Do unpaid customer invoices count as income?
Unpaid Invoices and Business Income. Canadian tax guidance, practical records to gather and questions to resolve before preparing your return with Arsen Accounting.
Request a quote →Arsen Accounting Services · Prepared October 29, 2026
Self-employed expenses: 10 questions before filing · Browse the 100-article collection
The direct answer
Under the accrual method, income is reported when earned, not only when cash reaches your bank. Most self-employed businesses use that method. Farmers, fishers and self-employed commission agents may have a cash-method option under the rules. Delaying collection does not necessarily postpone the income-tax year. Your records need a list of amounts customers still owe at year-end.
Reconcile sales with receivables
A bank-deposit total does not necessarily equal business income under the applicable accounting method. Prepare a year-end list of invoices, credit notes and amounts still owed. Explain disputed bills and amounts collected after year-end. This lets the preparer reconcile the sales ledger with the books rather than treating every unpaid invoice as if it never existed.
Keep the original invoice history
Do not delete an unpaid invoice just to reduce a spreadsheet total. If it was cancelled, corrected or became uncollectible, document the reason and timing. Those are different events. Maintain a trail from the original invoice to later collections or adjustments so the tax treatment can be assessed against what actually occurred.
What to gather before the review
- Sales ledger and outstanding-invoice report
- Credit notes and later payment details
- Notes on disputes, cancellations and collection efforts
Can I report only deposits into my bank account?
That depends on the permitted accounting method. Many businesses use accrual accounting, so a deposit-only total can omit income or include amounts belonging to a different category or period.
Your next step
Prepare an aged receivables list and identify your established accounting method.
Related reading
Official sources
Sources checked for this collection on October 28–29, 2026. Annual forms may refer to a specific tax year. Use the rules and limits for the year being filed. General information; eligibility, elections and deadlines depend on the facts. No deduction or tax saving is guaranteed.
Let's discuss your tax needs.
Tell us the tax years, province and filing needs. Prepare a short quote inquiry or contact us directly to discuss availability and scope.
Email: elena@arsenaccounting.com
Phone: (647) 297-4126
Before you send
Please provide a brief description of the assistance you need. Do not email SINs, passwords, banking details or sensitive tax documents in your initial inquiry. We'll discuss an appropriate secure method of sharing documents if we proceed.
Information on this website is general and is not individualized tax advice. Engagements are subject to acceptance, agreed scope and applicable terms.