CANADIAN INVOICE RECORDS · UPDATED OCTOBER 2, 2026
An unpaid invoice includes GST or HST. What happens to the tax?
An overdue balance and a tax bad-debt adjustment are different questions. First reconcile the customer invoice and any payments. Then ask your accountant whether the legal conditions for an adjustment have actually been met.
The short answer
The CRA describes a GST/HST adjustment for an amount that has become uncollectible, has been written off as a bad debt, and whose tax was already included in a return and remitted. A bill merely being late does not by itself establish that adjustment. If you later recover part of a written-off debt, the tax treatment must be reviewed again.
See the CRA’s GST/HST return instructions and consult your tax adviser about your filing period and facts.
Keep these records together
The agreed invoice
Keep the original invoice showing the taxable supply, tax actually charged, due date, credits and any corrected invoice.
Payments and the remaining balance
Match bank, card, EFT or cheque payments against the invoice. A customer who says they paid may have a remittance reference your ledger has not yet matched.
Tax returns and any write-off
Record whether GST/HST was reported and remitted, and whether an amount was actually written off. The CRA’s bad-debt adjustment formula uses the tax payable and the portion of the total sale written off; a simple province-wide rate is not enough to calculate it.
Provincial sales tax needs its own check
PST and QST rules are not interchangeable with GST/HST, and not every supply in a province has the same tax treatment. For example, BC explains when PST remitted on a sale later written off as bad debt may be adjusted or refunded. Check the relevant provincial tax authority and your records rather than applying a combined tax percentage to every unpaid invoice.
BC source: Provincial Sales Tax Act refund guidance.
The customer may still be willing to pay
For an agreed overdue invoice, RemitRight can help you follow up by text and offer full payment or a voluntary 3- or 5-month plan. It does not decide tax adjustments, file returns or guarantee payment.
Review one overdue invoiceGeneral information, not accounting or tax advice. Use the original invoice and current official guidance for your own situation.