Supporting Canadian Expense Requirements with Microsoft Dynamics 365 Business Central & DATABASICS Expense

Canadian organizations have long sought to find solutions that can automate their expense reporting and integrate with their existing accounting platforms and services. Federal directives, coupled with province-specific tax rates, multiple languages, and international travel, make managing the collection, reimbursement, and accounting of employee expenses an administrative burden and corporate liability.

Input Tax Credits (ITCs) for GST/HST, if missed or calculated incorrectly, can have a significant impact on the bottom line. 

As Canadian organizations migrate their accounting systems to the cloud, Microsoft Dynamics 365 Business Central (Business Central) offers a complete Enterprise Resource Planning (ERP) solution to support the accounting and recording of expenses and taxes. However, for a truly comprehensive solution, integrating a proven third-party expense reporting platform such as DATABASICS Expense is critical.

Canadian companies are caught in a tug-of-war between federal and provincial revenue agencies battling for enforcement rights, producing ever-changing requirements for taxes and compliance. These include:

MULTIPLE TAX TYPES

Organizations need to account for four types of taxes: 

Two provincial taxes:

• Provincial Sales Tax (PST) – A separate retail sales tax levied by British Columbia (7%), Manitoba (7%), and Saskatchewan (6%). Unlike GST/HST, PST is not a VAT and is not recoverable as an input tax credit.
• Quebec Sales Tax (QST) – A provincial VAT similar to the GST/HST, charged at 9.975% on top of the 5% GST and administered by Revenu Québec.

Two federal and harmonized taxes:

• Goods and Services Tax (GST) – The 5% federal tax applied to most goods and services across Canada.
• Harmonized Sales Tax (HST) – The combination of GST and the applicable provincial sales tax component, administered by the Canada Revenue Agency and dispersed to the provinces. HST rates vary by province: 13% in Ontario, 14% in Nova Scotia (as of April 1, 2025), and 15% in New Brunswick, Newfoundland and Labrador, and Prince Edward Island.

Since each province enforces a unique tax code, adherence can be challenging. What’s more, various types of expenses are taxed differently. For example, food is taxed in different ways, depending on whether it is eat-in or take-away and whether the drink is hot or cold. Therefore, an employer needs to collect a couple of different data points related to GST, HST, and PST when accounting for employee expenses, including the business amount (for write-off), and the sales tax type and amount (for recovery).

MULTIPLE LANGUAGES

With two official languages, Québec’s Charter of the French Language sets out detailed rules that regulate the language of computer software in Quebec, while English is the standard for software across most of Canada. According to Quebec law, all computer software, including gaming software and operating systems, whether installed or offered separately, must be available in French, unless no French version exists. 

MILEAGE TRACKING

Canada's mileage tracking requirements impose a different rate for reimbursement once a traveler has exceeded 5,000 km in a given year. 

For 2025, the prescribed rates are:

• $0.72 per kilometre for the first 5,000 km (provinces)
• $0.66 per kilometre for each additional kilometre (provinces)
• $0.76 per kilometre for the first 5,000 km (territories)
• $0.70 per kilometre for each additional kilometre (territories)

In addition to meeting government requirements, most organizations also have their own internal needs that should be addressed by their expense management solution. These include:

EASE OF USE
If a solution is too difficult to use, it will never be fully adopted by its intended users. Tools should include features that make ease of use a priority. These can include remote capabilities, automated tax tracking using OCR receipt and invoice management, multiple language support, mobile apps, and direct deposits for rapid reimbursement.

CORPORATE POLICY DEVELOPMENT & ENFORCEMENT
Every company has its own internal priorities and policies. Utilizing an expense management solution that allows for custom configurations such as approval workflows and notifications makes the expense and accounting process even more efficient. When this happens, businesses obtain necessary information and employees are reimbursed as quickly as possible.

INTERNATIONAL TRAVEL
International travel further complicates matters. For those users traveling internationally and working on billable projects, an expense management solution will need to handle integrated multi-currency support and foreign exchange rates automatically in order to maintain accurate records. For users outside of Canada, accounting for currency, language, data, formats, and expense type distinctions must be localized.

INTEGRATION
Integrating expense management and accounting practices is critical for optimizing workflows, validating compliance standards, and maintaining operational continuity. However, to maximize efficiency, businesses require tools and systems that are proven to work well together.

DATABASICS provides a full integration with Microsoft Dynamics 365 Business Central and Finance & Operations, offering: 

Automatically exporting transaction data, all relevant code structures, and employee information to Dynamics 365, DATABASICS's bi-directional data flow eliminates inconsistencies between the systems. 

Manage global requirements such as VAT, multi-currency, and multi-language support—critical for Canadian organizations dealing with GST, HST, PST, and QST.

• Support for multiple Canadian tax types and rates
• Multi-language capability (English and French)
• Automated mileage tracking with calendar-year thresholds
• OCR receipt capture for accurate tax code identification
• Mobile app for entry and approvals anywhere

• Enforce business policies with data and oversight
• Built-in DCAA compliance
• Support for regulatory reporting requirements
• GPS capabilities for geofencing and location verification

• Combined view of time and expenses
• Notifications of incomplete timesheets, missing approvals, and unapplied charges
• Budget tracking on all aspects of project and labor activities
• Complete audit trail of every action