Australia, Canada and the United States: the rules a ledger must satisfy outside Europe

19.1How to read this chapter

This chapter is the companion to the last one. That one covered twenty-two European countries. This one covers the three large English-speaking markets outside Europe — Australia, Canada and the United States — with New Zealand in a short appendix because it shares Australia’s invoicing network.

Every country section follows the same order, so the sections can be compared down a column rather than read end to end:

• who must keep books, and where those books may physically live;
• accounting standards, and what if anything is filed publicly;
• the consumption tax, its rates and its return;
• electronic invoicing, with dates;
• what must appear on an invoice;
• payments, banking and the file formats;
• direct taxes the books must anticipate;
• payroll and its reporting standard;
• what the tax office can demand as an export;
• rules aimed at the software or its host.

The reader is assumed to have no accounting training. Every technical term is explained in plain words the first time it appears, and the acronyms are collected in a glossary at the end.

Where a rule is changing, the dates are given. Where a figure could not be confirmed at an official source, it has been left out rather than guessed. The research notes behind the chapter carry a link for every fact.

Some ground is deliberately not covered again. Earlier chapters already deal with how a Pakistan-based firm serves American clients, forming an American company, who is legally allowed to prepare American tax returns, and the build order for an accountant’s edition. This chapter is about what the software must do.

19.2What is different here

Anyone arriving from the European chapter needs one paragraph of reorientation, because the shape of the problem is inverted.

Europe regulates the document and the software. These countries regulate the report.

In Europe the invoice is a legal instrument with a prescribed content list, an increasingly compulsory electronic format, a delivery network, and in several countries a state platform that must see it before it counts. Five countries certify or register the accounting software itself.

In Australia, Canada and the United States none of that is true, with one narrow exception in Quebec. Invoices may be paper. Nothing is cleared. No accounting product needs a licence. What these countries regulate instead is what you tell the tax office afterwards, and how fast.

Six differences do most of the work:

• The consumption tax is simpler in two countries and far worse in the third. Australia has one rate on everything. Canada has one federal rate plus five provincial variations. The United States has no federal consumption tax at all, and twelve and a half thousand local ones instead.
• Sales tax in the United States is single-stage. It is charged once to the final buyer, and the seller does not recover tax on its own purchases. Half of a European VAT module — the input credit machinery — is simply not needed there, and a different half is: certificates, nexus and jurisdictions.
• Payroll is the real-time system, not invoicing. Europe is moving toward reporting every invoice as it is issued. Australia reports every pay run as it happens, and has since 2018. The United States does not report payroll in real time but deposits the tax within days. Canada sits between the two.
• Payment references barely exist. Europe has structured creditor references with check digits, so money comes back matched. Australia has eighteen characters. Canada and the United States have nothing at all. Cash application in North America is a matching problem, not a lookup, and that changes what a receivables module has to do.
• Cheques are still alive. Nine billion of them a year in the United States, averaging over 2,600 dollars each, and still material in Canada. Australia has set an end date — 2028 to issue, 2029 to accept — but the other two have not. A ledger sold here prints cheques.
• Where the data physically sits is a live question. This is the one place where the English-speaking world is stricter than Europe, and it is dealt with country by country below and summarised in the comparison table.

A seventh difference is worth stating on its own, because it is the reason these three countries are worth a chapter at all.

19.3Australia: the books, the GST and the invoice

Australia is the tidiest of the three countries. One tax office, one rate, one return, one network, one invoice rule. If a ledger can only be made to fit one of these three markets properly, this is the one to pick.

It is a federation, and the split is worth knowing before anything else. The Commonwealth collects goods and services tax, income tax, wage withholding, fringe benefits tax and compulsory superannuation, all through the Australian Taxation Office. Company registration and financial reporting sit with a separate regulator, ASIC. Payroll tax and workers’ compensation are levied by each of the six states and two territories on their own.

The financial year runs 1 July to 30 June. A different year-end needs the tax commissioner’s permission, applied for in advance, granted only for a real business reason such as matching a foreign parent, and normally answered within 28 days. The fringe benefits year is different again and fixed: 1 April to 31 March.

There are three identifiers and a ledger needs all three:

• ABN, the Australian Business Number — eleven digits, held by every business including sole traders and trusts. It goes on invoices. Validate it by subtracting 1 from the first digit, multiplying the eleven digits by the weights 10, 1, 3, 5, 7, 9, 11, 13, 15, 17 and 19, and checking the sum divides by 89.
• ACN, the Australian Company Number — nine digits, issued by ASIC to companies only. A company’s ABN is usually its ACN with two digits in front. Check it by weighting the first eight digits 8 down to 1, taking the sum modulo 10 and subtracting from 10.
• TFN, the tax file number — never printed on an invoice, and legally restricted personal information. The ledger holds employees’ numbers for payroll and beneficiaries’ numbers for trusts, and nothing else.

The register behind the ABN is free and machine-readable. Sign up for an authentication key and the ABN Lookup web service returns a supplier’s status, entity type, legal name, trading names and — the useful one — the date it registered for GST. That is how a ledger checks that a supplier is entitled to charge tax.

aWho must keep books, and where they may live

Three separate laws demand records, with three different retention periods:

• Seven years under the Corporations Act for every company: written financial records that correctly record and explain its transactions and would allow true and fair statements to be prepared and audited. Breaking this is a criminal offence.
• Five years under the tax law for every business, running from whichever is later, the record or the transaction — longer while an asset is held, plus five years after it is sold.
• Seven years under the Fair Work Act for employment records, which must be legible, in English, accessible to an inspector and never altered except to correct an error.

The tax office’s own rules for electronic records read like a design specification. Information must not be changed and must be stored so that it cannot be changed or damaged. The tax office may ask a business to demonstrate its safeguards. If the system changes over time, the original data must still be capable of being reconstructed. Encryption keys must be handed over on request. And the data must be extractable into a standard format — the guidance says Excel or CSV — in English.

The binding ruling behind that, TR 2018/2, adds the sentence that matters to us: records stored in the cloud are subject to the same rules as paper, and if they are immediately accessible to the taxpayer the tax office can reach them.

No chart of accounts is prescribed. Australian software conventionally ships the old MYOB numbering — 1 assets, 2 liabilities, 3 equity, 4 income, 5 cost of sales, 6 expenses — but nothing requires it. What is effectively prescribed is the tax coding: every sale and purchase line must carry a GST classification that maps to a label on the activity statement.

Accounts and filing. Australian standards follow international financial reporting standards, adopted in 2005, in two tiers. A private company is “large” and must lodge audited accounts if it meets two of three tests: revenue of 50 million dollars, gross assets of 25 million, or 100 employees. Below that a private company neither audits nor lodges, unless it is foreign-controlled.

Deadlines are three months after year-end for listed entities and four months for everyone else, on Form 388, and a report is due even from a company that did not trade. XBRL is optional. Sole traders, partnerships and trusts have no statutory accounts at all — their annual accounts are whatever the tax agent needs.

That is the useful conclusion for a product like ours: the deliverable for an Australian client is not a public filing. It is the tax return package — profit and loss, balance sheet, depreciation schedule, GST reconciliation, payroll reconciliation.

bGST, and the activity statement

Goods and services tax has been 10 per cent on almost everything since 1 July 2000. There is one rate. GST is one eleventh of a tax-inclusive price. After twenty-two European countries with five rates each, this is a holiday.

Registration is compulsory at 75,000 dollars of turnover, or 150,000 for a non-profit, and must happen within 21 days of crossing the line. Taxi and ride-share drivers register from their first fare. The test is rolling: this month plus the previous eleven, or this month plus the next eleven.

Three non-taxable categories behave differently and a ledger must keep them apart:

• GST-free — no tax on the sale, but the seller still claims credits on its purchases. Basic food, most medical and education, water and sewerage, international transport, exports of goods shipped within 60 days, services consumed outside Australia, and the sale of a business as a going concern.
• Input-taxed — no tax on the sale and no credit on related purchases. Financial supplies, and renting or selling residential property.
• Out of scope — wages, superannuation, dividends, loan principal, purchases from unregistered suppliers.

Cash or accrual is a choice below 10 million dollars of turnover and accrual above it. On the cash basis, tax follows the money and partial payments are apportioned. On the accrual basis, a sale is attributed to the earlier of the invoice and any payment, and a purchase to the earlier of the invoice arriving and any payment made.

Credits have a hard stop. The entitlement to claim ends four years after the due date of the return in which it could first have been claimed, and the commissioner has no discretion to extend. A ledger should let a credit be claimed late and warn as the four years run out.

The Business Activity Statement is one form covering several taxes at once, and it is the single most important thing an Australian ledger produces.

The GST labels are few and precisely defined: G1 total sales including tax, G2 exports, G3 other GST-free sales, G10 capital purchases, G11 non-capital purchases, 1A GST on sales, 1B GST on purchases, 7A deferred import GST pre-filled by the tax office.

Simpler BAS has been the default under 10 million dollars since 2017: only G1, 1A and 1B are reported, and sending the others is a validation error. Full reporting is compulsory at 10 million and above.

The same form carries the rest of the business’s obligations: W1 total wages, W2 tax withheld from them, W3 other withholding, T1 instalment income with T2 its rate, 5A the income-tax instalment, 6A the fringe-benefits instalment, 7C fuel tax credits, then a total owed, a total credited and a net figure.

One wrinkle a developer will hit: the form comes in lettered variants — BAS A, C, D, F, G, P and others — according to which obligations the business has, and the label set differs between them. The ledger must know which variant its client was issued. Since 2023 the tax office pre-fills W1 and W2 from payroll data it already has.

Four lodgement channels exist: the tax office’s own portal, software connected to the Standard Business Reporting platform, a registered agent, or paper. The second is the one a ledger would implement, and it is the same channel payroll uses.

Reverse charge is narrower than in Europe. A registered business buying services or digital products from offshore self-assesses 10 per cent only if it would not have been entitled to a full credit — a fully creditable business purchase is simply not taxable. Since 2018 the same applies to imported goods worth 1,000 dollars or less.

Imports above 1,000 dollars are taxed at the border. Businesses on monthly statements can apply to defer that tax to the return instead, where it is pre-filled at 7A and credited at 1B in the same breath.

Foreign sellers of low-value goods and of digital services to Australian consumers have had to register since 2018 and 2017 respectively, under a simplified regime that gives them a reference number rather than an ABN. That has a trap for Australian buyers: a supplier with only a reference number cannot issue a valid tax invoice, so no credit is claimable. The right move is to quote the ABN and not be charged at all.

cWhat must be on an invoice

Australia has a real statutory invoice, but a short one. For a sale under 1,000 dollars a tax invoice must show seven things: that it is intended to be a tax invoice; the seller’s identity; the seller’s ABN; the date of issue; a brief description with quantity and price; the GST amount, or the words “total price includes GST” where the tax is exactly one eleventh; and the extent to which each sale is taxable.

At 1,000 dollars and above, add the buyer’s identity or ABN. A document that meets the higher standard can be used for everything.

Three thresholds matter:

• 82.50 dollars including tax — below this the seller need not issue a tax invoice at all, even on request, and the buyer may claim the credit without one.
• 1,000 dollars — the buyer’s identity becomes compulsory.
• 75 dollars of GST — below this no adjustment note is needed for a downward correction.

Rounding is statutory, not stylistic. For a single taxable sale, round the tax to the nearest cent with half-cents up. For several on one invoice, either add each line’s tax and round once, or compute at full precision, add, then round. A ledger must pick one rule, apply it consistently and be able to say which it used.

Numbering is not regulated. An invoice number is not one of the statutory elements. What is compulsory is the company’s name and ACN on the first page of every invoice, statement, order and cheque, clear and readable.

Credit notes are called adjustment notes and have their own rules. The supplier issues one within 28 days of the buyer asking, or within 28 days of becoming aware of the adjustment. It must carry the words, the supplier’s ABN, the buyer’s details if the original sale was 1,000 dollars or more, a description of what happened, and the change in tax. The buyer cannot claim the reduction until it holds the note.

Self-billing is allowed and formalised. A recipient-created tax invoice may be issued only when both parties are registered, a written agreement is in place, and the supply falls into a class the commissioner has approved — agricultural products, government grants, and a general class for buyers above 20 million dollars of turnover. It must show both ABNs and state that the tax is payable by the supplier. The buyer must verify the supplier’s registration before the first one and periodically after; the tax office’s own advice is to wire the ABN Lookup service into the software.

