Table of Contents
- Introduction
- Taxes in Canada
- Step 1: Create a Canadian Bank Account (Payoneer, Wise)
- Step 2: Open a Business, Obtain GST/HST, and Import Goods
- Step 3: Ensure Product Compliance
- Step 4: Analyze Logistics Structure in Canada
- Important Tasks
Introduction
This guide provides step-by-step instructions for expansion and financial calculations in Canada. It covers all details regarding registration and tax obligations.
Key considerations for expansion:
• Importing goods from the country of origin
• Taxes: GST, HST, PST, Corporate Income Tax
• Limited liability company in Canada
• Business registration
• Labeling requirements
• Legal requirements for selling or distributing specific goods/products
Taxes in Canada
Before expanding into Canada, understanding the tax system is essential.
Selling in Canada requires paying both federal (GST/HST) and provincial sales taxes. Sales prices exclude sales tax, which is calculated at checkout based on the customer’s province.
Amazon automatically calculates, collects, and remits sales tax on behalf of sellers unless the GST/HST and PST numbers are added in Seller Central. However, sellers not registering for GST/HST cannot claim tax refunds on imports and FBA fees.
Key taxes include:
• GST/HST (Goods and Services Tax/Harmonized Sales Tax): Federal tax applied to most goods and services. GST is 5%, while HST rates vary from 13% to 15% depending on the province.
• PST (Provincial Sales Tax): Levied by some provinces (not all) on retail goods and services. PST rates vary by province.
• CIT (Corporate Income Tax): Applied to corporate income in Canada. The federal CIT rate is 15%, with additional provincial CIT rates depending on location.
If you establish a physical presence in Canada:
• A company must be registered, incurring legal and registration fees.
• Annual tax filings are required.
• CIT must be paid on profits.
Difference Between GST/HST and PST in Canada
• GST (Goods and Services Tax): A federal tax on goods and services in Canada.
• HST (Harmonized Sales Tax): A combination of GST and PST in certain provinces.
• PST (Provincial Sales Tax): A sales tax levied by some provinces.
Prices on the website will include GST/HST, but PST will not be charged unless the company is based in a province that collects it.
For tax-related assistance, consult a Canadian tax advisory firm.
Customs Duties and Fees
Canada imposes import duties based on product classification. Consulting a freight forwarder about customs duties is advisable.
What are the steps?
Step 1: Creating a Canadian Bank Account (Payoneer, Wise)
A Payoneer or Wise account offers benefits like receiving payments in CAD, avoiding currency conversion fees, and faster transactions.
Steps to open a Canadian bank account:
1. Choose a bank offering online business services.
2. Submit an application with business details.
3. Fund the account (minimum deposit varies by bank).
Step 2: Open a Business, Obtain GST/HST, and Import Goods
As a non-resident seller, registering a corporation in Canada is unnecessary unless hiring Canadian employees.
Key requirements for tax registration:
• Legal business name
• Mailing address
• Phone number
• Bank account number
• Contact person’s name
• Province of operation
• Business number for tax identification
• GST/HST registration
If global revenue exceeds 30,000 CAD, a Canadian business number from the Canada Revenue Agency is required.
Importer Requirements:
• “Non-Resident Importer Number (NRI)”
• GST/HST and provincial sales tax registration
Step 3: Ensuring Product Compliance
Selling on Amazon Canada requires compliance with regulations to avoid penalties and account suspension. Key considerations include:
• Product labeling requirements: Proper labeling with accurate product details, manufacturer information, and ingredients.
• Canadian Consumer Product Safety Act (CCPSA): Compliance with safety warnings and testing.
• Health Canada Requirements: Adherence to safety and labeling regulations.
Step 4: Analyzing Logistics Structure in Canada
Key logistics considerations:
• Shipping costs and estimated delivery times
• Import procedures and tax rates
• Customs brokerage requirements
Logistics Partners for Canada:
1. Shipping from China:
o Use a freight forwarder familiar with Canadian imports.
o Consider DDP (Delivered Duty Paid) to simplify customs clearance.
2. Shipping from a 3PL in Canada:
o Preferred option: Work with UPS to ship inventory directly to Amazon’s fulfillment centers.
o CSA Transportation: Offers LTL shipping but requires a customs broker.
o Clearit.ca: Provides customs clearance services.
Important Tasks
To ensure smooth operations in Canada:
• Read Amazon Canada’s Selling Agreement: Amazon Selling Agreement
• Register a Canadian Amazon Seller Account
• Create product listings
• Apply GST/HST to product prices
• Determine the provinces for selling (some require additional tax registrations)
• Consult a tax advisor familiar with Canadian regulations
• Calculate all applicable taxes
• Regularly review and update pricing
• Add GST/HST number to Amazon Seller Central
• Ensure GST/HST number activation (inactive numbers may lead to account suspension)
• Register for tax collection on Amazon to avoid double taxation
• File and pay GST/HST regularly to avoid penalties
By following these steps, sellers can successfully expand to Amazon Canada while ensuring tax and regulatory compliance.