Amazon seller tax services: T2 returns, GST/HST refunds, and inventory that reconciles

The T2 starts with settlement data, not bank deposits

An FBA corporation's T2 corporate return is only as accurate as the revenue figure behind it, and Amazon's biweekly deposits are not that figure. Each payout nets out referral fees, FBA fulfilment fees, storage, advertising, refunds, and reserve holdbacks. We rebuild gross sales, fees, and refunds from settlement reports — usually through A2X into QuickBooks Online — so the T2 shows real revenue and every Amazon fee lands as a deductible expense instead of vanishing inside a net deposit.

Structure matters just as much. A Canadian-controlled private corporation pays the small business rate — 9% federally plus the provincial rate — on its first $500,000 of active business income, which is why most scaling FBA sellers incorporate. The return is due six months after your year-end; the balance owing is due earlier, at two months, or three for many CCPCs claiming the small business deduction. We calendar all of it around your sales cycle so year-end work never collides with Prime Day or Q4 prep.

Year-end inventory valuation decides whether your margin is real

Inventory is the most misstated line on FBA tax returns, and taxable income moves dollar-for-dollar with it. We value closing stock at landed cost — supplier invoice plus freight, duty, and prep — and apply the lower of cost and fair market value rule the Income Tax Act allows, item by item.

• Count from Amazon's own data. The FBA Inventory Ledger and month-end snapshot reports give quantities across every fulfilment centre, including inbound, reserved, and unfulfillable units most sellers forget.
• Write down what is effectively dead. Stranded listings, stock facing aged-inventory surcharges, and damaged customer returns can be written down to market value — a legitimate deduction when the support is on file.
• Units in US warehouses still count. Inventory sitting in US fulfilment centres belongs on your Canadian corporation's balance sheet, converted to Canadian dollars at year-end.

Get this wrong in one direction and you prepay tax on margin you have not earned; get it wrong in the other and a CRA review unwinds your COGS. Neither is necessary.

GST/HST: zero-rated exports usually mean CRA owes you

Sales shipped to US customers through Amazon.com are zero-rated exports — you charge 0% GST/HST yet still claim input tax credits on Canadian costs: prep centres, freight forwarders, packaging, software subscriptions, accounting fees. For sellers doing most of their volume on the .com marketplace, nearly every GST/HST return is a refund claim.

Two practical moves follow. First, filing frequency: an annual filer waits a year for that money, so we often elect quarterly or monthly filing to pull refunds forward into working capital. Second, refund claims get looked at — CRA routinely holds refunds for pre-assessment review and asks for export evidence and supplier invoices before releasing funds, so we keep shipment records and ITC support organized from day one. On Amazon.ca, a registered seller provides Amazon its GST/HST number and remits tax on Canadian orders at the destination province's rate.

Instalments and owner pay once the corp is profitable

Once tax payable passes $3,000 in a year, the corporation owes instalments the following year — monthly, or quarterly for small CCPCs with a clean compliance history. Miss them and interest accrues quietly in the background. We set the schedule from the filed T2 and adjust mid-year when a hero SKU takes off or a supplier problem kills a quarter, so you are never paying instalments sized for a business you no longer have.

Profit also opens the salary-or-dividends question. Salary is deductible to the corporation, creates RRSP room, and builds CPP; dividends skip payroll remittances but build neither. Most owners land on a mix, and the right one shifts as margins and reinvestment needs change — so we revisit it with every T2, not once at incorporation.

The US side, kept in its lane

Holding inventory in US fulfilment centres raises American questions: state sales tax (now largely collected by Amazon under marketplace facilitator laws), treaty-based federal return positions, and whether a US entity ever makes sense. Those deserve a full analysis, not a paragraph — that lives on our cross-border accounting for Amazon sellers page. Within the Canadian filings, we make sure US-source income and any US taxes paid land correctly on the T2 so the two systems never double-tax the same dollar.

Source: CRA — GST/HST for businesses.