Trailing by ten points at three-quarter time, the Aussies came out firing in the fourth period to spark themselves to a 21-4 run.
Dragan Elkaz (22 points on 3-9 long range shooting) was the catalyst for the run but Canada were able to steel themselves thanks to the athletic play of Simi Shittu who finished with 22 points himself including two highlight dunks.
A Canadian dunk and three-point play from Rowan Barrett Jr. in the dying seconds proved to be the match-winner although Elkaz still had a chance on the buzzer that was blocked.
Coach Mark Watkins will take away a lot from Australian's first game as they struggled to deal with Canada's full-court press for most of the night while they also shot just 15-30 from the free-throw line.
In addition to that, a nervous start saw them trailing 0-10 as they coughed up the ball for five turnovers in as many minutes.
Samson Froling (15 points on 5-5 shooting) came off the bench to help pull the Aussies back into the contest in the second term while they showcased their restrictive team defence to hold Canada to just 5-20 shooting for the period.
The game was all tied up at the main break but a 26-16 third term from the Canadians turned the game on it's head and forced Australia to once again play catch up.
Alongside Elkaz and Froling, Callum Dalton was the third player to reach double-figures in scoring with 11 points and two blocks while Patrick Bines (nine points) and Tom Fullarton (eight points, seven rebounds) also contributed.
Watch a full replay of the game below and find the box score here.
The Australian men will continue their campaign against China on Saturday night at 10.15pm. Keep an eye on Basketball Australia's social media channels for links to the live-stream closer to tip-off.