The no-ABN rule is a payment blocker. If a supplier does not quote an ABN and the payment exceeds 75 dollars before tax, the payer must withhold at the top marginal rate of 47 per cent and remit it. A ledger should refuse to pay a supplier bill above 75 dollars without an ABN or a signed statement that the supply is not part of an enterprise.

There is no mandatory QR code, hash, signature or fiscal device on an Australian invoice. Invoices may be in a foreign currency, but the tax must be reported in Australian dollars at a published rate, and the invoice should show either the converted tax or the rate used.

dElectronic invoicing: Peppol, without the tax office watching

Australia adopted Peppol in 2019, jointly with New Zealand, and the tax office became the Australian Peppol Authority. It accredits access points and sets the country requirements — and it says plainly that it does not receive a copy of any invoice and cannot see the contents.

That is the whole difference from Italy, Poland and Hungary. Australia has structured e-invoicing with no clearance and no reporting. It is a four-corner exchange between two access points, and the state is not one of the corners.

The format is PINT A-NZ Billing, the international Peppol invoice model with an Australia–New Zealand specialisation. Receivers had to support it from 15 November 2024 and senders had to issue it from 15 May 2025; the older specialisation was switched off in May 2025. Documents are UBL 2.1 XML carried over AS4 between access points, and Australian participants are identified by ABN.

An e-invoice is a tax invoice. The tax office has ruled that a Peppol invoice satisfies the “intended to be a tax invoice” test even without the words on it, provided it carries the mandatory data. For record keeping it is treated like any other digital record — and the XML must be kept, not merely a rendered PDF.

Government first, business maybe. The timeline so far:

• 1 January 2020 — federal agencies must pay an e-invoice within five calendar days, against twenty otherwise, with interest payable automatically once it exceeds 100 dollars. The rule was capped at contracts under a million dollars; the cap was removed on 1 July 2022.
• 1 July 2022 — all non-corporate federal agencies must be able to receive Peppol invoices.
• 1 July 2026 — agencies must have raised e-invoices to 30 per cent of everything they receive.
• December 2026 — agencies must be able to send and process e-invoices automatically, reporting progress quarterly.

Beyond government there is no mandate and none scheduled. A proposed “business e-invoicing right”, which would have let any business demand Peppol invoices from its trading partners from 2023, was consulted on and never legislated. Over 400,000 businesses are on the network anyway, because government and large retailers prefer it.

To send and receive, a product has two routes. Connect through one of the roughly forty-five accredited service providers — the tax office is explicit that no accreditation of your own is needed for this — or become an accredited access point yourself.

The second route is expensive. It means joining OpenPeppol, signing the service provider agreement, passing due-diligence checks, carrying professional indemnity insurance of at least one million Australian dollars, completing a security questionnaire assessed against ISO 27001 or the Australian government information security manual, and passing unit, acceptance and interoperability testing before a production certificate is issued. Accreditation is reviewed annually.

We integrate. We do not accredit.

19.4Australia: money

Australia runs two account-to-account systems side by side: an old batch one that every business banking portal still eats, and a modern instant one built on the same message standard Europe uses. A ledger needs the old one now and the new one later.

The old one is the Bulk Electronic Clearing System, universally called Direct Entry. It carries batch credits and debits, settles in intraday batches, and takes payments up to 100 million dollars.

The new one is the New Payments Platform, live since February 2018: real time, every day of the year, ISO 20022 from birth, settled at the central bank. It carries 1.97 billion payments a year and reaches 128 million accounts.

Four things ride on the new platform and a ledger should know all four:

• Osko — the instant payment itself, with 280 characters of remittance text.
• PayID — addressing a payment to a mobile number, an email address or an ABN instead of a bank number. 38 million are registered. A business can print its ABN-based PayID on its invoices.
• PayTo — the replacement for direct debit. The customer authorises a mandate in their own banking app, and the business triggers real-time debits against it. Both sides can see the mandate and pause or cancel it.
• Confirmation of Payee — a name-checking service rolled out from July 2025, live at 82 institutions covering 143 million accounts, which ran 100 million checks in its first year.

Bank numbers have no check digit. The BSB — Bank State Branch — is six digits written as three-three. Historically the first digits identified the institution and the third the state, but many banks now use one BSB nationally. Account numbers are institution-specific, up to nine digits, and a leading zero must be preserved.

Since nothing can be computed, validation is by lookup. The payments association publishes the BSB file free, as fixed-width, CSV and JSON, with a public search interface. Each record flags which clearing systems that branch supports, and a ledger should refuse a payee BSB that is not flagged for electronic payments.

aThe ABA file, field by field

Every Australian business banking portal accepts an ABA file, also called Cemtex, for bulk credits and — for approved users — bulk debits. This is the Australian equivalent of Europe’s pain.001, and it is far simpler: fixed width, 120 characters a line, three record types.

The descriptive record, type 0, one per file. Position 1 is the digit 0. Positions 19–20 hold a reel sequence number, normally 01. Positions 21–23 are the bank’s three-letter code — WBC, CBA, NAB, ANZ. Positions 31–56 are the name of the business supplying the file. Positions 57–62 are the Direct Entry User ID, a six-digit number the bank issues when it approves the business for bulk payments; without it the file is rejected. Positions 63–74 describe the batch — PAYROLL, CREDITORS. Positions 75–80 are the processing date as day, month, year.

The detail record, type 1, one per payment. Positions 2–8 are the payee BSB with the hyphen kept at position 5. Positions 9–17 are the account number, right-justified. Position 18 is an indicator, normally blank.

Positions 19–20 are the transaction code: 50 for a general credit, 53 for pay, 54 for a pension, 56 for a dividend, and 13 for a debit. Positions 21–30 are the amount in cents, zero-filled, with no punctuation.

Positions 31–62 are the account title. Positions 63–80 are the lodgement reference — only eighteen characters, and this is what the payee sees. Positions 81–96 repeat the originator’s own BSB and account, and positions 97–112 the remitter name as it appears on the payee’s statement, sixteen characters.

The total record, type 7, one per file. It carries the filler 999-999, the net total, the credit total and the debit total in cents, and a count of detail records.

One trap. Many banks require the file to be self-balancing: a type-1 debit record against the business’s own account for the total, so credits equal debits and the net is zero. Others reject exactly that. The bank’s own import guide decides.

Direct debit under the old system needs a User ID from the bank and a signed request and service agreement from each customer; dishonours come back as separate entries a few days later with a reason code. PayTo is the modern replacement and moves the mandate into the customer’s bank.

ISO 20022 arrived for high-value payments in March 2023, and the old SWIFT messages were phased out for domestic payments by November 2024 and cross-border by November 2025. Direct Entry itself is not being migrated. An end date of June 2030 was set in 2023 and then withdrawn in December 2025 in favour of an industry roadmap still being drafted.

The practical reading: the ABA file remains the bulk payment interface for the rest of this decade, with the instant platform as the growth path through a bank or a payment provider.

Cheques have a death certificate with dates on it. Under the Treasury’s transition plan of November 2024, cheques cease to be issued on 30 June 2028 and cease to be accepted on 30 September 2029, when the paper clearing system closes. The fifteen-month gap is the stale period. A ledger should support cheques as a legacy method with an explicit sunset.

Bank statements have no national format. What a ledger will actually meet:

So OFX and QIF are the lowest common denominator and every portal has them. CSV layouts differ by bank in date order, sign convention and column count, so a ledger needs a profile per bank. MT940 and camt.053 exist, but only from corporate channels.

The dominant practice among Australian small businesses since about 2010 is not file import at all. It is an automatic bank feed into Xero or MYOB, delivered either by a private arrangement between the bank and the software house or through the open-banking regime.

Open banking is called the Consumer Data Right, and it has been live for the big four banks since July 2020 and everyone else since July 2021. There are five ways to get at a customer’s transactions, and they differ enormously in cost.

The intermediaries that publish prices are few. Basiq connects to more than 135 banks at 50 cents per user per month plus a platform fee, with enrichment at 25 cents, billed per end user regardless of how many accounts they connect, on a twelve-month minimum. Fiskil, Adatree and Frollo quote on request.

For us the answer is the representative route through an accredited intermediary. It takes weeks instead of months and costs cents per customer instead of a quarter of a million dollars.

There is no structured payment reference. No ISO 11649 creditor reference, no Nordic-style OCR line. What exists is the eighteen-character lodgement reference, the BPAY biller code and customer reference number with a check digit the biller chooses, PayID, and the instant platform’s end-to-end identifier. An invoice should therefore print the BSB and account, the PayID, and the BPAY code and reference if the business is a biller.

There are no statutory payment terms and no statutory late interest for private trade. The levers are all indirect: the five-day rule for federal agencies receiving e-invoices, and the Payment Times Reporting Scheme, under which businesses above 100 million dollars of revenue must publish how fast they pay small suppliers twice a year, with the fastest and the slowest twenty per cent named.

19.5Australia: direct tax, payroll, and the rule that decides where we may host

Company tax has two rates. 30 per cent is standard. 25 per cent applies to a base rate entity — turnover under 50 million dollars and no more than 80 per cent of income from passive sources such as interest, rent, royalties and most dividends.

Sole traders, partnerships and trusts are not taxed at entity level. Their returns allocate income to the people behind them, who pay at personal rates: nothing to 18,200 dollars, then 15 per cent, 30, 37 and 45 per cent, plus a 2 per cent Medicare levy. The second bracket fell from 16 to 15 per cent on 1 July 2026 and falls again to 14 in 2027.

The franking account is a second ledger. Australia does not tax company profits twice. When a company pays a dividend it can attach a credit for the tax it already paid, and the shareholder deducts that credit from their own bill.

Every company must keep a franking account to track it. Credits arise when company tax is actually paid, not when it is accrued. Debits arise when franked dividends go out. A deficit at 30 June triggers a penalty tax. Every dividend needs a distribution statement showing the franked amount, the credit and the percentage, and the percentage must stay consistent within a period.

This is a memorandum account, not part of double entry, but a ledger sold in Australia should model it. Nothing in our product does today.

Trusts are everywhere in Australian small business, and they have a hard deadline. The trustee must make beneficiaries entitled to the year’s income by 30 June, normally by a written resolution. Income nobody is entitled to is taxed in the trustee’s hands at 47 per cent. Losses cannot be distributed; they stay in the trust. The return needs each beneficiary’s share of each class of income separately — interest, dividends, franking credits, capital gains, foreign income.

Instalments. A business prepays its own income tax quarterly on the same dates as the activity statement, entering the system automatically once its return shows 4,000 dollars of business and investment income and 1,000 dollars of tax. It pays either an amount the tax office computes or a rate applied to the quarter’s income — so the ledger must be able to total instalment income, meaning gross ordinary income excluding tax and capital gains, for a quarter.

Division 7A is the rule that catches every family company. A payment, loan or forgiven debt from a private company to a shareholder or their relative is treated as an unfranked dividend unless it is repaid or put on a complying loan agreement by the company’s lodgement day. Complying means written, seven years at most (twenty-five if secured by a mortgage), with a minimum repayment each year and interest at the published benchmark rate — 8.37 per cent for 2025–26 and 8.77 per cent for 2026–27.

So an Australian ledger must track shareholder loan accounts by person, compute the minimum yearly repayment and the interest, and warn before lodgement day. This is a real feature that Australian products all have.

Fringe benefits tax is a separate tax with a separate year. It runs 1 April to 31 March, is paid by the employer at 47 per cent on a grossed-up value, and the gross-up factor depends on whether the employer could claim the GST: 2.0802 if yes, 1.8868 if no. Benefits above 2,000 dollars per employee must be shown on that employee’s income statement. Employers whose prior-year tax was 3,000 dollars or more pay quarterly instalments on the activity statement.

Depreciation has a small-business shortcut. A business under 10 million dollars of turnover may write off each asset costing under 20,000 dollars immediately and pool the rest at 15 per cent in the first year and 30 per cent after. The threshold has been extended year by year and the 2026–27 budget announced it would be made permanent from 1 July 2026 — but as of September 2026 that is a bill, not law. Implement 20,000 and keep it configurable.

