What Sellers Need to Know About Amazon Sales Taxes in Canada
American Amazon sellers would be highly remiss to exclude our friendly neighbors to the north. Canada has nearly 40 million people and is one of the most technologically savvy countries on the planet. Suffice it to say a great many of them get their products on Amazon, and you as a seller can claim your slice of the Canadian market. Canadians love browsing and shopping online just as much (or more) than Americans do, so why not educate yourself about the ins and outs of selling to a Canadian audience?
So let’s cover the basics of what you as an Amazon seller in America (or any other country) need to know about sales taxes in Canada.
How is Canadian Sales Tax Charged?
Almost every product and service is taxable under Canadian law and charges both provincial and federal sales tax. The exception would be for those products and services that are considered “necessities.” These sales-exempt items include food and medical supplies.
Do Sellers Outside of Canada Pay Taxes?
If you are selling a total of $30,000 or more per year worldwide, then yes. You are legally obligated to report, collect, and remit sales taxes to the relevant provincial and federal tax authorities. Don’t worry, it’s not as difficult as it may sound.
Six out of the ten provinces in Canada have what is called “harmonized” sales tax reporting requirements, officially termed Harmonized Sales Tax (HST) with the federal government. What does that mean? It means there is only one sales tax return needed for those six provinces. It is a combination of the Federal Goods and Services Tax (GST) and the Provincial Sales Tax (PST). These provinces are Alberta, New Brunswick, Newfoundland, Nova Scotia, Ontario, and Prince Edward Island.
If you’re wondering when the other shoe is going to drop, well here it is. The other four provinces – you guessed it – do not make things quite as easy. British Columbia, Manitoba, Quebec, and Saskatchewan dictate that you as a seller collect federal and provincial taxes separately. Sellers outside of Canada will need to register for each of these provinces to collect and pay PST.
How Often are Canadian Sales Taxes Paid?
Two factors are at play here: jurisdiction and total sales. More often than not, sales taxes are paid on an annual basis. If your yearly sales are less than $1.5 million, then sales taxes are filed and paid only once a year. Again, there are exceptions. In Manitoba, the threshold is only $75,000, while Saskatchewan’s is only $60,000. British Columbia, on the other hand, requires monthly filing during the first year no matter what your sales volume is. After the first year, B.C. will allow annual filing as long as the previous taxes were filed and paid on time. The remaining provinces that don’t participate in HST have differing limits.
How Often are Sales Tax Returns Filed?
Typically, sales tax returns are due to be filed 1-3 months after the end of the reporting period. For an annual return, the deadline for filing is 90 days after the end of the reporting period. For more frequent monthly or quarterly reporting, filing must be done by the end of the month following the reporting period. If more than $3,000 in sales tax is collected during an annual GST/HST filing, you are required to make quarterly installments the following year.
What is Amazon’s Part in All This?
Amazon Canada does not file or pay your sales tax (while Amazon U.S. does) but they do collect and send sales tax as part of your regular settlement. You as a seller will still have to register for a sales tax number in each Canadian jurisdiction (all five of them), then file tax returns and remit taxes through the appropriate channels. In other words, sellers still have to bill Canadian customers for sales tax, collect that tax, then file tax returns on their own. However, if you are selling into Canada directly through a Canadian wholesaler, these obligations may not apply.
If you have questions about duties and tariffs when importing your products into Canada, the company that handles your shipping should be a good resource to ask. They can provide the appropriate guidance.
It’s Important to Have a Good Tax Person at Your Side
The above points are general guidelines and are not meant to be official tax advice. That is best left to a professional tax advisor, and you as an Amazon seller should have one always at your disposal.
The Bottom Line
Canada is a huge seller’s market and should not be overlooked. Even though tax laws may be different than in the U.S., you should take it upon yourself to get in on the lucrative Canadian market. You as an International Amazon seller will reap the benefits. Amazon Canada is quickly growing and there is room for everyone as long as you follow the rules!