Navigating Amazon Taxes and Fees in Canada: A Guide for Amazon Sellers

A recent study revealed that over half of Canadian Amazon sellers have been successful in generating annual revenue exceeding $50,000. To be precise, 54.5% of these sellers have reported an approximate annual revenue of more than $50,000, while 6.1% are new to the platform and haven't made any sales yet. 

These findings signify a positive growth trend for the e-commerce industry in Canada, as Amazon continues to be a popular choice for entrepreneurs seeking to build a successful online business. 

As the Canadian online marketplace continues to thrive, there is one aspect that often gets overlooked - taxes. Many online sellers are enamored with the large sums of revenue they generate, but fail to consider the tax implications. It's important for Canadian Amazon sellers to understand how to properly account for their taxes and fees when selling on the platform.

These taxes can be quite technical and intimidating for beginners, but fret not! We have compiled all the essential information you need to know to navigate this crucial aspect of online retailing.

In this comprehensive guide, we will delve into the nitty-gritty of who is accountable for paying these fees, what exemptions are available, and how much these taxes cost. Also, we will discuss other essential details regarding remitting taxes and obtaining necessary tax forms from Amazon Canada. 

So, whether you are a seasoned seller or just starting, keep reading to acquire a complete understanding of everything you need to know about taxes on this well-known e-commerce platform.

Amazon Taxes Canada

As one of the key players in the e-commerce sector, Amazon has created a strong foothold in Canada. Although operating under the regulations of the Canadian government, Amazon has enjoyed significant revenue, profits, and subscriber base growth in the country. 

Like every other organization that carries out business activities in Canada, Amazon is obligated to comply with various taxes and fees dictated by the Canadian government. These levies comprise federal and provincial sales taxes, and other miscellaneous duties.

The Canadian government has been relentless in ensuring that multinational corporations like Amazon comply with all the tax regulations. The government's scrutiny aims to prevent the loss of tax revenue for the country while ensuring that other businesses in Canada compete favorably.

As a result, the company's adherence to Canadian tax codes is a vital aspect since failure to do so would lead to severe penalties. However, there are complexities involved especially for an Amazon Seller.

For example, Goods and Services Tax (GST)/Harmonized Sales Tax (HST) requirements in Canada extensively differ from those in the United States, where Amazon has its headquarters. As you read on, we will get familiar with some of these complexities. 

Selling on Amazon Canada Taxes

If you are an Amazon Seller in Canada, you have certain tax obligations that you need to fulfill:

Amazon Seller Central Customs Taxes in Amazon Canada

Customs taxes, also known as tariffs, are taxes that are levied on goods that are imported into a country. These taxes are designed to protect domestic industries from foreign competition and to generate revenue for the government. 

The amount of customs tax that is levied on a particular product depends on the country of origin, the value of the product, and the type of product.

On the other hand, normal taxes refer to the taxes that individuals and businesses pay on their income, profits, and other sources of revenue. These taxes are used to fund government programs and services, such as education, healthcare, and infrastructure.

The main difference between customs taxes and normal taxes is that customs taxes are only applicable to goods that are being imported into a country, while normal taxes are applicable to all sources of income and revenue. 

Additionally, customs taxes are levied by the government on imported goods, while normal taxes are typically collected by the government from individuals and businesses. As an Amazon seller, you may be responsible for paying both customs taxes and normal taxes, depending on the nature of your business and the goods that you are importing and selling. 

It is important to be aware of the different types of taxes that apply to your business and to ensure that you are meeting all of your tax obligations to avoid any penalties or legal issues.

Provincial Sales Tax (PST)

Depending on the location, the PST might be merged with the Goods and Services Tax (GST) to create the Harmonized Sales Tax, or it might exist on its own. For instance, within the confines of Ontario, the PST joins forces with the GST.

However, in other provinces such as Alberta, only the GST comes into play. As an Amazon seller, you need to understand that you might be obligated to collect and remit PST on the items that your customers purchase if they reside in any of the PST-levying provinces.

In more practical terms, the PST works as follows: as a vendor, you must charge PST to your customers, just like GST. However, while the GST rate is uniform at 5%, the PST rate may vary. For example, British Columbia's PST rate stands at 7%, while Saskatchewan's PST rate is 6%. 

