DISCLAIMER
The team at Link My Books are happy to provide users with technical assistance in applying tax rules to their Link My Books setup. We are not Tax Advisors and so our advice and suggestions on the application of tax rules cannot be construed as tax advice. We highly recommend that users seek advice from qualified accountants for their tax compliance.
Amazon offers many services and programs to sellers, and fee taxability varies based on a combination of the type of services purchased, the Amazon entity providing the services, federal and provincial tax laws, your participation in Tax Calculation Service (TCS), business information you supply to Amazon, including your federal/provincial registration number, the location of your business or where an FBA service is performed.
You can read all about Canadian sale tax on Amazon fees in this help article from Amazon.
When does Amazon charge tax on my seller fees?
The charts below illustrate when an Amazon.ca seller fee may be subject to sales tax in various Canadian jurisdictions.
Selling on Amazon (SoA) Fees (based on your business location) |
Seller business location | Canada GST/HST | PST/QST |
Alberta | Taxable | Taxable |
British Columbia | Taxable |
|
Manitoba | Taxable | Not-taxable |
New Brunswick | Taxable |
|
Newfoundland | Taxable |
|
Northwest Territories | Taxable |
|
Nova Scotia | Taxable |
|
Nunavut | Taxable |
|
Ontario | Taxable |
|
Prince Edward Island | Taxable |
|
Quebec | Taxable | Taxable |
Saskatchewan | Taxable | Not-taxable (excluding any monthly seller subscription fees which will be taxable) |
Yukon | Taxable |
|
If Store Tax Collection applies to a buyer order, GST/HST or QST will be zero rated on your Amazon.ca per-order related SoA fees (for example, the referral fee, variable closing fee, tax calculation service fee and other per-order item fees).
Amazon Advertising (ads) fees (based on your business location) |
Seller business location | Canada GST/HST | PST/QST |
Alberta | Taxable |
|
British Columbia | Taxable | Taxable (except Managed Ads fees) |
Manitoba | Taxable | Not-taxable |
New Brunswick | Taxable |
|
Newfoundland | Taxable |
|
Northwest Territories | Taxable |
|
Nova Scotia | Taxable |
|
Nunavut | Taxable |
|
Ontario | Taxable |
|
Prince Edward Island | Taxable |
|
Quebec | Taxable |
|
Saskatchewan | Taxable | Not taxable (except managed ads fees) |
Yukon | Taxable |
|
Fulfilment by Amazon (FBA) fees (based on the fulfilment centre location) |
FBA fulfilment centre location | Canada GST/HST | PST/QST |
Alberta | Taxable | - |
British Columbia | Taxable | Taxable (as of July 1, 2022) |
Ontario | Taxable |
|
Quebec | Taxable | Taxable |
If Store Tax Collection applies to a buyer order, GST/HST or QST will be zero rated on your Amazon.ca per-order related FBA service fees (for example, the pick & pack fee, shipping commission and other per-order FBA fees).
How to set up Canadian taxes in Link My Books
We don't currently have a way to split fees out by fulfilment centre location unfortunately so we suggest as a workaround that you set GST/HST on Purchases as the tax rate for all Amazon Fees (Seller Fees, FBA Fees, Storage Fees and Advertising Costs) in Link My Books and then once a month use the tax invoices from Amazon to adjust for the taxes accordingly directly inside Xero.
To adjust for your Canadian PST/QST on fees follow these steps:
Navigate to Reports > Tax Document Library on Amazon Seller Central
Under Seller Fee Invoices download the invoices for that month
Make a journal entry in Xero/QuickBooks to adjust
You would effectively make a journal entry crediting the total amount of fees from the relevant fees account with your GST/HST on Purchases tax rate and then replacing them with the correct PST/QST tax rates.
If we take an example of a business established in Ontario.
Here is an example of what the tax summary section would look like on one of their Amazon tax invoices:
Note that only the BRITISH COLUMBIA and QUEBEC locations are having Provincial Tax applied.
So we need to adjust the tax rates on those fees only.
In Xero, the journal entry would look something like this:
What we have done is:
-$15.00 FBA fees with ON - HST on Purchases
+$0.06 FBA fees with BC - GST/PST on Purchases
+$14.94 FBA fees with QC - GST/QST on Purchases
Meaning the total FBA Fees is the same as before but now the correct tax rates have been applied.
IMPORTANT
You should have your accountant check this over and set up the first journal entry to make sure it's done right then you could copy it each month and replace the figures with the right ones.
We'd would also recommend attaching the Invoice as a PDF to the journal for audit purposes.
If you have any questions about this article or feedback on how we could make it better please reach out to the support team via the blue chat icon on the bottom right of the page or via email to [email protected].