Answers to Your Canadian Sales Tax Questions

Canadian Sales Tax Solutions is a specialized tax preparation service based in Canada. We assist online sellers outside Canada with Canadian tax compliance services, including registration, filing and payment processing.

If selling to Canada through Amazon, they collect and send the sales tax as part of the regular settlement. Sellers must still register for sales tax numbers in five Canadian jurisdictions, file tax returns and remit taxes to the appropriate governments. 

When selling directly into Canada to the end consumer, sellers must bill  Canadian clients for sales tax, collect the tax, file tax returns and pay taxes to the government. If selling into Canada directly through a Canadian wholesaler, it is unlikely the same obligations will apply.

Usually, the deadline for filing sales tax returns is one to three months after the reporting period. For example, if the return is annual, the filing must take place file by no later than 90 days after the end of the reporting period. For instance, if sales taxes are filed more frequently, quarterly or monthly, the filing must occur by the end of the following month.

How often you file your sales tax returns depends on two factors. First is the jurisdiction, and the second is total sales. In most cases, sales taxes are filed and paid annually. Federal returns due once a year if annual sales are less than $1.5 million. In Manitoba, however, the yearly sales threshold is $75,000, while in Saskatchewan, it’s $60,000. The limit is different for each of the four provinces that do not participate in the HST program with the federal government. Yes, it can be a lot to keep track of.

Anyone selling in Canada with worldwide sales over $30,000 per year, is legally obligated to collect, report and remit sales taxes to the appropriate federal or provincial tax authorities. But that’s not as onerous as it sounds.

Harmonized Sales Taxes Makes Things A Little Easier.

Six out of the ten Canadian provinces have “harmonized” their sales tax reporting requirements with Canada’s federal government.  So that means just one sales tax return for those six provinces is all that’s needed. This combined reporting is known as the Harmonized Sales Tax or HST, a combination of the Federal Goods and Services Tax (GST) and the Provincial Sales Tax (PST). Canadians do like their acronyms—almost as much as they love hockey. 

Here’s Where it Gets A Little More Complicated.

Unfortunately, Canada’s four other provinces (British Columbia, Saskatchewan, Manitoba and Quebec) require that sellers collect and report sales taxes separately. In addition to registering federally to pay HST, sellers from outside Canada also need to register for each of the other four provinces to collect and pay Provincial Sales Taxes.

In Canada, almost all products and services are taxable except for those considered necessities. Such sales-tax-exempt items are ordinarily food or medical supplies. Canada charges both federal and provincial sales taxes.

With almost 40 million citizens and as one of the most digitally active and savvy countries in the world, Canada is an attractive market in which many Amazon merchants can and do thrive.   Canada is the world’s second-largest country, stretching east to west from the Atlantic Ocean to the Pacific Ocean and north to the Arctic Ocean. While the United States has 51 states, Canada has ten provinces and three territories.  Canadians love to browse and shop online, and Amazon is one of their top destinations for online shopping.