This article was contributed by PingPong.
Amazon Canada is one of the top e-commerce platforms in Canada and one of the country’s top 15 visited websites. For Amazon sellers, Canada is an opportunity to expand your brand and grow your sales to an entirely new market. Yet, one that feels reassuringly similar to American shoppers.
However, Canada’s resemblance to America ends there when it comes to taxes. If you’re an American selling on Amazon Canada, taxes can still be a huge hassle due to Canada’s complex tax structure. In this post, we’ll look at Canada’s tax system and some of the most important questions that come up for Amazon sellers.
How does Canada’s tax system work for Amazon sellers?
Canada has a unique and complex tax structure that includes national and provincial sales taxes which can be divided into four types:
- Goods and Services Tax (GST), 5% across the country. National sales tax.
- Provincial Sales Tax (PST) – 6-10% across the country. Certain territories or provinces add a tax on top of GST and require businesses to register and remit the PST separately.
- Harmonized Sales Tax (HST) – Up to 15%. Combination of both GST and PST which allow businesses to remit the entire amount to Canada Revenue Agency.
- Quebec Sales Tax (QST) – 9.975%. Calculated on the selling price excluding the GST. Collected on the supply of most goods and services.
Canadian taxes (by province)
|
Canada Province |
Rate type |
Provincial rate |
Canada rate |
Total |
|
Alberta |
GST |
0.0% |
5.0% |
5.0% |
|
British Columbia (BC) |
GST+PST |
7.0% |
5.0% |
12.0% |
|
Manitoba |
GST+PST |
8.0% |
5.0% |
13.0% |
|
New-Brunswick |
HST |
10.0% |
5.0% |
15.0% |
|
Newfoundland and Labrador |
HST |
10.0% |
5.0% |
15.0% |
|
Northwest Territories |
GST |
0.0% |
5.0% |
5.0% |
|
Nova Scotia |
HST |
10.0% |
5.0% |
15.0% |
|
Nunavut |
GST |
0.0% |
5.0% |
5.0% |
|
Ontario |
HST |
8.0% |
5.0% |
13.0% |
|
Prince Edward Island (PEI) |
HST |
10.0% |
5.0% |
15.0% |
|
Québec |
GST + QST |
10.0% |
5.0% |
15.0% |
|
Saskatchewan |
GST + PST |
6.0% |
5.0% |
11.0% |
|
Yukon |
GST |
0.0% |
5.0% |
5.0% |
You can calculate provincial tax rates for GST/HST here.
Do I need to pay Canadian taxes as an Amazon seller from the US?
Now that you understand more about the different taxes in Canada, it’s important for both small and large volume Amazon resellers to know whether they’ll need to pay taxes or not.
Before we get into some of the general guidelines for whether you’ll need to pay taxes or not, be sure to remember that the information here should not be used as professional advice. It’s important to make sure you get legal and tax advice individual to your business if you have any question about whether you do or don’t need to pay taxes. For the sake of our discussion, we’ll be talking in broad terms. Basically, Amazon sellers can be divided into three categories:
Fast growing (required to pay taxes):
- Exceed $30,000 in sales in one calendar quarter.
- Required to collect and pay sales tax starting with the sale that pushed you over $30,000.
- Required to register and file for GST/HST within 4 weeks of that sale.
Slow growing (required to pay taxes):
- Exceeds $30,000 in sales in the previous 4 calendar quarters.
- Required to start collecting sales tax a month after exceeding the $30,000.
- Required to register and file for GST/HST within 4 weeks of that sale.
Small business (not required to pay taxes in some cases):
- Under the $30,000 threshold, many businesses will qualify for the small supplier exemption. (Be sure to consult a tax professional to make sure you qualify.)
- Not required to collect taxes but it is recommended that you file for HST/GST because you will not be eligible to claim the tax that you pay on services provided in Canada (such as Amazon fees).
- Downside is you will have to charge and remit taxes if you register for HST/GST.
How to pay Canadian taxes as a US seller
Now that you have a better idea of whether or not you need to pay taxes, you’ll also need to know how to pay your Canadian taxes for sales made on Amazon.ca.
To pay taxes to the Canada Revenue Agency (CRA) as a US merchant, you have to pay through a bank account. You’ll need your 15-digit business number (BN) as your CRA account number. The 15-digit business number for your CRA account consists of 9 characters for business number, a 2 letter identifier and a 4-digit reference number. You’re required to get a business number to pay taxes in Canada if your business does not meet the small supplier requirements.
PingPong now offers the service of making GST/HST payment in Canadian dollars to CRA directly from your multi-currency account for free. The key is to pay before converting your Amazon profits back to US. If you convert to USD first, you’ll pay an additional FX fee to exchange your USD to CAD, which is required to pay your Canadian taxes. That adds up to a lot of currency exchange fees.
With a multi-currency account, like the one from PingPong, you can keep your earnings in the currency you choose. So, you can opt to keep some or all of your earnings in Canadian dollars. That way, you avoid double exchange fees if you’ve got a tax payment to the Canadian government coming up. More control over your Amazon Canada payouts means you keep more of your earnings.
Thinking about opening a global currency account, or interested in comparing the rate you’re currently paying? Learn more about multi-currency account options for global Amazon sellers, and compare rates.