Outside that regime it is prime cost or diminishing value over an effective life the tax office publishes each year, with a low-value pool, buildings at 2.5 or 4 per cent straight line, and a hard cap on cars: depreciation is limited to 69,674 dollars for 2025–26 with the GST credit capped at 6,334. GST-registered businesses depreciate the tax-exclusive cost.

So the ledger needs two depreciation books, pool accounting, the car limit, effective life tables, balancing adjustments on disposal and five-year retention after a sale.

Company losses carry forward indefinitely, subject to a more-than-half-same-owners test or, failing that, a similar-business test. Trust losses are trapped. Capital losses only offset capital gains, and individuals and trusts get a 50 per cent discount on assets held more than a year.

aPayroll: reported at every pay run

Australia was among the first countries to make payroll reporting real time. Single Touch Payroll has been compulsory since 2018 for larger employers and 2019 for everyone, and Phase 2 since January 2022.

The rule is simple to state and demanding to build: every time you pay an employee, you report it to the tax office, on or before the pay day, from within the payroll software. The report is cumulative year-to-date per employee, and it carries the employer totals that also go on the activity statement.

Phase 2 killed two pieces of paper. Employees no longer lodge a separate tax declaration — their details travel in the pay event. And employers no longer issue annual payment summaries — the employee sees an income statement online, populated from what was reported all year.

What each pay event must carry is the hard part. Per employee: tax file number, payroll identifier, name, date of birth, address, employment basis, start date, and if they have left, the cessation date and reason — voluntary, ill-health, redundancy, dismissal, contract ended, transfer. A six-character tax treatment code. An income type from a fixed list: salary and wages, closely held payee, working holiday maker with a country code, foreign employment, inbound assignee, seasonal worker, voluntary agreement, labour hire.

Then the amounts, and they must be disaggregated. Not one gross figure but gross split from paid leave, and paid leave split by type — other, parental, workers’ compensation, ancillary, cashed out, unused on termination. Allowances split by type: cents per kilometre, award transport, laundry, overtime meal, travel, tools, tasks, qualifications. Overtime separately. Bonuses and commissions separately. Directors’ fees. Lump sums by category. Termination payments with codes and dates. Salary sacrifice by type, with gross reported before the sacrifice. Reportable fringe benefits. Super liability and ordinary time earnings.

That list is why a payroll module cannot be a wage and a deduction. It is a coded dictionary of earnings types, and the codes are the tax office’s.

The channel is the same Standard Business Reporting platform the activity statement uses, with a machine credential. For cloud software the vendor creates and installs the credential on its own server and each client authorises the product. A vendor may connect directly, which requires the full security framework below, or route through a sending service provider — which is what most small vendors do, and what we should do.

Year end is a declaration, not a form. The employer ticks a finalisation indicator on each employee’s record by 14 July, after which the employee’s income statement is marked tax ready and pre-fills their return.

Payslips have a legal content list and must be issued within one working day of pay day. They must show the employer’s ABN, the pay period, gross and net, the hourly rate and hours where relevant, every loading, allowance, bonus and penalty separately, every deduction with the name of the fund or account it went to, and the superannuation contributions made with the fund’s name.

bSuperannuation, and the change of 1 July 2026

Employers must pay retirement contributions on top of wages. The rate is 12 per cent. The contributions go to the employee’s chosen fund, or if they choose none, to the fund the tax office says is already “stapled” to them — which the employer must ask for before using a default.

Contributions travel in a prescribed electronic format called SuperStream: an XBRL contribution message linked to a payment that carries the same reference, sent through a clearing house or gateway. It needs the employee’s tax file number, the fund’s identifier, the member number, the period and the amounts by type.

Payday Super changed the timing on 1 July 2026, and it is the biggest payroll change in Australia for a decade:

• Contributions must be received by the fund within seven business days of each payday. Until June 2026 they were quarterly.
• They are calculated on qualifying earnings, a slightly wider base than before: ordinary time earnings plus salary sacrificed amounts plus all commissions, including commissions earned outside ordinary hours.
• The penalty for being late is assessed per payday and is severe: the shortfall, daily compounding interest, an administrative uplift of 60 per cent, and a further 25 per cent loading where the employee’s choice of fund was ignored.
• Pay events must now report year-to-date qualifying earnings and super liability. The tax office will reject events without them from 1 July 2027.
• The free government clearing house closed permanently on 30 June 2026. Every employer now needs a commercial clearing house or payroll-integrated super.

Seven business days is a hard number for software. A payroll module that computes super monthly is now non-compliant.

cPayroll tax: eight separate taxes

Payroll tax is levied by each state and territory on the employer, above a threshold, on Australia-wide wages including superannuation and grossed-up benefits. It is not a federal tax and there is no national return.

Monthly returns are generally due by the 7th and the annual reconciliation on 21 or 28 July. Related businesses are grouped and share one threshold. The threshold is apportioned by the share of Australian wages paid in that state.

So a ledger must tag every wage cost by the state the work was done in, include superannuation and grossed-up benefits in the definition of wages, and produce a monthly and an annual reconciliation per state. Workers’ compensation is the same shape: eight schemes, premiums on declared wages times an industry rate, coverage following where the employee works.

dAudit exports, and the rule that decides our hosting

Australia has no standard audit file. No SAF-T, no prescribed general-ledger schema. The tax office works by written notice: it can require any document in your custody, and it has full and free access to premises and records, with the occupier obliged to hand over logins, keys and passwords.

The nearest thing to a specification is the electronic-records ruling: data must be capable of being extracted into a standard format, labelled and indexed, in English, with system documentation and encryption keys available. The guidance names Excel or CSV. In practice the audit teams ask for general ledger, journals, sales, purchases, payroll and bank extracts as spreadsheets with a data dictionary.

What an Australian accountant expects on top is specific and worth listing, because it is a short build: a trial balance and general ledger export with a tax code on every line so the GST reconciliation ties to the statements as lodged; a BAS reconciliation; a withholding reconciliation of the statement labels against payroll year-to-date totals; a super reconciliation of what accrued against what was paid, per employee; a fixed-asset register with both depreciation bases and the pool balances; and the Division 7A and franking account workings.

The rest of the framework is a security baseline, and it is a reasonable one to meet regardless:

• Multi-factor authentication that is permanent and cannot be turned off by the client, for every user of a cloud product and every staff member with privileged access. Session timeout of 30 minutes or less, lockout after five failed logins, no shared logins.
• Audit logging of access and privilege changes, with unique user and session identification, kept at least twelve months.
• Certification — independent audit against ISO 27001 or the Australian government scheme for larger products; self-assessment against ISO 27001, SOC 2 or the OWASP application security standard for products under 10,000 clients.
• Encryption at rest with AES, and TLS 1.3 in transit, with a written key-management policy.
• Entity validation of every customer against the business register, with a confirmed email and phone number.
• Supply-chain disclosure naming every party in the data path with its role and business number.

Privacy. The Privacy Act binds organisations above three million dollars of turnover, and any organisation handling tax file numbers regardless of size. A foreign product with an Australian link is bound. Penalties for serious breaches reach the greater of 50 million dollars, three times the benefit, or 30 per cent of turnover.

The cross-border principle is the one to design around. Before disclosing personal information overseas, an Australian business must take reasonable steps to ensure the recipient will not breach the principles — and it stays accountable for the recipient’s breaches.

There is a way through, and it is contractual. The regulator’s guidance says that giving personal information to an overseas cloud provider purely to store it may count as a use rather than a disclosure — putting it outside the rule — if a binding contract limits the provider to those purposes, binds its subcontractors to the same obligations, and gives the customer effective control over how the information is handled, including rights to access, change, retrieve and delete.

So our terms of service should give the customer effective control, bind subcontractors, permit export and deletion, and name the hosting country. That last point is required by the security framework anyway.

Breach notification is compulsory. Once a breach likely to cause serious harm is suspected, the assessment must be completed within 30 calendar days, and the regulator and the affected individuals notified as soon as practicable. A hosted ledger holding tax file numbers, bank details and salaries is squarely in scope.

Immutability is not certified but it is required. Three rules add up to it: the tax office’s requirement that records must not be changed and must be stored so they cannot be; the employment rule that wage records may only be altered to correct an error; and the ban on sales suppression software in force since October 2018, which makes producing, supplying, possessing or using software that falsifies or deletes sales records a criminal offence.

An append-only journal with reversals instead of deletions, a timestamped audit log, period locking and stored lodgement receipts satisfy all three.

19.6New Zealand, briefly

New Zealand shares Australia’s invoicing network and almost nothing else. It is a separate tax system, a separate payments system and a separate regulator, and it has one rule that no other country in this chapter has — a rule that decides whether we can serve it at all.

GST is 15 per cent, one rate, since October 2010. Registration is compulsory above 60,000 dollars of turnover in any twelve months. Exports are zero-rated; financial services and residential rent are exempt.

The accounting basis is a payments basis below 2 million dollars of sales and an invoice basis above it. Returns are monthly above 24 million dollars, two-monthly by default, or six-monthly below 500,000 — all due on the 28th of the month after the period, with two calendar exceptions.

The invoice was abolished in 2023. Since 1 April 2023 New Zealand no longer has “tax invoices”. It has taxable supply information, which need not be a single document at all. The requirement scales with value: under 200 dollars just the seller, date, description and amount; between 200 and 1,000 add the seller’s GST number and the tax; above 1,000 add the buyer’s name and one identifier — an address, a phone number, an email, a trading name, a business number or a web address.

Self-billing needs only mutual agreement, with no approval from anyone. Corrections are called supply correction information and go in the period they are issued. This is the most relaxed invoice regime in the whole survey.

Peppol is shared with Australia under mutual accreditation, with the same PINT A-NZ format on the same dates. 64,535 New Zealand businesses can receive e-invoices. Government procurement rule 44 requires agencies handling more than 2,000 invoices a year to send and receive e-invoices from 1 January 2026, and to require their large suppliers to do so from 1 January 2027. Agencies must pay 95 per cent of e-invoices within five business days. There is no business-to-business mandate.

Payments are ahead of Australia in one respect and behind in another. Cheques ended entirely in 2021, when the paper clearing closed. Settlement runs seven days a week. High-value messaging moved to ISO 20022 in November 2025. But there is no national bulk-payment format like the ABA file — batch payments use bank-specific CSV layouts, so a ledger needs a profile per bank.

Account numbers are sixteen digits in four parts — two for the bank, four for the branch, seven for the body and two or three for the suffix — validated against the payments association’s weighted modulus tables rather than by a check digit.

Open banking went live on 1 December 2025 for the four large banks under the Customer and Product Data Act. Requestors are accredited by the ministry for a 2,000-dollar application fee and an annual levy, and the banks may not charge for the data. The intermediary Akahu publishes real prices: 15 cents per payment and between 50 cents and 2.50 dollars per user per month.

Payroll is filed at every payday, like Australia’s, but with a two-working-day window rather than same-day. Company tax is 28 per cent, with an imputation credit account that works like Australia’s franking account. Provisional tax is paid in three instalments. Retirement saving is KiwiSaver, and the employer contribution rises to 3.5 per cent on 1 April 2026 and to 4 per cent in 2028.

The privacy rule is gentler than Australia’s and has an explicit exception for us. Principle 12 of the Privacy Act 2020 restricts sending personal information overseas, but sending it to an offshore processor that does not use it for its own purposes is not a disclosure at all. The New Zealand business stays responsible for it. Breaches causing serious harm must be notified to the commissioner.

19.7Canada: the sales taxes

Canada sits between Australia and the United States, and it does so awkwardly. It has a proper value-added tax like Europe’s, but it has it three times over, and three provinces run an entirely different kind of tax underneath.

Two tax administrations matter. The Canada Revenue Agency handles federal income tax, the goods and services tax and payroll deductions. Revenu Québec handles everything in Quebec — including the federal tax, which it collects on Ottawa’s behalf. Alberta collects its own corporate tax separately again.

Four kinds of consumption tax coexist:

• GST — the federal value-added tax, 5 per cent, everywhere.
• HST — the same tax with the province’s share merged into it, collected once by the federal agency, in five provinces.
• QST — Quebec’s own value-added tax, 9.975 per cent, on top of the federal 5.
• PST and RST — retail sales taxes in British Columbia, Saskatchewan and Manitoba. These are not value-added taxes. There are no input credits. They are charged once at retail, and resale is proved by the buyer’s number.

