CRA tax guide for Canadian Amazon FBA sellers — inventory, HST, T2125, and cross-border considerations.
Amazon FBA (Fulfillment by Amazon) sellers in Canada are self-employed business owners. Your net profit from FBA — after Amazon fees, cost of inventory, shipping, and other expenses — is taxable self-employment income reported on Form T2125.
Amazon Canada provides annual sales reports and fee summaries through Seller Central. Download these each year before filing — they are your primary income and expense records.
If your total Canadian taxable revenues exceed $30,000 over four consecutive quarters, you must register for HST. For many active FBA sellers, this threshold is crossed quickly.
| Expense | Notes |
|---|---|
| Cost of goods sold | Purchase price of inventory sold |
| Amazon FBA fees | Referral, fulfillment, storage fees |
| Shipping to FBA warehouse | 100% deductible |
| Product research tools | Helium 10, Jungle Scout, etc. |
| Amazon PPC advertising | 100% deductible |
| Photography and listing optimization | 100% deductible |
| Returns and refunds | Reduce gross revenue |
| Customs and duties (imports) | Add to cost of inventory |
| Home office | If managing business from home |
| Accounting and legal fees | 100% deductible |
| Bank and currency conversion fees | Deductible |
FBA sellers must track inventory carefully. The CRA uses the cost of goods sold method: Opening inventory + Purchases − Closing inventory = COGS. Your year-end inventory value must be reported on T2125.
Use the cost method (what you paid for goods, including duties and shipping to get them into Canada) for valuation. Amazon's "Inventory Health" report helps you track current FBA inventory levels.
If you sell on Amazon.com (US marketplace), income is still reportable to CRA as Canadian-source income. You may also have US tax obligations — consult a cross-border accountant. Currency conversion: use the Bank of Canada average exchange rate for the calendar year to convert USD earnings to CAD for reporting purposes.
Business type: "Online Retail — Amazon FBA." NAICS code: 454110 (Electronic Shopping). Gross revenue = all Amazon sales in Canada (before fees). Amazon fees and COGS are deductions. Net income flows to line 13500 of your T1.
If you have both Canadian (amazon.ca) and US (amazon.com) income, maintain separate records and report combined net income in CAD.
Self-employed FBA sellers pay CPP at 11.9% combined on net self-employment income up to ~$71,300. If you owe more than $3,000 in taxes beyond withheld amounts, quarterly installments are required: March 15, June 15, September 15, December 15.
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Get KOHO Free — Use Code 45ET55JSYAInformational only. Not tax or legal advice. Cross-border e-commerce tax rules are complex — consult a CPA with e-commerce expertise.