Proforma Invoice: What It Means and When to Use One in Canada

Short answer: A proforma invoice (also written “pro forma invoice”) is a preliminary bill you send before a sale is final, showing the buyer what the real invoice will say: items, prices, taxes and terms. It isn’t a demand for payment, and you don’t record it as a sale. For GST/HST, the Canada Revenue Agency (CRA) treats an invoice as a document that notifies the buyer of an obligation to pay or records a payment, and tax becomes payable when the buyer pays or payment becomes due. So a proforma that doesn’t require payment doesn’t trigger GST/HST, but money paid against one does, and you still issue a proper invoice afterwards.

This guide is for self-employed people in Canada and reflects CRA GST/HST guidance for the 2026 tax year. The rules for the real invoice are in how to invoice in Canada as a freelancer, and the difference between an invoice and proof of payment is in receipt vs invoice.

What is a proforma invoice?

A proforma invoice is a good-faith preview of a sale. It’s laid out like an invoice, but it’s sent before the goods ship or the work is done, so the buyer can approve, budget or arrange payment.

Pro forma is Latin for “as a matter of form”: the document has the form of an invoice without its function, whether you spell it “proforma,” “pro forma” or “pro-forma.” A typical proforma shows:

• the words “Proforma invoice” at the top, with its own reference number;
• your business details and the buyer’s;
• a description of the goods or services, with quantities and prices;
• the GST/HST or other sales tax that will apply, and the expected total;
• payment terms, delivery terms and an expiry date;
• a statement that it is not a request for payment.

When would you use a proforma invoice?

When a buyer needs a document that looks like an invoice before you’re ready to bill them. The common situations are:

Situation	Why a proforma helps
A business client’s purchasing department needs paperwork to issue a purchase order	It gives them the exact amounts, tax and your details to approve
A client wants to prepay for a custom order before you start	It sets out what the payment will cover, before you make or buy anything
You’re shipping goods to a buyer in another country	The buyer may need a priced document to arrange import permits, financing or a letter of credit

For goods crossing a border, a proforma doesn’t replace the customs paperwork. Customs authorities set their own invoice rules (for goods coming into Canada, the Canada Border Services Agency’s are in Memorandum D1-4-1), and your carrier or customs broker will tell you which document a shipment needs.

For a service business, a proforma usually does the same job as an estimate, which is simpler if the client just wants a price; see the Canadian quote template.

Proforma invoice vs invoice vs quote: what’s the difference?

A quote offers a price, a proforma previews the invoice, and an invoice asks for payment.

	Quote or estimate	Proforma invoice	Invoice
When	Before the client agrees	After agreement, before delivery or billing	After delivery, or at an agreed billing date
Purpose	Offers a price for a scope	Previews the final bill so the buyer can approve or prepay	Requests payment
Demands payment?	No	No, if worded correctly	Yes
Triggers GST/HST?	No	No, unless the buyer pays against it	Yes, tax is generally payable by the invoice date at the latest
Supports the buyer’s input tax credit?	No	Not on its own	Yes, if it shows the required details
Numbering	Quote series	Its own series (e.g. PF-0012)	Your invoice series, with no gaps
Goes in your sales records?	No	No	Yes

Is a proforma invoice a sales invoice for GST/HST?

No, as long as it doesn’t require payment. GST/HST becomes payable when the buyer pays or when payment becomes due, and a document that only previews the bill doesn’t make payment due.

The CRA’s memorandum on invoices defines an invoice as a document that notifies the recipient of an obligation to pay or records payment. It includes bills, statements of account and cash register receipts, whatever they’re called. A document sent only as a reminder of an amount, which doesn’t require payment, doesn’t start the timing rules. Under the CRA’s time-of-liability rules, tax is payable on the earlier of the day the buyer pays and the day payment becomes due. Payment becomes due on the earliest of:

• the day you first issue an invoice;
• the date on that invoice;
• the day you would have issued one but for an undue delay;
• the day payment is due under a written agreement.

Three practical consequences follow:

1. Word it so it isn’t a demand. “Proforma: not a request for payment” at the top keeps it on the right side of the line. A document headed “Proforma” that says “Pay $4,746 by October 1” is a request for payment in substance, whatever the title says.
2. Payment against a proforma triggers tax. If the buyer pays some or all of the price before you invoice, the GST/HST on that payment is payable the day you receive it, in that reporting period.
3. A true deposit waits. The CRA says a deposit held as security is not consideration for the supply until you apply it against the price, and the tax is payable then.

Worked example. A cabinet maker in Hamilton, registered for HST, builds a custom walnut desk for a business client in Ontario for $4,200 plus 13% HST ($546), or $4,746 in total.