Nova Scotia’s cut was the first rate change anywhere in Canada since 2016, and it makes the point that matters for software: rates must be date-effective. A supply made in Nova Scotia on or after 1 April 2025 carries 14 per cent; before that date, 15. One number per province is not enough.

The provincial taxes are calculated on the price before the federal tax, not on top of it. That is true in Quebec, British Columbia, Saskatchewan and Manitoba alike.

aRegistration, credits and returns

The threshold is 30,000 dollars of worldwide taxable sales over four consecutive calendar quarters, and how you cross it changes the date you must register:

• Cross it within a single quarter and you must register immediately — and the sale that took you over must itself carry tax.
• Cross it cumulatively across four quarters and you stop being a small supplier at the end of the month after that quarter.

Taxi and ride-share drivers register from their first fare regardless. Registering for the federal tax registers you for the harmonised version automatically. Quebec requires separate registration.

The number itself is worth understanding because it appears on invoices. It is the nine-digit Business Number plus a program suffix: RT0001 for sales tax, RP0001 for payroll, RC0001 for corporate tax, RM0001 for import and export. Quebec’s is ten digits plus TQ0001. Both agencies publish a free registry to check a number against a legal name.

Which province’s tax applies is decided by place-of-supply rules, and they are not the same as the customer’s billing address. Goods follow where they are delivered. Services follow the recipient’s address if the supplier has it in the ordinary course of business. Licences, software and digital content follow where the rights can mainly be used. Real property follows the property.

So every invoice line needs a tax province that may differ from the customer’s address on file.

There is no cash basis. Tax is payable on the earlier of payment and the day the consideration becomes due, and it becomes due on the earliest of the invoice being issued, the invoice date, the day it should have been issued but for undue delay, and any date fixed by written agreement. The same moment sets the exchange rate for a foreign-currency invoice.

Input credits have a four-year window, cut to two years for businesses above 6 million dollars of sales and for financial institutions. Two complications that older material still describes have gone: Quebec’s restriction on credits for large businesses was fully phased out on 1 January 2021, and the Ontario and Prince Edward Island recapture rules ended in 2018 and 2021. A ledger built in 2026 needs neither.

The Quick Method is a genuine simplification worth supporting. A business under 400,000 dollars of tax-inclusive sales may elect to remit a flat percentage of its sales instead of tracking credits — in Ontario 4.4 per cent for a retailer and 8.8 for a service business — with a 1 per cent credit on the first 30,000 dollars each year, and credits still claimable on capital purchases.

There is a catch that is almost funny: accountants, lawyers, tax professionals and bookkeepers are excluded. A bookkeeping practice cannot use it, but nearly all of its clients can. Either way, the invoice still shows the statutory rate; the ledger computes the remittance separately.

Annual filers whose net tax last year was 3,000 dollars or more must pay quarterly instalments. A nil return is still a return.

Electronic filing has been compulsory since 2024 for all registrants except charities and certain financial institutions, with a 100-dollar penalty for the first paper return and 250 for each one after. Any payment over 10,000 dollars must also be electronic.

The interface a ledger should target is GST/HST Internet File Transfer. A business creates the return in certified accounting software, which produces a .tax file, and uploads it with a four-digit access code. It does not cover Quebec registrants, who file a combined federal-and-provincial return through Revenu Québec instead.

The return itself is short — sales, tax collected, credits, net tax, instalments, balance — which is a relief after the European chapter.

bForeign sellers, and a trap for buyers

Since 1 July 2021 non-resident sellers of digital products and services to Canadian consumers must register once their Canadian revenue passes 30,000 dollars over any twelve months. They may use a simplified registration: no input credits, tax charged only to consumers, quarterly returns, and remittance permitted in some foreign currencies.

The trap is on the buyer’s side, and a ledger should know it. Tax charged by a supplier under the simplified regime cannot be claimed as an input credit. A Canadian business that gives its registration number is not charged at all and self-assesses instead. So the vendor record needs a simplified-regime flag that blocks the credit.

Quebec ran the same scheme earlier, from 2019, with the same threshold and the same no-credit rule.

There is no domestic reverse charge between Canadian businesses. Imported goods pay the federal tax at the border, recoverable as a credit. Imported services and intangibles are self-assessed only by a business that is not fully commercial — a fully commercial registrant self-assesses nothing.

cThe three provincial taxes are three separate systems

Each of British Columbia, Saskatchewan and Manitoba has its own registration, its own return, its own portal, its own filing thresholds and its own rule about when an out-of-province seller must register. None of them is a value-added tax.

A nil return is required in all three. Manitoba goes further than anyone and requires the price of each item and the total tax to be stated separately on every invoice.

19.8Canada: invoices, a fiscal device, and a language law

Canada has no general invoice statute. There is no prescribed layout, no numbering rule, no mandatory identifier and no QR code. What binds an invoice is what the buyer needs in order to claim back the tax.

The rules are tiered by amount, and the thresholds changed recently in a way most published material has not caught up with. They are now 100 and 500 dollars, raised from 30 and 150 by a 2024 statute with retroactive effect to April 2021. The tax office’s own memorandum still prints the old numbers; the regulation governs.

“Supporting documentation” is defined broadly and includes an invoice, a receipt, a card slip, a debit note, a book of account, a written contract, and any record in a computer system. Quebec uses the same breakpoints but wants slightly more at the bottom: the tax amount and a description are needed even under 100 dollars.

The under-100 tier is Canada’s simplified invoice, and a till receipt satisfies it.

The tax must be shown. Either separately from the price, or with a clear statement that the price includes it. On request, the registration number must be given in writing. So a Canadian invoice normally shows subtotal, federal tax with its rate, provincial tax with its rate, and total, as separate lines.

Credit notes have a prescribed content list of their own: a statement that it is a credit note, the supplier’s name and registration number, the buyer’s name, the date and the amount of the tax adjustment. The supplier deducts the adjustment in the period the note is issued; the buyer adds back any credit already claimed.

Which gives a three-line rule for a Canadian ledger: never edit a posted invoice; issue a numbered credit note that references the original; carry the tax adjustment into the return for the period the note was issued.

aNo e-invoicing, and the one exception

Canada has no e-invoicing mandate. None for business-to-business, none at the tax level for government, and none announced. There is no clearance system, no structured invoice format and no timetable. An invoice is valid in any medium that carries the required information and can be produced on audit.

Canada is not a Peppol authority and the business number is not registered as a Peppol identifier, so the few Canadian firms on the network identify themselves with a global location number or a DUNS number for their European and Australasian partners.

Two things are worth watching. The instant payment rail launching at the end of 2026 carries request-to-pay with structured remittance data, which will make “invoice plus payment request” one message from 2027. And Quebec already runs a transaction-level clearance system in all but name.

bThe language law, which reaches the software itself

Quebec’s Charter of the French language, as amended in 2022, is the only rule in this chapter that regulates our user interface. Four provisions matter.

• Invoices must be in French. No one may send an invoice, receipt or similar document in another language unless a French version is available to the recipient on terms at least as favourable. An English invoice to a Quebec customer is lawful only if a French one exists on equal terms — so a bilingual template, or a per-customer language switch with French as the default.
• Software must be available in French unless no French version exists anywhere. A product with an English interface and a French version somewhere may not lawfully be marketed in Quebec in English only, and the French version may not cost more except where production genuinely costs more.
• Standard-form contracts — which is what a subscription agreement is — may not be presented in another language unless the French version was provided first and the customer then expressly chose otherwise. No charge may be made for producing the French version. Contracts with people outside Quebec are excepted.
• Where both languages appear, French must be displayed at least as prominently, and on any discrepancy the customer may rely on either version.

Fines run from 2,000 to 20,000 dollars for an individual and 10,000 to 250,000 for anyone else, doubled for a second offence and tripled after that. The language regulator can also order an online marketplace to stop selling to anyone in Quebec.

Outside Quebec there is no language rule for private invoices.

This is genuinely good news for us and it should be said plainly. Our ledger already runs its interface and its documents in forty languages with per-language templates. Meeting a French-language obligation is configuration, not a project. It is the one requirement in this entire chapter that we are already better placed to meet than most of the competition.

19.9Canada: records, money, payroll and the rule about where the books live

Canada has the strictest data-location rule in this chapter, and it is not a privacy rule. It is a tax rule, it has been on the statute book for decades, and it decides how we can sell there.

Beyond location, the circular reads like a specification and it is worth taking literally. It requires enough detail to determine the tax; six years of retention; back-ups under the same rules; system documentation covering how transactions are created and processed and how standard reports are built; file retention procedures including a record layout or data dictionary; an audit trail that includes emails where they form part of the transaction; conversion between formats without loss or alteration; and the source documents themselves.

Nothing in Canadian law requires an immutable ledger or a certified audit-log module for an ordinary business. The requirement is that the trail exists and can be produced.

Six years, counted from the end of the tax year the records relate to. Longer if the return was filed late, in which case it runs from the filing date. Longer again while an objection or appeal is open. Share registers and minutes are kept indefinitely. A dissolved company keeps everything two more years. Early destruction needs a form or written permission.

So a document supporting the year ending 30 June 2026 must survive until 30 June 2032, and longer if that year is disputed.

aGIFI: the chart of accounts the tax office does prescribe

Canada has no standard audit file. It has something more useful and more demanding: every corporation must map its trial balance to a General Index of Financial Information code and file that with its corporate return. Since electronic filing became compulsory, the GIFI schedules are the only form in which financial statements reach the tax office at all.

The code ranges are fixed:

Amounts are whole dollars and the balance sheet must balance or the return is rejected. There are separate schedules for the balance sheet, the income statement, a first-year opening balance sheet, and one asking who prepared the statements, with what professional designation, and whether the engagement was an audit, a review or a compilation.

For a ledger this is a feature, not a report. Every account carries a GIFI code, the trial balance rolls up to those codes, the mandatory totals are computed and checked, and the result exports as a code-and-amount file that the tax software imports. A Canadian default chart should ship with the codes already attached.

Note what a ledger does not do: it does not file the corporate return. That requires certified tax software, of which twenty-four products are approved for 2026. We export the coded trial balance to one of them.

What an audit actually asks for is the accounting data file or a full export, plus general ledger, sales journal, purchase journal and trial balance as spreadsheets. The tax office’s own words are that where books are electronic “the auditor will normally ask for your electronic records before meeting with you”. A one-click audit export — chart of accounts with GIFI codes, general ledger detail with the audit trail, receivables and payables sub-ledgers, tax working papers, bank reconciliations, the asset register, and a system description — covers it.

Canadian accountants also work in CaseWare, and the small-business world exchanges Sage 50 and QuickBooks files. An accountant taking over a client asks for “the backup”. The practical answer from a cloud product is accountant access plus CSV exports.

Accounts are not filed publicly. A private corporation files nothing anywhere except the coded statements inside its tax return. Audit is required only if a shareholder or a lender insists — the company law lets shareholders waive it by unanimous consent, renewed each year. The middle ground lenders accept is a review engagement or a compilation.

What is filed publicly is registry housekeeping: an annual return to the federal or provincial registry, twelve dollars online federally, due within sixty days of the anniversary, together with the register of individuals with significant control.

bMoney

Three systems, run by Payments Canada:

• ACSS, the retail batch system — cheques, direct deposits, pre-authorised debits, card and bill payments. 10.6 billion items worth 10 trillion dollars in 2025. It is 99 per cent of the volume and 13 per cent of the value.
• Lynx, the wire system — 13.6 million items worth 93.3 trillion dollars, and fully ISO 20022 since 22 November 2025, when the old messages were retired.
• The Real-Time Rail — instant, round the clock, ISO 20022, with a centralised fraud service from day one. Its by-law came into force on 24 August 2026 and the system launches in the last quarter of 2026. Interac e-Transfer migrates onto it in 2027.

The bulk payment file is Standard 005, and it is stranger than either the Australian or the American equivalent. Records are 1,464 characters long, and each one holds up to six transactions in 240-character segments. Once a blank segment is reached, the rest of the record must be blank.

The file opens with an A record carrying the originator’s ten-character identifier, a four-digit file creation number that must increase by one each time — a duplicate rejects the whole file — and a creation date in the odd format of a zero, a two-digit year and a Julian day number.