So, as an Amazon seller, you may have to apply two sales taxes depending on the province/territory where your customer lives - GST plus PST. This taxation system can make the pricing of your products more complicated, and difficult to compare with other sellers.

Additionally, not all products are taxable under the PST. PST in most provinces focuses on products that are considered as luxury or aren’t essential.  To make matters worse, each province has different regulations surrounding PST, which can be a labyrinthe to navigate. 

Making sure that you understand what is taxable under each province's PST regime can be a difficult yet critical exercise as an Amazon seller. Furthermore, as an Amazon seller, you have to be careful about your registration obligations regarding PST. You must register for and collect PST in specific circumstances (like when selling to buyers in PST-levying provinces). 

Amazon Seller Income Tax Canada

If you're an Amazon seller operating your business as a sole proprietor or a partnership, you'll need to pay heed to Amazon Seller Income Tax. This is a tax that applies to the net income you make, which must be reported on your personal tax return and taxed at the individual tax rates.

As a seller on Amazon, it's critical to be aware of these tax obligations and any related laws and regulations, as they can impact your bottom line. You'll need to ensure that you're keeping accurate records of all sales revenue, expenses, and any other relevant financial information for your business.

By maintaining meticulous records and staying informed about the latest tax laws and regulations, you can help to ensure that you're paying the correct amount of Amazon Seller Income Tax and avoiding any unnecessary penalties or legal issues.

Amazon Covering Taxes to Ship From US to Canada

When you ship goods from the US to Canada as an Amazon seller, you may be responsible for paying both taxes and import duties on those goods. Taxes are levied by the Canadian government on goods that are imported into the country, and these taxes are typically calculated as a percentage of the total value of the goods being imported. 

These taxes are separate from import duties, which are fees charged by the Canadian government to protect domestic industries from foreign competition. Import duties are typically calculated as a percentage of the value of the goods being imported or as a fixed amount per unit.

If you use Amazon's Global Shipping Program (GSP) to ship your products from the US to Canada, Amazon will handle the customs process and pay the taxes and import duties on your behalf. 

This means that you do not have to worry about calculating or paying these fees yourself. However, it is important to note that Amazon's GSP service only covers certain products and may not be available for all sellers.

If you choose to handle the shipping process yourself, you will need to be aware of the taxes and import duties that apply to your products and ensure that you are complying with all Canadian customs regulations. 

You may wish to consult with a customs broker or other professional to help you navigate the complexities of the Canadian customs process and ensure that you are meeting all of your tax and duty obligations.

Amazon FBA Selling Taxes in Canada

Selling on Amazon Canada through FBA (Fulfillment by Amazon) involves a number of tax obligations that you need to be aware of as an Amazon seller. Here are some of the main taxes that you may be responsible for when selling on Amazon Canada through FBA:

Corporate Income Tax

Corporate income tax is a tax levied on the net income of corporations operating in Canada. As an Amazon seller, if you are operating your business as a corporation, you will be required to pay corporate income tax on your profits. 

The amount of the tax depends on the income earned by your business, and there are various deductions and credits that may apply to reduce your tax liability.

Payroll Taxes

Payroll taxes are taxes that employers must pay based on their employees' salaries and wages. These taxes include Canada Pension Plan (CPP) and Employment Insurance (EI) contributions. 

As an Amazon seller, if you have employees in Canada, you will be responsible for withholding and remitting payroll taxes on their behalf. The amount of the tax depends on the salary and wages earned by your employees.

Import Duties

Import duties are taxes imposed by the Canadian government on certain imported goods. The amount of the duty is based on the value of the goods being imported, as well as the country of origin. 

Import duties can be significant, particularly for goods that are imported from countries with which Canada does not have a free trade agreement. As an Amazon seller, you are responsible for paying any applicable import duties on goods that you import into Canada.

Excise Tax

Excise tax is a tax that is imposed on certain goods, such as tobacco and alcohol. The amount of the excise tax varies depending on the type of product being sold. You may be required to collect and remit excise tax on certain products, particularly if you are selling products such as cigarettes or alcohol.

Amazon Canada GST Taxes

The Goods and Services Tax (GST) is a value-added tax that is imposed on most goods and services sold in Canada. As an Amazon seller, you are required to collect and remit the GST on products sold to Canadian customers. 