• No prepayment. She sends proforma PF-0007 on September 15, 2026 so the client can raise a purchase order. Nothing is paid. She delivers on October 20 and issues invoice INV-0142 that day, and the $546 of HST is payable on October 20.
• Half paid up front. If the client instead pays half, $2,373, on October 1 as a part payment of the price, the $273 of HST in it is payable on October 1. Her final invoice then shows the full $4,746, the $2,373 already received and $2,373 still due.

Can your client claim input tax credits from a proforma invoice?

Not on its own. A GST/HST-registered buyer can only claim an input tax credit once the tax has been paid or has become payable, and a proforma that doesn’t require payment does neither.

Under the CRA’s input tax credit rules, the credit first becomes available in the reporting period in which the GST/HST was paid or became payable. Most registrants then have four years to claim it. The claim also has to be backed by a document that meets the documentary requirements:

Total of the sale	What the supporting document must show
Under $100	Your business or trading name, the date, and the total amount paid or payable
$100 to $499.99	Also the GST/HST charged (or a statement that it’s included), and your GST/HST registration number
$500 or more	Also the buyer’s name, a brief description of the supply, and the terms of payment

The final invoice is the document your client files. If they prepaid against a proforma, send a receipt for the prepayment with these details so they can claim the tax in the right period; they can check your number in the GST/HST registry.

How do you turn a proforma into the final invoice?

Issue a new document from your invoice series. Don’t relabel the proforma.

1. Give it the next invoice number, so your sales records have no gaps. Proformas live in their own series and never use invoice numbers.
2. Date it the day you bill. That date usually sets when the GST/HST is payable, unless payment came first.
3. Reference the proforma and any purchase order number, so the client’s accounts team can match them.
4. Show any prepayment or applied deposit as already received, and the balance due.
5. Include your full GST/HST number (your business number plus RT0001) on any sale of $100 or more.

Record the sale from the invoice, not the proforma: the invoice is the income record behind your Form T2125 and GST/HST return. A proforma that never becomes a sale has nothing to reverse.

…and where does Keel fit?

Keel: Invoice Maker & Receipts, by Ilura Technology OÜ, is an iPhone app for people who work for themselves. In Keel, the document that plays the proforma’s role is the estimate. You write it on your phone, and once the client accepts it, it becomes the invoice in one tap, with nothing retyped. Each job keeps its estimate, receipts, expenses and invoice together, and “who owes you” lists unpaid invoices with reminder drafts you review and send yourself.

Keel is a record keeper: it doesn’t decide when GST/HST becomes payable, file returns or connect to the CRA. Records stay on your iPhone, with no account, no bank connection and no cloud sync, and the App Store privacy label reads “Data Not Collected.” It’s free with no invoice limit, and free invoices carry a small “Made with Keel” footer. Keel Lifetime is a one-time purchase ($249.99 USD; the App Store shows your local price) that adds custom branding, a signature, premium templates and accountant-ready exports. Keel: Invoice Maker & Receipts on the App Store. More Canadian guides are on the Canada guides hub.

Frequently asked questions

What is the meaning of pro forma invoice? A pro forma invoice is a preliminary bill that shows a buyer what the final invoice will contain (goods or services, prices, taxes and terms) before the sale is complete. “Pro forma” means “as a matter of form”: it looks like an invoice but doesn’t ask for payment. Businesses use it to get purchase orders approved, arrange prepayment or support an import.

Is a proforma invoice legally binding? Not by itself, because it’s a preview rather than a request for payment or a signed agreement. What binds you and the buyer is the contract, purchase order or accepted quote behind it. If a proforma’s terms become part of that agreement, they can bind you, so only put prices on it you’ll honour.

Do I charge GST/HST on a proforma invoice? Show the GST/HST that will apply, so the buyer sees the real total, but it isn’t payable just because you sent the proforma. It becomes payable when the buyer pays or payment becomes due, usually your invoice date. If the buyer prepays against the proforma, the tax on that payment is payable when you receive it.

Can a client pay from a proforma invoice? Yes, clients often prepay from one, especially for custom or imported goods. When they do, treat the payment as received for GST/HST in that reporting period. Send them a receipt with your GST/HST number, and issue a final invoice that shows the prepayment and any balance.

Does a proforma invoice need an invoice number? Give it a reference number, but from a separate series such as PF-0001, not your invoice sequence. Your invoice numbers should run without gaps and only cover real sales. An invoice number on a proforma makes it look like a sale, and a cancelled one leaves a gap.

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This article is general information, not tax advice. Consult a qualified accountant or tax professional.