Then come C records for credits and D records for debits. Each segment carries a three-digit transaction type, the amount in cents, a date in the same Julian format, a nine-digit routing number written as a zero plus the three-digit institution and the five-digit branch, the account number, a twenty-two digit trace number that must never be altered on a return, the originator’s short and long names, the payee name, a nineteen-character cross-reference that reaches the recipient’s statement, and separate routing and account details for returns.

The file closes with a Z record carrying the value and count of debits and credits separately.

The transaction type codes come from a separate standard and they matter: 200 is payroll deposit, 420 cash management, 450 miscellaneous payments, 460 accounts payable, 480 donations, and the 700 series is business pre-authorised debit. Returns arrive as their own record type with a reason code — 901 insufficient funds, 902 account not found, 905 account closed, 910 payor deceased, 915 no agreement existed.

And, as in Australia, every bank has its own dialect. Standard 005 is the format banks use between themselves; the banks accept customer files in their own variants, each with proprietary header fields, and each issues the originator identifier. Implement the standard as the base and keep a profile per bank.

ISO 20022 for batch payments exists in Canada but is voluntary and, in 2026, no bank accepts a pain.001 file for domestic batch payments from a small business. Standard 005 is still the file to write.

Account numbers have no check digit. A Canadian account is a three-digit institution number, a five-digit branch transit and up to twelve digits of account. On a cheque the order is transit then institution; in a payment file it is the other way round. Validity comes from a subscription lookup file, never from a computation.

Pre-authorised debits have a rulebook with prescribed wording. Every debit must be backed by an agreement containing a fixed list of elements: the date and signature, the authority to debit, the category — personal, business or funds transfer — the amount and timing, the cancellation right on notice that may not exceed 30 days, contact details, and a verbatim recourse statement telling the payer they may be reimbursed for a debit that was not authorised.

The timing rules are equally specific: a confirmation at least ten days before the first debit, and a pre-notification at least ten days before any change to a fixed amount or date and before every variable-amount debit, waivable only if the waiver is displayed prominently. The agreement and the evidence of authorisation must be kept for at least twelve months after the last debit. A consumer has ninety days to dispute; a business has ten business days.

Cheques are still material. 340 million items worth 2.7 trillion dollars in 2024, averaging nearly 8,000 dollars each. That is 3 per cent of the volume and the second-largest value stream in the country. They clear by image, usually the same day they are deposited. A Canadian ledger prints cheques, records post-dated ones and reconciles returns.

Bank statements have no national standard. The banks export CSV and the OFX family — RBC, TD, BMO and CIBC in various combinations, with Scotiabank adding BAI2. So the same importers as the United States, with a column map per bank.

Open banking has been legislated twice. The Consumer-Driven Banking Act was enacted in June 2024 with the consumer agency as supervisor; the 2025 budget moved oversight to the Bank of Canada, and a replacement framework received royal assent on 26 March 2026. Draft regulations were published for comment on 27 June 2026: a one-time accreditation fee of 2,500 dollars, a Canadian place of business and insurance as conditions, and a data scope covering deposit, payment, investment and lending accounts with at least twenty-four months of history. Read access is targeted for 2026–27 and payment initiation for mid-2027.

Until then, feeds come from aggregators. Flinks is the Canadian one most used by accounting products and publishes prices: 500 dollars a month for 200 connections, 1,250 for 1,100, with a monthly minimum and a one-year term. Plaid covers Canada and publishes plans but not prices.

There are no statutory payment terms, and the late-interest position has a trap worth knowing. The federal Interest Act caps interest at 5 per cent a year where a contract states a rate per day, week or month unless the contract also states the equivalent yearly rate. So “2% per month” on an invoice is unenforceable above 5 per cent a year unless the invoice also says “26.82% per annum”. An invoice template sold into Canada should print both.

cPayroll: periodic, but with a demanding calendar

Canada does not report payroll in real time. There is no equivalent of Australia’s pay-event or Britain’s real-time information. Money is remitted periodically and the slips are filed once a year.

Everything except Quebec goes to the federal agency in one payment. Quebec employers remit Quebec income tax, its own pension plan, its parental insurance, an employer health contribution and a labour-standards contribution to Revenu Québec, and a reduced employment insurance premium to the federal agency.

The tax office does not certify payroll software. It publishes the formulas twice a year and an online calculator that acts as the reference implementation; software is expected to match it.

The remittance calendar is set two years back. An employer’s type depends on its average monthly withholding from two calendar years ago:

Quebec mirrors the structure with its own bands. Any single remittance over 10,000 dollars must be electronic. Every dollar deducted is deemed held in trust for the government until it is remitted.

Year end is the T4 return, due on or before the last day of February — the same date the employee copies are due. The slip carries employment income, pension and employment-insurance amounts, tax withheld, pensionable and insurable earnings, union dues, a dental benefits code compulsory since the 2023 slips, and the new second-tier pension boxes added in 2024.

Filing is electronic above five slips of a type, and the penalties for filing on paper instead escalate sharply: 125 dollars for six to fifty slips, 250 to 250 slips, 500 to 500, 1,500 to 2,500, and 2,500 above that.

The XML has three rules that catch developers out. Every submission is wrapped in a transmittal record. Since January 2025 all returns in one submission must be the same type. And since 20 October 2025 every optional field without a value must be removed from the file, or the submission is rejected.

Quebec has its own XML channel, with a transmitter number, a per-year software certification number issued to the developer, and slip numbers issued by Revenu Québec rather than chosen by the software.

The Record of Employment is a Canadian peculiarity with no equivalent elsewhere in this chapter. Whenever an employee has an interruption of earnings — seven consecutive days with no work and no insurable earnings, or a drop below 60 per cent of normal — the employer must issue one, electronically within five calendar days of the end of that pay period.

It requires insurable earnings listed by pay period for the last 53 weekly, 27 fortnightly, 25 semi-monthly or 13 monthly periods, plus the insurable hours. That is a report a payroll module must be built to produce, and it is the reason payroll history cannot be summarised away.

Employer health taxes are a fourth layer. Ontario charges up to 1.95 per cent above a one-million-dollar exemption, British Columbia 1.95 per cent above 1.5 million with a notch rate in between, Manitoba 4.3 per cent above 2.5 million, and Quebec runs the scale in the table above. Each has its own instalment dates and annual return. Workers’ compensation is a fifth, with a separate board, assessable-earnings cap and rate in every province.

dCorporate tax, briefly

The federal rate is 15 per cent generally and 9 per cent on the first 500,000 dollars of active business income of a Canadian-controlled private company. Two grinds shrink that limit: it falls away between 10 and 50 million dollars of taxable capital, and it is reduced by five dollars for every dollar of passive investment income above 50,000, vanishing at 150,000.

Which has a direct consequence for the ledger: investment income and taxable capital must be separable from active income at trial-balance level.

Provincial rates add roughly 2 to 3 per cent for small business and 8 to 16 per cent generally, so combined small-business rates run from 9 to about 12 per cent and combined general rates from 23 per cent in Alberta to 31 in Prince Edward Island. Ontario and Quebec both cut their small-business rate to 2.2 per cent during 2026.

The return is due six months after year-end, with the balance payable in two months, or three for a small private company. Electronic filing has been compulsory for all corporations since 2024, with a 1,000-dollar penalty for non-compliance.

Depreciation is pooled, not per asset. Capital cost allowance runs on declining-balance classes with a half-year rule in the year of purchase: 4 per cent for buildings, 20 for furniture and machinery, 30 for vehicles, 55 for computer hardware, 100 for software and small tools, 5 for goodwill. Passenger vehicles above a cost cap each get their own class with no recapture. A ledger needs a register keyed by class with the pool balances, not just a per-asset schedule.

Losses carry back three years and forward twenty; capital losses carry forward indefinitely but only against capital gains. Meals and entertainment are half deductible, and so — neatly — is the sales tax credit on them.

Withholding on foreign payments is the part a ledger must compute. Fees paid to a non-resident for services performed in Canada carry 15 per cent withholding, plus 9 per cent more if the work was done in Quebec, reported on its own slip. Dividends, interest, rents, royalties and management fees paid to non-residents carry 25 per cent under a different part of the act, reduced by treaty, reported on another slip by 31 March.

Finally, privacy. The federal law requires a breach posing a real risk of significant harm to be reported as soon as feasible, individuals notified, and a record of every breach kept for twenty-four months. Quebec’s Law 25 is much sharper: penalties reach 10 million dollars or 2 per cent of worldwide turnover, with penal fines up to 25 million or 4 per cent.

And Law 25 adds a procedural gate that touches our hosting directly. Before sending personal information outside Quebec — even to Ontario — an organisation must carry out a privacy impact assessment showing the information will receive adequate protection, and the transfer must be covered by a written agreement. A vendor hosting Quebec customers should supply both templates.

19.10The United States: what is not there

The United States is the easiest of the three countries to satisfy and the hardest to serve. It is easy because almost nothing is compulsory. It is hard because what replaces the rules is a thicket of local practice that nobody has tidied up.

Here is the list of things a European ledger must have that a United States ledger does not need at all:

• No federal bookkeeping act. No law says the books must be double-entry.
• No prescribed chart of accounts.
• No federal sales tax, value-added tax or goods-and-services tax. There never has been one.
• No law about what an invoice must contain, how it must be numbered, or what language or currency it must use.
• No e-invoicing mandate of any kind.
• No standard audit file.
• No accounting-software certification, registration or licence.
• No rule that the data must be held on American soil.

What exists instead is one sentence of law and four consequences. The sentence is section 6001 of the tax code: every person liable for tax must keep such records as the Secretary may prescribe. The regulation adds that the records must be sufficient to establish income, deductions and credits, and must be available for inspection at any time.

That is a sufficiency test, not a form. The tax office does not tell you what your books look like. It tells you they must answer its questions.

The four consequences run through the rest of these sections:

• The tax return is the chart of accounts. There is no official taxonomy, so the line structure of Form 1120, Form 1065 or Schedule C is what every account eventually maps to.
• The vendor and employee records are the compliance-critical data. The rules that bite arrive through what a business must report about the people it pays — the 1099 and the W-2 — not through the invoice.
• Payroll is a deposit calendar measured in days. Tax withheld from wages must reach the Treasury within days of the payday, not at the end of the month.
• There are five payment rails and three file formats, and no national payment reference, so cash application is a matching problem rather than a lookup.

Entity type drives the equity section. An American small business is one of four things for tax, and the ledger must know which, because the owner’s side of the balance sheet is different in each case.

A limited liability company is a creature of state law with no federal tax class of its own. It defaults to one of the first two rows and may elect its way into either of the last two. The ledger therefore needs an entity-type switch that picks the equity template, not a company-type field copied from the state charter.

Small companies escape even the balance sheet. A corporation whose receipts and assets are both under 250,000 dollars need not file Schedule L at all. One with assets of 10 million dollars or more must file the longer Schedule M-3.

The financial year is free, mostly. A C corporation may choose the calendar year, any month-end, or a 52-53 week year ending on the same weekday. Partnerships and S corporations must use a required year that follows their owners unless they elect otherwise and make a deposit for the privilege.

Cash or accrual is a tax question, not a bookkeeping one. A business may keep accrual books and file on the cash basis. The test that decides whether it may is average receipts over three years: 32 million dollars for 2026, indexed each year. The same test governs whether inventory must be accounted for properly and whether interest deductions are capped.

The practical consequence is a feature every American ledger has and ours does not: a switch that produces a cash-basis profit and loss and balance sheet from accrual entries. Revenue is recognised when the invoice is collected; expenses when the bill is paid. QuickBooks has had that toggle for twenty years and users expect it.

Accounting standards are private law. US GAAP is mandatory only for companies listed on a stock exchange. No federal law requires a private company to use it, to be audited, or to file accounts anywhere. GAAP reaches private companies through loan covenants, investor agreements and bonding requirements. There is no registrar of accounts and no filing deadline.

Most small American businesses keep their books on the same basis as their tax return and treat the return as the annual accounts. Nothing is published.

