Canada's complex tax policies present significant challenges for cross-border e-commerce sellers. This article provides a comprehensive guide to navigating the country's value-added tax system, including Goods and Services Tax (GST), Harmonized Sales Tax (HST), and Provincial Sales Taxes (PST).
Amazon's Tax Collection Policy: Key Considerations
The Marketplace Tax Collection (MTC) policy implemented by Amazon specifically addresses British Columbia's tax requirements. Effective July 1, 2022, Amazon calculates, collects, and remits provincial taxes for goods shipped from Canadian fulfillment centers to BC consumers. For items shipped from outside Canada, sellers must independently calculate and remit applicable taxes.
Current Amazon Tax Collection by Province:
- British Columbia (PST - 7%)
- Manitoba (PST - 7%)
- Saskatchewan (PST - 6%)
- Quebec (QST - 9.975%)
Tax Obligations for Cross-Border Sellers
E-commerce businesses must address three critical questions:
- Are they obligated to pay Canadian federal consumption taxes?
- Which Canadian provinces receive their products?
- Which provinces have Amazon tax collection versus self-remittance requirements?
Businesses subject to federal taxes must independently remit the 5% GST and any provincial taxes not collected by Amazon.
Canada's Consumption Tax System Explained
1. Goods and Services Tax (GST)
The 5% federal GST applies to most goods and services consumed in Canada. Businesses collect this tax from end consumers and remit it to the Canada Revenue Agency.
2. Provincial Sales Tax (PST)
Individual provinces levy PST at varying rates. Amazon currently collects PST for four provinces:
- British Columbia: 7%
- Manitoba: 7%
- Saskatchewan: 6%
- Quebec: 9.975% (QST)
3. Harmonized Sales Tax (HST)
HST combines GST and PST into a single tax collected by federal authorities. Rates vary by province:
| Province | HST Rate |
|---|---|
| New Brunswick | 15% |
| Newfoundland | 15% |
| Nova Scotia | 15% |
| Ontario | 13% |
| Prince Edward Island | 15% |
Registration Requirements for Foreign Sellers
Since July 1, 2021, digital platform sellers shipping goods from within Canada to Canadian addresses must register for consumption taxes. Businesses operating before this date must evaluate whether they qualify as small suppliers based on CA$30,000 annual taxable sales threshold.
Registration Types:
Simplified Registration: Applies to non-resident digital product/service sellers. This method doesn't permit input tax credits.
Standard Registration: Required for FBA sellers with Canadian inventory. Allows input tax credit claims for GST/HST paid on business expenses.
Security Deposits for Tax Registration
Sellers without Canadian addresses must provide security deposits unless annual sales remain below CA$100,000. The deposit equals 50% of estimated or previous year's taxes, with a CA$5,000 minimum.
Tax Filing Procedures
Filing frequency depends on annual sales volume:
- ≤CA$1.5 million: Annual filing
- CA$1.5-6 million: Quarterly filing
- >CA$6 million: Monthly filing
Key reporting elements include net sales (Line 101), output GST (Line 105), input GST (Line 108), and net GST payable (Line 109).
Tax Payment Information
Tax remittances should be directed to:
- Bank: Fédération des Caisses Desjardins du Québec
- SWIFT: CCDQCAMM
- Account Name: Receiver General of Canada
- Account Number: MFI09708060815CAD3