeks apart.
What a Canadian invoice needs
To support an input tax credit claim for GST/HST, the CRA sets three tiers:
- Under $100: the supplier's name, the date and the total paid.
- $100 to $499.99: all of the above, plus the supplier's GST/HST registration number and the tax charged or the rate.
- $500 or more: all of the above, plus the buyer's name, a description of the goods or services and the payment terms.
Quebec adds the QST registration number for QST refund claims. Missing details do not make the purchase invalid, but they can cost the buyer the tax credit.
Worked example
A supplier invoice that clears every tier
An Ontario printer bills a client $1,130: $1,000 of brochures plus $130 HST. The invoice shows the printer's name and HST number, the client's legal name, the date, 2,000 tri-fold brochures, net 30 terms and invoice number 4417. Because the total is over $500, every one of those details matters for the client's input tax credit.