The current GST rate in Canada is 5%, which is applied to the selling price of the product before any other taxes or fees are added. The GST is charged to customers at the point of sale, and it is the responsibility of the seller to ensure that the tax is collected and remitted to the Canada Revenue Agency (CRA) on a timely basis. 

Failure to do so can result in penalties and interest charges. It is important to note that certain goods and services may be exempt from GST, such as basic groceries, prescription drugs, and certain medical devices.

Harmonized Sales Tax (HST)

The HST is a combined federal-provincial sales tax that applies in some provinces, which combines the GST with provincial sales tax. The provinces that have implemented the HST include New Brunswick, Ontario, Labrador, Newfoundland, Prince Edward Island and Nova Scotia.

The HST is collected and remitted by businesses operating in these provinces, including Amazon sellers. The current HST rates vary depending on the province, ranging from 13% in Ontario, to 15% in Nova Scotia, New Brunswick, Newfoundland and Labrador.

Who is Responsible For Duties and Taxes When Selling on Amazon Into Canada

When selling on Amazon into Canada, the responsibility for paying duties and taxes on imported goods will depend on the shipping terms that you have agreed upon with your customer.

If you are selling goods on Amazon to Canadian customers and shipping the goods from outside of Canada, the import duties and taxes will generally be the responsibility of the customer. 

This means that the customer will be responsible for paying any applicable duties and taxes to the Canadian government when the goods arrive in Canada. However, if you are selling goods through Amazon's FBA (Fulfillment by Amazon) program, the responsibility for paying duties and taxes may be different. 

In this case, Amazon acts as the importer of record and assumes responsibility for paying any applicable import duties and taxes on your behalf. Amazon will then charge you for these duties and taxes as part of their FBA fees.

It is important to note that even if Amazon assumes responsibility for paying duties and taxes through their FBA program, you are still responsible for complying with all other Canadian tax regulations, such as GST/HST and income taxes. 

Additionally, if you are using Amazon's Multi-Channel Fulfillment (MCF) service to fulfill orders from other channels, you will still be responsible for paying any applicable import duties and taxes on those orders.

Amazon Seller Forum Remitting Canada Taxes

Remitting taxes on your sales in Canada is an important part of selling on Amazon, and Amazon provides a platform called the Amazon Seller Forum to help sellers navigate Canadian tax requirements.

To help sellers with tax compliance, Amazon provides access to the Amazon Seller Forum, where you can find information on Canadian tax requirements, ask questions, and receive support from other sellers and Amazon's Seller Support team. 

You can also find resources such as tax guides and tutorials on the forum. Additionally, Amazon offers a Tax Calculation Service (TCS) for Canadian sellers, which automatically calculates and collects GST/HST on orders shipped to Canadian customers, and remits the tax to the Canadian government on the seller's behalf. 

How Much is Amazon's Fee Tax?

Amazon charges several different types of fees to sellers, and the amount of tax that you pay on these fees will depend on the specific fee and the jurisdiction in which you are selling.

In general, most fees charged by Amazon to sellers are subject to Goods and Services Tax (GST) or Harmonized Sales Tax (HST) in Canada. These taxes are based on the province or territory where the seller is located and where the goods are being shipped.

The amount of tax that you pay on Amazon's fees will also depend on whether you are registered for GST/HST and whether you are eligible for input tax credits. Input tax credits allow you to recover the GST/HST that you pay on business expenses, including fees charged by Amazon.

Amazon's fees can include referral fees, fulfillment fees, storage fees, and other charges. Referral fees are a percentage of the sale price of each item sold, and are charged for each item sold on Amazon's platform. 

Fulfillment fees are charged for each item that is fulfilled through Amazon's FBA program. Storage fees are charged for each unit of inventory that is stored in Amazon's fulfillment centers for more than a certain period of time.

It is important to keep track of all of the fees charged by Amazon and the taxes that you are required to pay on those fees. You should consult with a tax professional or use Amazon's tax calculation tools to ensure that you are accurately calculating and remitting taxes on your sales and fees.

Does Amazon Include Tax in The Price

Whether or not tax is included in the price of items sold on Amazon will depend on the specific item and the seller. In Canada, sales tax (either the Goods and Services Tax (GST) or the Harmonized Sales Tax (HST)) is generally not included in the list price of an item on Amazon. 