19.11The United States: sales and use tax

This is the one genuinely hard problem in the United States, and it is hard in a way Europe never is. Europe has twenty-seven VAT systems. The United States has 12,566 taxing jurisdictions, counted by Vertex at 30 June 2026: 46 at state level, 7,183 cities, 1,972 counties and 3,365 special districts.

Forty-five states and the District of Columbia levy a general sales tax. Five do not — New Hampshire, Oregon, Montana, Alaska and Delaware — though Alaska lets its municipalities levy their own, and 86 of them do.

The tax is single-stage. That is the deepest difference from Europe. Sales tax is charged once, to the final buyer, and the seller remits it. There is no input tax, no credit mechanism, no VAT control account, no reverse charge and no partial exemption. Tax a business pays on its own purchases is simply part of the cost.

So a US ledger needs a sales-tax liability engine. It does not need the credit machinery that takes up half of a European VAT module.

Rates attach to a street address, not a postcode. Special districts, city limits and county lines do not follow postal boundaries. A single five-digit ZIP code routinely straddles two or more combined rates. Illinois now charges a punitive 15 per cent when a seller reports a sale to an undetermined location.

Rate lookup must therefore be by validated street address with a rooftop geocode. That is a service, not a table you download.

The rates move constantly. Vertex counted 463 rate changes and new rates in the first six months of 2026 alone, plus 63 new taxing cities and 105 new district taxes. Roughly 900 changes a year is the maintenance load. The combined average rate reached 10.19 per cent, a ten-year high.

aNexus: when a seller must collect

Until 2018 a state could only compel collection from a seller with a physical presence there. On 21 June 2018 the Supreme Court decided South Dakota v. Wayfair and overturned that rule. A state may now require collection once a seller passes a dollar or transaction threshold. Every sales-tax state copied the idea within eighteen months.

The thresholds have converged but not merged:

The transaction count is being repealed state by state, because 200 sales of a ten-dollar item was never a sensible test. Sixteen states and the District of Columbia still carry it. Illinois dropped it on 1 January 2026, Kentucky on 1 August 2026.

The look-back window differs too. Most states test the previous or the current calendar year. Missouri and Tennessee use a rolling twelve months. Illinois reviews the preceding twelve months every quarter. New York uses the last four sales-tax quarters.

So the ledger must keep, per state, a rolling total of sales and a rolling count, each in that state’s own window, and warn before the line is crossed.

Marketplaces collect for their sellers. Every sales-tax state now makes Amazon, eBay, Etsy and the app stores collect on behalf of the businesses that sell through them. That moves the collection duty but not the bookkeeping: those sales still appear as gross sales on the seller’s return and are then deducted as marketplace-collected, and in most states they still count toward the seller’s own threshold.

bFive states where the city is its own tax office

In most states one registration, one return and one payment cover the state and all its localities. Five states break that pattern, and they are the reason a hand-built rate table fails.

• Colorado. About seventy home-rule cities — Denver, Boulder, Colorado Springs, Aurora — write their own tax base and collect their own tax. The state collects only its 2.9 per cent and the taxes of the localities that let it. A single portal called SUTS exists, but joining it is voluntary for the cities.
• Louisiana. Each of 64 parishes has its own collector, base and rates. A constitutional amendment to centralise this failed at the ballot in 2021. Remote sellers get one return through a single commission; in-state sellers still file parish by parish.
• Alabama. Most local taxes go through one state system, but some localities self-administer. A remote seller may instead elect a flat 8 per cent on every Alabama sale regardless of destination, keep 2 per cent of it for filing on time, and be relieved of everything else.
• Arizona. The tax is legally on the seller for the privilege of doing business, not on the buyer. Cities license separately under their own Model City Tax Code, though one return covers the money.
• Alaska. No state tax at all. 86 municipalities have adopted a uniform remote-seller code and collect through one commission portal, each with its own rate, some of them seasonal.

On top of that sit taxes that are not sales taxes at all. Chicago charges a Personal Property Lease Transaction Tax on cloud software used from the city. It was 9 per cent in 2021, 11 per cent from 1 January 2025 and 15 per cent from 1 January 2026. It has its own nexus rule, its own return and its own apportionment affidavit, and no state return carries it.

Colorado and Minnesota charge flat retail delivery fees per order. Minnesota’s is 50 cents on orders of 100 dollars or more, and the receipt must call it the “Road Improvement and Food Delivery Fee”. These are separate invoice lines, not part of a rate.

cSoftware as a service, and the 2027 switch

Anyone selling software into the United States needs to know this table, because it decides whether our own subscription is taxable. Software delivered over the internet is taxed in roughly twenty states today, and the list changes every year.

Taxable now: Connecticut, District of Columbia, Hawaii, Kentucky, Louisiana (since 1 January 2025), Maryland, Massachusetts, New Mexico, New York, Pennsylvania, Puerto Rico, Rhode Island, South Carolina, South Dakota, Tennessee, Utah, Washington, West Virginia and Arizona.

Texas is its own case. Software as a service is a data processing service there, and 20 per cent of the value is exempt by statute. Tax is charged on 80 per cent of the fee, so a full 8.25 per cent rate works out at 6.6 per cent.

Two states taxable only locally: Colorado, where some home-rule cities tax software although the state does not, and Illinois, where the state does not but Chicago does. Two states where it depends on the buyer: Iowa taxes it unless it is for exclusive business use; Ohio taxes it when used in business and exempts personal use.

Two large states flip on 1 January 2027. California’s SB 122, chaptered 29 June 2026, brings software accessed remotely into the definition of taxable property, sources it to the buyer’s location, and makes buyers above 5 million dollars of purchases self-assess instead. California is the largest software market in the country and has never taxed this. Colorado’s HB26-1223, signed 4 June 2026, repeals its software exemption from the same date.

Both dates matter to us twice over: once for our customers’ invoices, and once for our own subscription revenue.

dCertificates, sourcing and returns

Exemption certificates are a ledger feature, not a filing cabinet. Sales tax is charged unless the buyer hands over a document. A seller who accepts no document owes the tax itself when the auditor arrives.

There are five kinds: the resale certificate (the buyer will resell the goods), the exempt-entity certificate (governments, charities, schools, hospitals), the use-based exemption (manufacturing machinery, farm inputs, goods for export), the direct-pay permit (large buyers who pay the state themselves), and the multiple-points-of-use certificate for software used across several states.

Two multi-state forms cut the paperwork. The Multistate Tax Commission’s uniform resale certificate is accepted by 36 states, each with its own footnotes. The Streamlined certificate of exemption is accepted by all 24 member states.

A certificate store keyed by customer, state, exemption type, reason code, number, issue date, expiry date and scanned image is therefore real work. Florida’s resale certificates expire every 31 December and must be reissued. Others do not expire but go stale after three or four years.

Sourcing decides whose rate applies. Destination sourcing — the rate where the goods arrive — is the rule in most states and in every state for a remote seller. Origin sourcing — the rate where the seller sits — still applies to local tax on in-state sales in Arizona, Illinois, Mississippi, Missouri, Ohio, Pennsylvania, Tennessee, Texas, Utah and Virginia.

California is a hybrid: state, county and city components follow the seller; district taxes follow the buyer. Services and software follow where the customer uses them.

For the ledger this means every document needs a ship-from address and a ship-to address, both validated, plus a use address for services. The order header must not collapse them into one field.

Every state has its own return, portal and deadline. There is no national schema, nothing like Australia’s BAS or the European one-stop shop. A Texas return lists tax by local jurisdiction code. An Illinois return itemises by tax site. A Colorado return has a line per state-collected city and county. A Washington return combines sales tax with a gross-receipts tax on its own classification codes.

The 20th of the month is the commonest deadline but far from universal: California the last day, Washington the 25th, Ohio the 23rd, Maine the 15th. Florida is due on the 1st but late after the 20th, and electronic payment must be confirmed by 5 p.m. Eastern the business day before.

Filing frequency is assigned by the state from expected liability and revised as volume changes. Several states demand prepayments once you are large: California above 17,000 dollars of average monthly taxable sales, New York above 500,000 dollars a year, Illinois above 20,000 dollars a month.

A zero return is still a return. Once registered, a business files every period whether or not it sold anything. Texas charges 50 dollars for a late report even when no tax is due.

Some states pay you to file on time. The return must compute the discount, and each one has its own cap: Texas 0.5 per cent (1.25 per cent more for prepaying), Florida 2.5 per cent of the first 1,200 dollars capped at 30 dollars, New York 5 per cent capped at 200 dollars a quarter, Illinois 1.75 per cent capped at 1,000 dollars a month, Pennsylvania 1 per cent capped at 25, 75 or 300 dollars, Ohio 0.75 per cent, Alabama’s flat regime 2 per cent capped at 8,000 dollars a month.

Use tax is the purchase side, and it is where audits find money. Every sales tax has a mirror tax at the same rate on things bought without paying it — from an out-of-state seller who did not collect, from a foreign seller, or from the business’s own stock taken for internal use. The buyer owes it and files it.

Auditors find it in the purchase ledger: they sample supplier invoices for software subscriptions, equipment and marketing services, and assess tax plus interest on anything untaxed. So the ledger needs a flag per purchase line meaning “no tax charged, taxable use in state X”, and a use-tax-payable account per state that rolls into the same return.

eThe Streamlined agreement, and why it matters to us

Twenty-four states have joined a voluntary compact called the Streamlined Sales and Use Tax Agreement, begun in 2000. Members conform their law: the state administers all local taxes, definitions are uniform, rates change only at the start of a quarter, and each state publishes a taxability matrix and free rate-and-boundary files updated every quarter.

Those files are the only free, official rate data in the country. They cover 24 states. The big economies — California, Texas, New York, Florida, Illinois, Pennsylvania, Massachusetts, Colorado, Arizona, Louisiana — are not members.

The part that matters commercially is the Certified Service Provider. A CSP is an agent certified to do all of a seller’s sales-tax work. The current list is AccurateTax, Avalara, Avior, Sovos and TaxCloud.

For a seller with no people or property in a member state, the state pays the CSP, not the seller. The state also carries the liability for a wrong rate. The state pays the provider 5 per cent of the first 500,000 dollars of tax and 2 per cent above that.

So calculation, returns and remittance can be free in half the country. That makes “integrate a certified provider” the cheapest possible route into the United States.

The engines, with their published prices:

• Avalara — market leader for mid-market and ERP, and a certified provider. Package pricing from 699 dollars; registrations 403 dollars per location.
• Vertex — enterprise, quote only.
• Sovos — enterprise, also European VAT and e-invoicing; quote only.
• TaxJar, owned by Stripe — 39 dollars a month for 200 orders, 99 for the professional tier.
• Stripe Tax — 0.5 per cent per transaction, or 50 cents per transaction through the API, with a complete tier from 90 dollars a month.
• Anrok — built for software sellers. 100 dollars per market per month, where each US state is one market and each Canadian province is one.
• Numeral — 75 dollars per filing plus 150 per registration.

The integration itself is eight steps, and they are the same for every engine:

• Validate the address at entry.
• Call for a calculation per quote, order, invoice or credit note, sending both addresses, the customer code, the exemption and a product tax code per line.
• Commit the transaction when the invoice is posted.
• Negate it against the original identifier on a credit note.
• Sync exemption certificates.
• Feed every sale, taxable or not, so the engine can watch the thresholds.
• Register per state, and record the permit number and filing frequency.
• Reconcile the engine’s liability report to the ledger before it files, and send purchase lines flagged for use tax as consumer-use documents.

Two rules inside that list are easy to get wrong. Calculations are date-effective, so a document must be recalculated whenever its date, address, items or customer change, and must never post with a stale figure. And a credit note reverses tax at the original rate in the original jurisdiction, by negating the original transaction — never by a fresh calculation at today’s rate.

19.12The United States: records, invoices and what the tax office can demand

There is no standard audit file in the United States. There is no e-ledger submission and no fiscal device. What the tax office can demand is set out in two revenue procedures, and between them they describe almost exactly what a hosted accounting product has to guarantee.

Revenue Procedure 98-25 governs the accounting database itself — what it calls machine-sensible records. It binds every taxpayer with assets of 10 million dollars or more, and every smaller one whose books exist only in software. That is everybody who uses an accounting package.

