Here is a number that should make every Amazon seller who files their own GST/HST returns a little nervous: $28,635. That is how much CRA was holding from one of my clients when he finally called me, with another $11,897 about to be frozen on top of it. He had been fighting the audit on his own for three months and getting nowhere. We had the money back in his account sixteen days after I picked up the phone.
The mistakes that got him there were ordinary ones, which is exactly why this is worth reading.
How a good seller ended up in an audit
Call him Sam. He is genuinely good at the hard parts of this business: sourcing, PPC, moving units. To save on accounting, he filed his own GST/HST returns. The trouble is that Amazon's settlement reports are not built for tax filing. The way Amazon reports tax collected, marketplace facilitator amounts, and its own fees is genuinely confusing, and Sam got the numbers wrong. CRA found errors in one return, then pulled the thread into two more. That is how GST audits usually go.
The three mistakes, and why they are so common
- Counting Amazon's tax as his own. Sam included marketplace facilitator tax, which Amazon collects and sends to CRA directly, as tax he had collected himself. That made it look like he owed far more than he did.
- Leaving money on the table. He missed input tax credits he was fully entitled to: the GST buried in his Amazon advertising fees, some shipping, and software subscriptions.
- Numbers that would not reconcile. His returns did not line up cleanly with his bank deposits and Amazon payouts, which is the fastest way to invite a closer look.
None of it was dishonest. He simply did not know the Amazon reporting well enough to file it correctly. He had actually overpaid on a couple of returns.
Why three months alone got him nowhere
Sam spent three months trying to explain FBA to an auditor who had never seen it, second-guessing every document he sent, and avoiding the agent's calls because he did not know what to say. Meanwhile his cash was frozen, so he could not restock. The stress was the worst part of it.
What actually moved it
When he sent me the file, the real issue was visible within an hour. From there it was unglamorous work: I called the auditor and talked to them like a person, walked them through how FBA and the settlement reports actually work, and handed over a clean reconciliation showing what was filed, what the correct numbers were, and the proof straight from Amazon's own reports. Sixteen days later the $28,635 was back, and CRA released the second amount without a fight once the first file was closed.
The cheap lesson
Sam saved maybe five hundred to a thousand dollars filing his own returns. The audit cost him far more in frozen cash, lost restock time, and sleep. GST/HST returns are where sellers get audited most, because the error rate is high and the recoveries are large. If you file your own and you are not completely sure the marketplace facilitator numbers are right, that is worth a second set of eyes before CRA is the one checking.
I wrote up the full play-by-play, including the exact timeline and every step I took with the auditor, on our firm's site: How I Got $28,635 Back for a Client from CRA in 16 Days.
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