The tax is added to the price of the item at the time of purchase, based on the location of the seller and the buyer. However, Amazon's Tax Calculation Service (TCS) is available to Canadian sellers who use the Amazon platform to sell their products. 

The TCS automatically calculates and collects GST/HST on orders shipped to Canadian customers, and remits the tax to the Canadian government on the seller's behalf. If a seller uses the TCS, then the tax will be included in the price of the item at checkout.

It is important for sellers to clearly state whether or not tax is included in the price of their items in their product listings. Failure to accurately disclose the amount of tax charged can result in legal and financial consequences.

How Much is Tax on Products in Canada?

The amount of tax on products in Canada will depend on the specific province or territory in which the purchase is made. Canada has two main types of sales taxes: the Goods and Services Tax (GST) and the Harmonized Sales Tax (HST).

The GST is a federal tax of 5% that is applied to most goods and services sold in Canada. The HST is a combined federal-provincial tax that ranges from 13% to 15%, depending on the province or territory.

Currently, five Canadian provinces (New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, and Prince Edward Island) have HST, while the remaining provinces and territories have GST (except for Alberta, which has no provincial sales tax).

For example, in Ontario, the HST rate is 13%, while in British Columbia, the GST rate is 5%. In Quebec, the GST rate is 5% and the provincial sales tax (PST) rate is 9.975%, for a combined sales tax rate of 14.975%.

It is important to note that some products and services may be exempt from sales tax or subject to a reduced tax rate. For example, certain groceries, prescription drugs, and medical devices are exempt from GST/HST in Canada.

Amazon Tax Exempt Canada

Amazon offers a tax exemption program in Canada for eligible organizations that are exempt from paying sales tax. This program is called the Amazon Tax Exemption Program (ATEP).

The ATEP is designed for qualifying organizations, such as government agencies, schools, and non-profit organizations, that are exempt from paying the Goods and Services Tax (GST) or the Harmonized Sales Tax (HST) in Canada. 

Eligible organizations must provide Amazon with a valid tax exemption certificate or registration number from the Canada Revenue Agency (CRA). Once an organization has been approved for the ATEP, they can make tax-exempt purchases on qualifying items sold by Amazon in Canada. 

However, it is important to note that not all items sold on Amazon are eligible for tax exemption. Some products are subject to specific regulations and may not qualify for tax exemption.

To participate in the ATEP, eligible organizations must first register for an Amazon Business account and submit the required tax exemption documentation to Amazon. Once approved, the tax exemption will be automatically applied to eligible purchases made through the organization's Amazon Business account.

How Do I Get My Tax Form from Amazon?

If you are a seller on Amazon and need to obtain your tax form, you can do so by logging into your Amazon Seller Central account and following these steps:

1. Log into your account.

2. Then click on 'Account Settings' in the top right corner of your screen. 

3. Scroll down to 'Payment & Tax Information.'

4. After which you should find a button labeled 'Find Forms'. Click it.

5. Download any relevant documents required for taxation purposes.

It is important to note that not all sellers on Amazon will receive a tax form. In the United States, for example, sellers who have processed less than $20,000 in sales and fewer than 200 transactions in a calendar year will not receive a 1099-K form. 

However, they may still be required to report their income to the Internal Revenue Service (IRS) and file taxes accordingly. If you are having trouble accessing your tax form through Amazon Seller Central, you can also contact Amazon customer support for assistance. 

Additionally, it may be helpful to consult with a tax professional or accountant to ensure that you are meeting all of your tax obligations as a seller on Amazon.

Amazon Canada Tax Calculator

Amazon Canada does not have an official tax calculator. However, there are several online tax calculators available that can help you estimate the taxes you will owe on your Amazon sales in Canada.

One option is the Intuit’s TurboTax, which is popular among Canadian taxpayers. The TurboTax tax calculator allows you to input your income, deductions, and credits to estimate your federal and provincial tax liability.

TurboTax also offers a "Self-Employed" version that can be helpful for Amazon sellers who operate as sole proprietors or are otherwise self-employed. This version includes additional features and guidance specifically designed for self-employed individuals, such as the ability to import your business income and expenses from platforms like Amazon.

Also, there is another application called the Income Tax Calculator, which allows you to enter your income, deductions, and province or territory of residence to estimate your federal and provincial taxes. 