Its five operative demands:

• Keep the machine-readable records themselves, not printouts, for the whole assessment period.
• Keep the system documentation with them: record layouts, field definitions and a history of program changes.
• Give the tax office the resources to process the records.
• Tell the tax office promptly if records are lost, stolen, damaged or no longer capable of being processed, and propose a plan to restore them. Replacing a general ledger system is explicitly fine — as long as the old records stay retrievable.
• Accept that the tax office may test the system.

That fourth point is the sentence a hosted product must design around. If the hosting relationship ends, the client’s records must remain processable. The contract and the software must both guarantee a complete machine-readable export on termination: every journal, sub-ledger, master file, attachment and the data dictionary that explains them.

Revenue Procedure 97-22 governs scanned and imaged documents. It asks for reasonable controls over integrity and accuracy, reasonable controls to prevent and detect unauthorised creation, alteration or deletion, an inspection and quality-assurance programme, an index, and the ability to print a legible copy. Once a system meets those tests the paper may be destroyed.

One sentence in it is aimed straight at us: using a third party such as a hosting service “does not relieve the taxpayer of the responsibilities described in this revenue procedure”. The client stays responsible. The software has to make that responsibility keepable.

How long records must be kept is not a single number. It is derived from how long the tax office has to assess.

A hosted ledger should default to seven years and never purge an asset record while the asset is still on the register.

What an examination actually asks for is a set of extracts: the general ledger detail, the chart of accounts, the trial balance, the receivables and payables sub-ledgers, the fixed-asset register, the sales and purchase journals and the bank data — as delimited text or spreadsheets with a data dictionary, over a defined period.

A ledger that can export every journal, sub-ledger and master file as CSV with a field list, for a date range, satisfies this. That is a modest feature, and it is the whole American audit-file requirement.

There is a voluntary standard worth building toward. The accountants’ institute publishes Audit Data Standards, the nearest American equivalent to Europe’s SAF-T: a base standard plus general ledger, receivables, payables, inventory and fixed-asset layouts, delivered as pipe-delimited files. Producing the general-ledger detail and chart-of-accounts tables in that layout is a small job that makes the product credible in an American audit.

aThe invoice, and why the vendor record matters more

No federal law prescribes the content, numbering, language, currency or format of a commercial invoice. The Uniform Commercial Code governs the sale of goods and says nothing about invoice fields. Numbering need not be sequential or gap-free. Credit notes are unregulated. There are no QR codes, no fiscal codes, no mandatory identifiers.

What fixes invoice content instead is the buyer. Large buyers reject invoices without their purchase-order number, line numbers matching the order, unit of measure, ship-to and bill-to, remit-to bank details and payment terms. Net 30 is customary, and an early-payment discount written as “2/10 net 30” must be on the invoice to be enforceable.

The only public codification of the practice is the federal government’s own. Under the Prompt Payment Act a proper invoice to a federal agency must show the vendor name, invoice date, contract number, invoice number, description with the contract line number, price and quantity, shipping and payment terms, the taxpayer number, bank details for electronic payment, and a named contact with a telephone number. Agencies pay within 30 days and pay interest automatically when late — 4.75 per cent for the second half of 2026.

Selling to the federal government has its own plumbing. The Treasury runs a free Invoice Processing Platform used by more than 220 agencies; whether it is compulsory depends on the agency’s contract. The Department of Defense is compulsory: payment requests must go through its own system, and “facsimile, email, and scanned documents are not acceptable”.

The compliance-critical fields are on the vendor master. American tax rules reach the ledger through what a payer must report about what it paid, not through the invoice it received.

• Form W-9 collects the vendor’s legal name, business name, federal tax classification, address and taxpayer number, and a certification that it is not subject to backup withholding. The payer keeps it and never sends it in. The tax classification decides whether a 1099 is due at all — payments to corporations are generally exempt, except for legal fees and medical payments.
• TIN matching lets a payer check name and number pairs against the revenue service before filing: 25 at a time interactively, or a file of up to 100,000 with results in about a day. It is free.
• Backup withholding at 24 per cent becomes compulsory when the payee gives no number, gives an invalid one, or the tax office sends a mismatch notice. The payer then sends the payee a notice and must start withholding if no corrected W-9 arrives within 15 business days. The money is deposited separately from payroll and reported annually on Form 945.

So the vendor record in a US ledger is a compliance object: legal name, tax classification, number and its type, the W-9 date and image, the 1099 box, the backup-withholding flag and notice history, the W-8 form for foreign vendors, and the result of the last number check.

bElectronic invoicing, such as it is

There is no mandate, no clearance model and no real-time reporting. A US company may invoice on paper, by emailed PDF, through the customer’s portal, or over a network. The customer decides.

A voluntary network does exist. The Business Payments Coalition, facilitated by the Federal Reserve, ran a pilot in 2022 to prove a four-corner exchange model. In 2023 the Digital Business Networks Alliance took over as its governing body and calls it the US Open Exchange Network.

It is built from the same parts as Europe’s Peppol — AS4 messaging, SMP and SML discovery, UBL documents — but it is a separate network with its own registry, identifiers, certificates and document profiles. Its core invoice is UBL 2.3, not Peppol’s BIS Billing 3.0 on UBL 2.1. Several providers sit on both.

Membership costs between 250 and 9,000 dollars a year by headcount, plus 250 dollars per certificate. Certification takes about two months and requires successful test exchanges with three existing providers. Members include Chevron, ConocoPhillips, Microsoft and Halliburton; adoption is driven by large buyers in oil, gas and technology, and no volume figure is published.

The honest reading for us: nothing must be joined. If a customer asks for network delivery, integrate through a certified provider rather than becoming one.

19.13The United States: money

The United States runs five domestic payment rails and still writes nine billion cheques a year. There is no national payment reference. That last fact shapes more of an American ledger than any other single thing in this chapter.

ACH is the rail a ledger actually writes. It reaches every bank and credit-union account in the country and carries payroll, supplier payments and direct debits. Same-day ACH has three submission windows — 10:30 a.m., 2:45 p.m. and 4:45 p.m. Eastern — settling at 1:00, 5:00 and 6:00 p.m. The originating bank always has an earlier cut-off of its own.

The file format is unforgiving and completely public. It is fixed-width ASCII, every line exactly 94 characters, and the first digit of each line says what it is:

• 1 file header — the bank’s routing number, a date-time stamp, and the origin and destination names.
• 5 batch header — a service class code (200 mixed, 220 credits only, 225 debits only), the company name, the company identifier (usually “1” followed by the employer number), a description such as PAYROLL, and the effective entry date.
• 6 entry detail — a transaction code (22 checking credit, 27 checking debit, 32 and 37 for savings), the receiving routing number, the account number, the amount in cents, the receiver name and a trace number.
• 7 addenda — remittance information.
• 8 batch control — entry count, an entry hash formed by summing the first eight digits of the routing numbers, and debit and credit totals.
• 9 file control, then padding lines of nines until the file is a multiple of ten lines.

Four entry-class codes matter: CCD for business-to-business with one addenda, CTX for business-to-business carrying up to 9,999 addenda of structured remittance, PPD for payroll and consumers, and WEB for internet-authorised consumer debits.

Direct debit is ACH in reverse, and the rules put the paperwork on the originator. The authorisation must be kept for two years after it ends. A consumer has 60 days to return an unauthorised debit; a business has two banking days. The ledger must store authorisations and handle return codes — R01 insufficient funds, R02 account closed, R10 unauthorised — with reversal entries.

Account identifiers. The routing number is nine digits with a check digit computed from the first eight using the weights 3, 7 and 1 repeated, summed modulo 10. About 22,000 are active and lookup is free. Account numbers have no standard length, format or check digit, so the ledger validates the routing number, stores the account number as a string, and masks it at rest. There is no IBAN.

Cheques are still a business instrument. The average American cheque is worth more than 2,600 dollars. A US ledger must print them with a magnetic character line, in three-per-page and voucher formats, export a positive-pay file so the bank can reject forgeries, and handle manual, stale and voided cheques.

A large share of supplier payments now goes by single-use virtual card number instead. The supplier keys it in and pays the card fee; the payer earns a rebate. Card-settled payments are reported by the card processor on Form 1099-K, so the payer must exclude them from its own 1099 totals — which means the ledger has to know how each bill was paid.

Bank statements come in three shapes, and a US ledger needs all three plus a live feed:

• BAI2 — the corporate cash-management format, comma delimited, with record codes 01 file header, 02 group header, 03 account, 16 transaction detail, 49 account trailer, 88 continuation, 98 and 99 trailers. Amounts carry implied decimals and take their sign from a three-digit type code.
• OFX, and its Intuit flavours QFX and QBO — what the “download to Quicken or QuickBooks” button produces. The QBO variant needs a bank identifier issued by Intuit.
• CSV — every bank portal exports it, in a three-column shape (date, description, amount) or a four-column one (date, description, credit, debit), with American month-day-year dates.

Open banking is in a strange state. The Consumer Financial Protection Bureau made a rule under section 1033 requiring banks to hand account data to the customer and to authorised third parties, free of charge, through a developer interface. It was published on 18 November 2024 and took effect on 17 January 2025, with compliance phased from 1 April 2026 for the largest banks down to 1 April 2030 for the smallest, and an exemption below 850 million dollars of assets.

Then the bureau announced it would revisit its own rule. It published a reconsideration notice on 22 August 2025 asking whether banks should be allowed to charge fees. A replacement proposal was scheduled for July 2026 and, as of September 2026, has not appeared.

So the rule is formally in force, its first compliance date has passed, its enforcement is uncertain and a rewrite is pending. The practical position for a ledger: keep using aggregators, and do not build on the assumption of free mandated bank APIs.

The aggregators are Plaid, MX, Finicity and Yodlee. None publishes per-product prices; Plaid offers a free sandbox and 200 live calls per product before you must talk to sales. Market practice for an accounting product is a few dollars per connected account per month, or the cost buried in the subscription.

One more absence: there are no statutory payment terms and no statutory late interest for private trade. Late fees are contractual, and subject to state usury law. Only federal agencies are bound to 30 days.

19.14The United States: payroll, and the returns the books generate

American payroll is a deposit calendar, not a monthly return. Tax withheld from wages must reach the Treasury within days of the payday, and the schedule depends on how big the employer was two years ago.

The deposit rule. An employer looks back at the twelve months from 1 July two years ago to 30 June last year. If its payroll tax was 50,000 dollars or less it is a monthly depositor and pays by the 15th of the following month. Above that it is a semiweekly depositor: paydays from Wednesday to Friday are due the following Wednesday, paydays from Saturday to Tuesday the following Friday.

On top sits a next-day rule. Accumulate 100,000 dollars of liability on any single day and it must be deposited by the next business day — and the employer becomes semiweekly for the rest of that year and all of the next.

So a payroll module cannot compute liability per month. It must compute it per payday and produce a deposit calendar.

The returns. Form 941 is quarterly, due 30 April, 31 July, 31 October and 31 January, with ten extra days if every deposit was on time; semiweekly depositors attach a Schedule B showing liability by day. Form 940 is the annual unemployment return, due 31 January, with quarterly deposits whenever accumulated tax passes 500 dollars.

Form 940 has a trap. When a state has borrowed from the federal unemployment fund and not repaid, its employers lose part of the credit. For 2025 California employers paid 1.8 per cent instead of 0.6, and the Virgin Islands 4.5 per cent extra. For 2026, decided on 10 November 2026, California could reach 5.3 per cent. The payroll module needs a per-state credit-reduction table refreshed every November.

Form W-2 goes to the employee and to the Social Security Administration — not the revenue service — by 31 January. Filing is through Business Services Online, either keyed in up to 50 at a time or uploaded as an EFW2 fixed-length file.

The W-2 needs, per employee: wages, federal withholding, Social Security and Medicare wages and tax, tips, dependent care, a set of coded items in box 12 for retirement deferrals, health savings accounts, group life and employer health cost, flags in box 13, and state and local wages and withholding. In other words the payroll module needs a coded dictionary of earnings and deductions mapped to W-2 boxes.

Two new codes arrived for 2026. The 2025 tax act created deductions for tips and for overtime, so qualified tips and qualified overtime must be reported separately on the W-2 from tax year 2026.

Every new hire must be reported to a state directory within 20 days with seven data elements. There is no federal payslip law, but most states require a wage statement showing hours, rate, gross, itemised deductions and net — so the payslip layout must be state-configurable.

