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To account for Amazon FBA sales in Canada, record every sale at its full price, record Amazon’s fees and refunds as separate lines, and reconcile the lot against your bank deposits each month. Amazon pays you a net figure, so a bank deposit alone never shows what you sold or what you were charged.
Why does the payout never match your sales?
Because Amazon takes its cut before it pays you. Referral fees, storage, fulfilment fees, ad spend and refunds all come off the top. If you record only the deposit, your revenue looks too small and your expenses look like they don’t exist.
That hurts twice. Your income tax is based on the wrong profit, and your GST/HST return starts from the wrong sales figure. So set up separate accounts for sales, refunds, Amazon fees, advertising and inventory, then post each payout period as a set of lines. Your accounting software can do the posting. What it can’t do is pick your categories for you.
Here’s a made-up settlement period to show the idea. Sales come to $2,000, refunds to $150, referral fees to $300, fulfilment fees to $240 and storage to $40. The deposit is $2,000 minus $150, $300, $240 and $40, which is $1,270. Suppose ads are charged to your card separately at $110. In your books that’s $1,850 of net sales, $580 of Amazon costs and $110 of advertising, and the $1,270 matches the bank. If your own total doesn’t agree with the deposit, the gap is a missed refund or fee, and it’s easier to find in the week it happened.
What does one $50 sale really earn?
Take a made-up product with a $50 price in Ontario. HST at 13% adds $6.50, so the buyer pays $56.50. This site’s GST/HST calculator gives the same split. The $6.50 isn’t your money. It belongs to the CRA if you’re registered and collecting.
Now say the product costs $32 all in, meaning purchase price, freight, Amazon fees and packaging (invented figures, just to show the maths). The profit margin calculator returns $18 of profit, a 36% margin and a 56.3% markup. Drop the price to $39.99 with the same $32 cost and the margin falls to 20%. Two dollars of Amazon fees you forgot to record can wipe out a lot of that.
| Line in your books | Where it goes |
|---|---|
| Product price the buyer paid | Sales |
| Refunds and returns | Sales reduction |
| Referral and fulfilment fees | Expense |
| Storage and advertising | Expense |
| Stock you bought and haven’t sold | Inventory (an asset) |
| HST or GST collected | Tax payable to the CRA |
When do you have to register for GST/HST?
You stop being a small supplier when your taxable revenue passes $30,000 in a single calendar quarter or over four consecutive quarters, and you then have 29 days to register. Below that, registering is optional. It can still pay off, since only registrants can claim input tax credits on what they spend, and FBA sellers spend a lot. The timing details are on the CRA’s page about when to register for and start charging the GST/HST.
The CRA also has separate rules for platforms and fulfilment warehouses, aimed at non-resident vendors. Under those rules a registered platform operator can be the one who charges and collects the tax. I couldn’t confirm how those rules apply to a seller who lives in Canada, so read the CRA’s digital economy pages and check the tax settings in your own seller account before you assume anyone is collecting for you.
How do you handle sales in US dollars?
Sales on amazon.com arrive in US dollars, and your return is in Canadian dollars. The CRA’s income tax folio says the default is the Bank of Canada rate on the day the amount arises. It will accept other sources if they’re independent, verifiable and used the same way every year. An average rate over a period is only accepted in some cases, and not when rates swing a lot.
Pick a method, write it down and keep using it. Changing halfway through the year is the sort of thing that invites questions.
Mistakes that cost real money
The common one is recording the deposit as revenue. The next is treating unsold stock as an expense in the year you buy it. Stock sitting in a warehouse hasn’t been sold yet, so it belongs on your balance sheet until it moves.
Refunds get missed as well, particularly when they land a month after the sale. And people mix personal and business spending on one card, which turns every year end into detective work. Open a separate account for the business, even if it’s just a basic one that costs a few bucks a month.
If you run this as a sole proprietor, your profit lands on your own return, so it helps to see what it does to your bill. Try the self-employed tax calculator. It leaves out EI and doesn’t lower CPP when you enter deductions, so treat it as a rough guide.
How long should you keep the records?
The CRA’s rule is six years from the end of the last tax year they relate to, unless it has agreed to let you destroy them earlier. That covers invoices from suppliers, Amazon reports, bank statements and your freight paperwork. Download the reports rather than trusting a dashboard to hold them forever, and keep a copy of every monthly settlement file.
Where the numbers come from
The $30,000 small supplier limit, the 29 day registration window and the platform rules come from Canada Revenue Agency guidance. The exchange rate rule is from the CRA’s income tax folio on reporting currency, and the six year rule is from its record keeping page. The 13% HST rate is the Ontario rate in this site’s data. The settlement figures are invented. Fee amounts, and any claim about how Amazon itself treats a seller’s tax, aren’t covered here because I couldn’t confirm them. No level of government runs or endorses this site.
Frequently asked questions
Do I record Amazon deposits as revenue?
No. Record the full sale price as revenue and the fees, refunds and ad costs as separate lines. The deposit is only what is left after those.
When must I register for GST/HST as an Amazon seller?
When taxable revenue passes $30,000 in one calendar quarter or over four consecutive quarters. You then have 29 days to register.
How do I convert US dollar sales?
The CRA's income tax folio says to use the Bank of Canada rate for the day the amount arises, unless you meet its conditions for another source.
Is unsold FBA stock an expense?
No. Stock you haven't sold is inventory, an asset, until it sells.
How long do I keep my Amazon records?
Generally six years from the end of the last tax year they relate to.
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