What petty cash is for
A petty cash fund covers small, occasional, in-person purchases. The business sets a fixed starting amount, often called a float, and one person is responsible for it. As cash is spent, the fund is replenished from the bank for exactly the amount spent, so the starting figure stays the same.
It is not a place for larger purchases, owner draws or personal spending. A larger cash flow is better run through the bank account, where the statement acts as a second record.
What records to keep
Cash leaves no bank trail, so the paperwork carries the whole load. The CRA says you are required to keep records that support your expense claims, and receipts should show the date, the seller, the buyer and a description of what was bought. For purchases of $100 or more before tax, the vendor’s business number is also expected if the vendor is a GST/HST registrant.
If a seller gives no receipt, the CRA says to write the seller’s name and address, the amount, the date and the details in your expense journal. Many businesses use a simple voucher for each payment, signed by the person who received the cash.
An illustrative example
Suppose, with round numbers, a business starts a $200 float. Over a month, vouchers and receipts show $60 on courier fees, $45 on cleaning supplies and $25 on coffee for a client meeting. Cash remaining should be $70. The owner withdraws $130 from the bank to restore the float, and each spent amount is coded to its own expense account.
If the count shows $65 rather than $70, the $5 difference should be recorded and explained rather than quietly absorbed. Repeated shortfalls are a signal to tighten controls. This example ignores sales tax.
Sales tax and what to discuss
If you are a GST/HST registrant, input tax credits need documentary evidence before you claim them. The CRA’s chart asks for more detail as the purchase gets larger: under $100 the supplier’s name, date and total, and from $100 the supplier’s registration number and an indication of the tax charged. Personal purchases are not eligible.
Ask your accountant how often to count and reconcile the fund, who should hold it, which expenses it may cover and how to record shortages. Keep petty cash separate from personal money, and bring the vouchers and receipts at each close.
Sources & editorial notes
Sources checked October 24, 2026. The examples are illustrative and provide general information. Discuss how the guidance applies to your circumstances with your accountant.
- Business recordsCanada Revenue Agency
- Input tax creditsCanada Revenue Agency
Rules and guidance can change. Use the current official source and confirm the treatment for your facts. To flag an error, contact Sora.