State payroll is a second, larger problem. Forty-two states and the District of Columbia tax income; eight do not. Every taxing state has its own withholding certificate, its own tables, its own deposit frequency, its own reconciliation return, its own W-2 filing and its own employer number. Some cities and counties tax income too — Pennsylvania municipalities and school districts, Ohio cities, Indiana counties, Maryland counties, New York City.

Every state also runs unemployment insurance with its own experience rate and its own wage base, and files quarterly wage reports in a state-specific layout. Many run disability or paid-family-leave contributions on top: California, New Jersey, New York, Rhode Island, Hawaii, Washington, Massachusetts, Connecticut, Oregon, Colorado, Maryland, Delaware and Minnesota among them.

That is why almost no American small-business ledger computes payroll itself. The market embeds a payroll service — Gusto, ADP, Paychex or Intuit — and the ledger takes the journal import and keeps the liability accounts. That is the sensible route for us too.

aThe 1099, and the deadline that closes an era

Information returns are where an American ledger earns its keep. The payables module must total calendar-year payments per vendor number across every bill and payment method, exclude anything settled by card, and split the result by box.

• Form 1099-NEC for payments to non-corporate contractors. The threshold rose from 600 to 2,000 dollars for payments made after 31 December 2025, and is indexed after 2026. Due to the tax office and to the recipient by 31 January, with no extension.
• Form 1099-MISC for rents, prizes and medical payments at 2,000 dollars, royalties at 10 dollars, and gross proceeds paid to lawyers at 600 dollars. To the recipient by 31 January, to the tax office by 31 March if filed electronically.
• Form 1099-K is filed by the card processor or platform, not the merchant, above 20,000 dollars and 200 transactions. The merchant must be able to reconcile that gross figure — before fees, refunds and sales tax — to recorded revenue.

Ten returns and you must file electronically. The threshold fell from 250 to 10 in 2024, counted across all types together. Practically every business with a few contractors and employees is now over it.

The filing system is IRIS, which is free and offers two channels: a portal that takes manual entry or a CSV of up to 100 returns, and a machine interface that takes XML in transmissions of up to 100 megabytes. Both need a transmitter control code.

The legacy system closes. Its last filing day is 19 November 2026 at 3 p.m. Eastern. From 1 January 2027 IRIS is the only way to file information returns electronically. Existing filers must obtain a new code to file tax-year 2026 returns.

The penalties explain why this matters. For tax-year 2026 forms: 60 dollars per return if corrected within 30 days, 130 dollars if corrected by 1 August, 340 dollars otherwise — and the same schedule applies again to the copy owed to the recipient. One missed 1099 costs 680 dollars. Intentional disregard is the greater of 690 dollars per return or 10 per cent of the amount, with no cap.

bThe income tax the books must anticipate

Company tax is a flat 21 per cent, with no small-company rate. Owners of pass-through businesses instead deduct 20 per cent of qualified business income, a deduction made permanent in 2025, with 2026 thresholds of 201,750 dollars for a single filer and 403,500 dollars jointly.

Estimated tax has four dates: individuals pay on 15 April, 15 June, 15 September and 15 January; corporations on the fifteenth day of the fourth, sixth, ninth and twelfth months. Everything is paid electronically, and payments must be scheduled by 8 p.m. Eastern the day before they are due.

Depreciation is where book and tax genuinely diverge, so the fixed-asset register must run two sets of numbers and carry the difference into the book-to-tax reconciliation. The tax rules for 2026:

• Recovery classes of 3, 5, 7, 10, 15 and 20 years for equipment, 27.5 years for residential rental property and 39 years for other buildings, with half-year, mid-quarter and mid-month conventions.
• Immediate expensing under section 179 up to 2,560,000 dollars, phased out above 4,090,000 dollars of additions, with a 32,000-dollar cap for large vehicles.
• 100 per cent bonus depreciation, made permanent for property acquired after 19 January 2025.
• A small-item threshold: anything up to 2,500 dollars per invoice may simply be expensed by annual election. That is the number a ledger’s capitalisation setting should default to.

Some expenses are not deductible, and the ledger should know which. Tagging them at the account level makes the reconciliation automatic instead of a year-end scramble.

Losses carry forward for ever, never back, and are capped at 80 per cent of taxable income. Individual owners face a separate cap on business losses — 256,000 dollars for 2026, or 512,000 jointly — with the excess becoming a carried-forward loss.

Payments to foreign vendors are the one place American withholding bites: 30 per cent on US-source dividends, interest, royalties and services performed in the country, reduced by treaty on a W-8 form and reported on Form 1042-S. A ledger serving clients with foreign suppliers needs a W-8 field and that export.

Finally, the trial balance has to leave. Every American tax-preparation suite imports a trial balance and maps each account to a return line through a tax code on the account — UltraTax, Lacerte, ProSeries, Drake and CCH all work that way. The common denominator is a CSV of account number, name, debit, credit and tax-line code. An accountant taking over a client will also ask for “a QuickBooks file”, which in practice means an IIF or CSV export of the lists and the general-ledger detail.

19.15The four systems side by side

Everything above, compressed into one table, with Europe in the first column so the last chapter can be read against this one.

Three rows of that table are worth restating, because they are what a reader should carry away.

The United States is the easiest to enter and the hardest to serve. Nothing is compulsory, so nothing blocks us. But sales tax cannot be done without buying an engine, payroll cannot be done without buying a service, and there is no payment reference to match on.

Australia is the best fit for what we already are. One tax, one rate, one return, a statutory invoice we can produce today, and a payment file simpler than Europe’s. The obstacle is not accounting; it is hosting.

Canada is the one that constrains the architecture. Its records rule is the only hard data-residency requirement in this survey, and it applies to every customer from the first day, not only to those who want the software to talk to the tax office.

19.16Where our ledger stands

The same four marks as the rest of the book. have means the feature works today. partial means the substance exists somewhere in our family of products but not where a customer in these countries would need it. build means it is absent and a business in one of these countries needs it. skip means it is absent and we should leave it that way.

19.17What to build, in order

Nine items. They are ordered by how many of the four markets each one unlocks, not by how interesting they are. Items one, two and three are shared with the European build list and should be built once for all of them.

1Hosting in a chosen region

This is first because it is the only item that is a hard gate rather than a feature. Canada requires the records, or a readable copy of them, to be in Canada. Australia’s tax office expects data onshore by default from any product that connects to it. New Zealand requires either the taxpayer’s approval or ours.

The work is to make a tenant’s database and document store placeable in a named region, to be able to say which region a tenant is in, and to put that answer in the terms of service. A scheduled full export delivered to a customer-controlled location is the cheaper interim answer for Canada, and it should be built either way — it is the same export item four needs.

2Structured addresses, everywhere

Already on the European list for the November 2026 payment-file deadline. These countries widen the payload rather than change it: a ship-from and a ship-to per document plus a use address for services, a validated street address with a geocode for the United States, and a tax province per line for Canada.

The order header must stop collapsing these into one field. Everything in the American sales-tax section depends on it.

3An immutable journal and a real audit trail

Also already on the European list. Three more jurisdictions want it: Australia’s record rule plus its criminal ban on sales-suppression software, the American revenue procedures’ controls against unauthorised alteration or deletion, and Canada’s circular requiring an audit trail linking source documents to postings.

Append-only postings, reversal instead of edit, a timestamped change log, period locking after a return is filed, and twelve months of access logs — that last number comes from Australia’s security framework.

4The packaged export

Every tax office in this chapter asks for the same thing in different words: the records, machine-readable, with a description of what they are.

Build one export that produces every journal, sub-ledger and master file as CSV for a date range, with a data dictionary and a system description. Add the American audit-data layout for the general ledger and chart of accounts as a second output of the same job. This satisfies the American revenue procedure, the Australian ruling, the Canadian circular and the New Zealand approval conditions at once, and it is the item that makes leaving our product safe — which is itself a sales argument.

5The three bank-file writers and the statement importers

ABA for Australia, Standard 005 for Canada, Nacha for the United States. All three are fixed-width, all three are fully specified in this chapter, and all three need a profile per bank because every bank has a dialect.

On the import side: the OFX family, BAI2, and per-bank CSV profiles. Then one aggregator adapter — a Consumer Data Right representative arrangement for Australia, Flinks for Canada, Plaid for the United States — behind a single interface.

And with it, the matching engine that works without a reference: amount, remitter name, short reference, cheque number, emailed advice, with tolerance rules.

6Cheque printing

Unglamorous and unavoidable. A magnetic character line, three-per-page and voucher layouts, a positive-pay export, post-dated cheques, stale and void handling. Twenty-four trillion dollars a year in the United States and 2.7 trillion in Canada travel this way, and Australia keeps it until 2028.

7The tax-code layer, per country

One mechanism, three configurations. Every sale and purchase line carries a classification; the classification maps to a report line; the report line lands on a return.

Australia is the easiest and should be first: a set of GST codes mapping to BAS labels, the cash and accrual attribution rules, and the Simpler BAS output of three figures. Canada is next: a date-effective rate table per province, separate federal and provincial status per item, the place-of-supply rules, and the credit documentary tiers enforced on the purchase side.

The United States is not this shape at all and belongs in item eight.

8The sales-tax engine adapter

One interface with five operations — calculate, commit, negate, consumer-use, resolve address — behind which any engine can sit. Store the engine’s transaction identifier and the full per-jurisdiction breakdown on the posted document. Recalculate whenever the date, address, items or customer change, and refuse to post on a stale figure. Negate against the original identifier on a credit note.

Around it: a product tax code on every item, a nexus registry per state with permit number and filing frequency, the certificate store, the threshold monitor, and a per-state return summary that reconciles to the ledger before the engine files.

Start with one engine. Design so a second can replace it.

9The country-specific small things

Each of these is a week or two, and each is the thing that makes an accountant in that country believe the product was built for them:

• Canada: a GIFI code on every account, the six mandatory totals checked, and a code-and-amount export the tax software imports. Plus the bilingual invoice template with French as the default.
• Australia: business-number validation against the free register including the GST registration date, the no-business-number payment block above 75 dollars, the franking account, and Division 7A shareholder loans with the benchmark rate.
• United States: the vendor master as a compliance object, the information-return aggregation behind it, and the trial balance with a tax-line code.
• All three: book and tax depreciation side by side, since the three tax regimes differ from each other and from the books.

Payroll is deliberately not on this list. In all three countries the answer is a payroll service and a journal import, and the next section says why.

19.18What we will not build

A survey this long produces a long wish list. Most of it should be refused. Here is what we are deliberately not doing, and why.

A sales-tax rate table. Twelve and a half thousand jurisdictions, nine hundred changes a year, rooftop geocoding, a taxability matrix per product per jurisdiction. No accounting vendor in the world maintains this, including the largest. We integrate an engine behind an adapter and we never ship rates.

American payroll calculation. Federal tables plus fifty-odd state tables, each with its own certificate, deposit calendar, wage base, unemployment rate and quarterly report, changing every January and often mid-year. The market answer is a payroll service and a journal import. We take the journal import.

Direct filing to any revenue agency. Every one of them requires a vendor to be registered, tested and certified before it may transmit: an authorised e-file provider in the United States with fingerprinting and a 45-day suitability check, a digital service provider agreement in Australia, software certification in Canada. Each is a per-country, per-form-family, per-year commitment. We produce the file; someone else transmits it.

Quebec’s sales recording module. It is a certified fiscal device for restaurants, bars and passenger transport. It is the only such requirement in North America, it is a hardware-and-certification project, and it serves a sector we do not sell to. If a Quebec restaurant ever asks, the answer is a certified point-of-sale partner.

Our own e-invoicing network membership. Australia’s Peppol access points and the American network’s certified providers both exist, both are cheap to buy and both are expensive to become. We integrate one. The chapter on Europe reached the same conclusion for the same reason.

Bank connections built one bank at a time. Open banking in all three countries is either in flux, expensive to join, or both: an accredited data recipient in Australia, a framework still being stood up in Canada, and a rule under reconsideration in the United States. Aggregators exist in every market. We buy the feed.

A second general-ledger core per country. Everything in this chapter is configuration or an output format. None of it is a different way of keeping double-entry books. The moment a country requirement starts asking for a parallel posting engine, we have misread it.

19.19Glossary

19.20Sources