This calculator can help you determine your income tax liability as a seller on Amazon, but it does not take into account any sales tax or other fees associated with selling on the platform. 

It's important to note that tax calculators like TurboTax are only estimates and should not be relied on as a substitute for professional tax advice. 

As an Amazon seller, you can make the task of tackling taxes a whole lot easier with PayTraQer. Automatically import your transactions from Amazon and let this innovative tool do all the hard work for you by categorizing them for accurate tax reporting! Plus, integrating seamlessly with QuickBooks allows financial management without manual intervention - simple yet powerful!

FAQs

Do I Need a Tax Number to Sell on Amazon from Canada?

Yes, if you are selling on Amazon from Canada, you will need to obtain a tax number, such as a Business Number (BN) or a GST/HST number, depending on your sales volume and the type of products you are selling.

If you are operating your Amazon business as a sole proprietorship or a partnership, you can use your Social Insurance Number (SIN) as your tax number. However, if you are operating as a corporation or a limited partnership, you will need to obtain a Business Number (BN) from the Canada Revenue Agency (CRA) to register your business.

If your sales exceed $30,000 in a 12-month period, you will also be required to register for a GST/HST number and collect and remit the applicable sales tax on your sales. Even if your sales are below this threshold, it may still be beneficial to register for a GST/HST number to take advantage of input tax credits for expenses related to your Amazon business.

Is There Tax on Amazon Prime Membership Canada

Yes, there is tax on Amazon Prime membership in Canada. As with most goods and services sold in Canada, the federal Goods and Services Tax (GST) of 5% applies to the cost of Amazon Prime membership, as well as any applicable provincial sales tax (PST) or harmonized sales tax (HST), depending on the province in which you reside.

For example, if you live in Ontario, where the HST rate is 13%, you would be charged 13% HST on the cost of your Amazon Prime membership in addition to the 5% GST.

It's important to note that while Amazon Prime membership is subject to tax in Canada, the specific amount of tax charged may vary depending on the province or territory in which you reside. 

Additionally, tax laws and regulations can change over time, so it's always a good idea to consult with a tax professional or refer to the Canada Revenue Agency (CRA) website for up-to-date information on tax requirements for Amazon Prime membership and other purchases.

Do You Pay Taxes on Amazon Canada?

Yes, if you are a Canadian resident who purchases products on Amazon Canada, you will generally be required to pay taxes on your purchases, including federal Goods and Services Tax (GST) or Harmonized Sales Tax (HST), as well as any applicable provincial sales tax (PST).

The amount of tax you pay will depend on the specific product you are purchasing, the province or territory in which you reside, and the applicable tax rates in that province or territory. In general, GST or HST is applied to most goods and services sold in Canada, with the exception of certain exempt or zero-rated products, such as basic groceries or prescription medications.

It's important to note that while Amazon Canada collects and remits taxes on behalf of its third-party sellers, it is ultimately the responsibility of the individual seller to comply with Canadian tax laws and regulations. 

As a buyer on Amazon Canada, you can view the amount of tax charged for each purchase on your order details page, and you should also receive a tax invoice or receipt from Amazon for your records.

Is There No Tax Charged on Amazon Orders?

It is not accurate to say that there is no tax on Amazon orders in Canada. All orders placed on Amazon in Canada are subject to sales tax, which is either the Goods and Services Tax (GST) or the Harmonized Sales Tax (HST), depending on the province or territory in which the purchase is made.

The amount of tax charged on an Amazon order will depend on the type of product being purchased and the applicable tax rate for the province or territory. For example, in Ontario, the HST rate is 13%, while in British Columbia, the GST rate is 5%. Some products may also be exempt from sales tax or subject to a reduced tax rate, such as certain groceries, prescription drugs, and medical devices.

It is possible that a customer may not have been charged sales tax on an Amazon order if they were eligible for a tax exemption or if the order was shipped to a province or territory that does not charge sales tax, such as Alberta. However, this would be an exception rather than the rule.

In general, it is important to be aware of the applicable sales tax rate when making purchases on Amazon in Canada, as it will be added to the order total at checkout. If there are any questions or concerns about the amount of tax being charged on an order, it is recommended to contact Amazon customer support or consult with a tax professional.