Updated Checked by the Tax-Services.ca editorial team How we check
To handle petty cash in a small Canadian business, keep a fixed float, pay out only against a receipt or a signed voucher, and top the float back up to the same amount each time. For purchases under $100, the CRA’s input tax credit documentation tiers only ask for the supplier’s name, the date and the total paid.
How big should the float be?
Small. Pick an amount that covers a normal month of tiny purchases, such as stamps, courier fees, a Timmies run for a client meeting, or a part from the hardware store. For a small office that’s often a couple of hundred dollars, though nothing sets a figure. If you’re refilling it every week, the float is too small or the spending shouldn’t be in cash at all.
One person holds it, in a locked box. Nobody else borrows from it, even for a day. That single rule prevents most of the arguments.
What goes on the voucher?
Every payout gets a slip with the date, the amount, what it was for, who took the cash and who approved it. Attach the receipt. No receipt? Write down why and have the owner sign, but treat that as rare. Cash with nothing behind it is hard to explain later, and you can’t claim it.
The CRA has its own minimums for sales tax, and they depend on the size of the purchase.
| Purchase total | Receipt must show |
|---|---|
| Under $100 | Supplier name, date, total |
| $100 to $499.99 | Plus the GST/HST charged and the supplier’s registration number |
| $500 or more | Plus a short description, buyer’s name and payment terms |
A petty cash fund is nearly always in the first row. Still, a $120 courier run lands in the second, and a receipt that lacks the registration number won’t support a credit if you’re a registrant.
How do you count and top up the float?
At a set time, weekly or every two weeks, count the cash and add the vouchers. Together they should equal the float. Here’s a real-looking month. The float is $200 and there are three vouchers from an Ontario business: $45.20, $28.25 and $67.80, all with HST included. The vouchers come to $141.25, so the box should hold $58.75. If it holds $55, you’re $3.75 out, and you write that down as a difference instead of quietly fixing it.
Then you write one cheque, or make one transfer, for $141.25 to bring the box back to $200. The accountant books each voucher to its proper expense, not the lump sum. One line for “petty cash” in the ledger hides everything.
What sales tax can you claim from petty cash?
If you’re a GST/HST registrant, the tax on those receipts can be an input tax credit. Take the $45.20 voucher. The HST reverse calculator pulls it apart into $40.00 of cost and $5.20 of HST. The other two vouchers give $3.25 and $7.80. So the whole batch carries $16.25 of tax. The CRA gives most registrants about four years to claim an input tax credit, but don’t wait that long.
Not every receipt carries tax. Some purchases are zero-rated or exempt, and some suppliers aren’t registered. The GST/HST calculator will show what a standard purchase should carry so you can spot a slip that looks off. Meals and other special cases have their own limits, and we didn’t verify them for this page, so check the CRA before claiming.
What goes wrong with petty cash?
Borrowing “just until Friday”. Paying staff wages or owner withdrawals from the box. Handling a large supplier bill in cash because the float happened to be full. Losing the receipts in a drawer.
Wages are the serious one. Pay to an employee is taxable, and it has payroll deductions. The payroll remittance calculator is the place to see what that should look like. Don’t hide it in a cash box.
Owner withdrawals belong on their own line in the books. And if the float keeps running empty, bring it into the budget. The budget calculator shows whether small cash spending is a real monthly number.
What happens when the count doesn’t match?
Small differences happen, usually a missed voucher or a wrong coin. Write the difference down, note the date and who counted, and carry on. A pattern is a different story: if the box is short $5 every week, change who holds it or how it’s checked. And if the shortfall is big, tell the owner the same day. Covering it quietly with your own money just hides the problem and makes the records wrong.
Is a petty cash box even worth having?
Sometimes not. If most of your small buys can go on a business debit or credit card, the bank statement does half the bookkeeping for you and nobody has to count coins on Friday. Petty cash earns its place when you need physical cash: a parking meter, a tip for a courier, a few bucks for stamps at a counter that doesn’t take cards. Keep it for those, and keep the amount small.
What does the log look like?
One sheet is enough. Columns for the voucher number, date, what it was for, the amount, the tax, who took it and who approved. At the bottom, a running balance and the day you counted. If someone asks what happened to $58.75 in March, the sheet answers it in a minute.
How long do you keep petty cash records?
Six years from the end of the last tax year they relate to, according to the CRA’s record-keeping pages. That covers vouchers, receipts and the count sheets. If you scan them, the CRA has conditions for when paper can go, so don’t shred on day one. Destroying records early without permission can lead to prosecution.
Where this information comes from
The documentation tiers, the four-year window and the six-year retention period come from the Canada Revenue Agency‘s GST/HST and record-keeping pages, read in 2026. The worked example uses the 13% Ontario HST rate in our calculator. Float sizes are a rule of thumb, not a legal figure.
Frequently asked questions
How much petty cash should a small business keep?
Enough for about a month of small purchases. For many offices that might be a couple of hundred dollars. The size isn't set by law.
What receipt do I need for a purchase under $100?
For GST/HST input tax credits the CRA asks for the supplier's name or trading name, the date and the total paid.
How long do I keep petty cash vouchers?
Six years from the end of the last tax year they relate to, per the CRA's record-keeping rules.
What if the count doesn't match the float?
Record the difference as a difference, find out why, and don't adjust quietly. Small gaps happen, repeated ones need a look.
Can I pay wages from petty cash?
It's a bad idea. Pay to employees has payroll deductions and remittances, which belong in the payroll process.
All family and benefits calculators
- Self-employed taxes in Canada: income, CPP and GST
How tax works when you are self-employed in Canada: reporting income and expenses, paying both halves of CPP, instalments and when to register for GST