GST/HST invoice date vs payment date in Canada matters whenever a client pays late. Many freelancers assume they only report the tax after cash reaches their bank account. Under the usual CRA rule, that is often too late: GST/HST generally becomes collectible on the earlier of the day payment is made and the day payment becomes due.
In practical terms, an invoice can put GST/HST into your current return even if the client has not paid you yet. Knowing the timing rule prevents understated returns and helps you plan cash flow.
GST/HST invoice date vs payment date: the basic rule
For most ordinary sales of services or goods, tax is payable by the client on the earlier of these two dates:
- the date the client pays the amount, and
- the date the amount becomes due.
An amount generally becomes due on the earliest of the invoice date, the date shown on the invoice as the payment date, the date you issue an invoice for the amount, and the date you would have issued it except for an undue delay. This means simply postponing an invoice does not necessarily postpone the tax.
Example: a net-30 freelance invoice
Suppose an Ontario consultant issues a $2,000 invoice plus $260 HST on August 20, with payment due September 19. The invoice itself normally makes the amount due on August 20 for GST/HST purposes. If the consultant files monthly, the $260 belongs in the August reporting period, even if the client pays in September or October.
If the client pays before an invoice is issued, the payment date triggers the tax instead. Your bookkeeping should therefore capture both invoices and payments, then assign the tax to whichever event occurred first.
Do you remit HST before the client pays?
Often, yes. A GST/HST registrant generally reports collectible tax for the period in which it became collectible, not the period in which cash was eventually received. That can create a cash-flow problem: you may have to send the CRA tax that you have not yet collected from your customer.
Reduce that risk by requesting shorter payment terms, collecting an advance, following up quickly, and keeping the tax portion separate when it arrives. If you collect money before completing the work, review the separate timing issues in our guide to GST/HST on deposits and retainers.
What if the invoice is never paid?
A late invoice does not automatically let you reverse the GST/HST. If the receivable eventually becomes a genuine bad debt, you may be able to claim a bad-debt adjustment after you have already accounted for the tax and written the amount off in your records. It is not enough that the client missed the due date.
Keep the original invoice, collection correspondence, write-off entry, and any later recovery. Our article on GST/HST bad debts in Canada explains when an adjustment may be available.
Partial payments and instalment invoices
For staged projects, apply the earlier-of rule to each amount that is paid or becomes due. If you invoice 25% at kickoff, 25% at a milestone, and 50% on delivery, each instalment can have its own tax timing. A payment against only part of an amount can also make tax collectible on that paid portion.
Clearly show the subtotal, GST/HST rate, tax amount, total, invoice date, and payment terms. See the practical checklist for a compliant Canadian freelancer invoice with HST.
A simple reporting routine
- Record every invoice when issued, not only when paid
- Record advance and partial payments on the date received
- Review unpaid receivables before preparing each GST/HST return
- Match collectible tax to the correct reporting period
- Keep enough cash available to remit tax on slow-paying invoices
Invoice timing becomes relevant after registration, but registration timing starts with taxable revenue. HST Hero is a free Canadian tool that tracks revenue against the $30,000 small supplier threshold so freelancers and sole proprietors can see when registration is approaching.
The bottom line
Do not use your bank deposit date as the only trigger for GST/HST. In most routine transactions, report the tax based on the earlier of payment and the date the amount became due. Reconcile invoices, payments, and receivables every reporting period, and confirm unusual contracts or transactions with the CRA or a qualified tax professional.