Here is a sentence I hear constantly: "Amazon collects the tax for me, so I do not need a GST number." It is wrong, and it is one of the more expensive things a seller can get wrong. You still need your own GST/HST registration, and you need it set up correctly inside Seller Central. Let me explain both halves.
What Amazon is actually doing
Canada requires marketplaces like Amazon, Etsy, and eBay to collect and remit GST/HST on their sellers' sales, because too many sellers were unregistered and the government was losing the tax. So if you are not registered, Amazon collects the tax on your sales and sends it straight to CRA. You never touch it. Sounds like a free pass. It is not.
Why you register anyway
- You cannot claim input tax credits without it. This is the big one. Every time you buy inventory, pay for shipping, software, or Amazon fees, you pay GST/HST. If you are registered, you claim all of that back. If you are not, you eat it. For a seller spending $50,000 a year, that is roughly $2,500 to $7,500 in tax you never recover. Every year.
- It is the law past $30,000. Once your taxable revenue crosses $30,000 over four consecutive quarters, registration is required. Amazon collecting on your behalf does not change that, and CRA can require you to register retroactively.
- It lowers your real cost of goods. Recover the GST on inventory through ITCs and your margins are genuinely better than they look on paper.
The setup step that quietly bites people
Once you are registered, you have to update your tax settings in Seller Central, and this is where the costly mistake lives. You add your GST/HST number (your Business Number followed by the RT identifier, like 123456789RT0001), and then you verify your product tax codes. That last part is the one people skip.
If your tax codes are wrong, Amazon keeps collecting the tax as if you are unregistered and sends it to CRA directly. But your own GST/HST return shows that tax as collected, so CRA expects you to remit it too. Amazon will not retroactively hand you back money it already sent the government. I have watched sellers end up owing CRA five figures over a setting they never checked.
Most products simply need the standard taxable code. If you sell groceries, children's clothing, or other special categories, the codes need a closer look, and they are set per ASIN, so new products need checking too.
The short version
Register. Update Seller Central. Verify your tax codes by product. It is a twenty-minute job that protects you from a five-figure surprise and unlocks thousands a year in recoverable tax.
We walked through the exact Seller Central steps, the tax codes, and the double-payment trap in full on our firm's site: Do You Need a GST Number on Amazon.ca? Yes, and Here's Why.
If you are not sure your Amazon tax setup is right, that is exactly the kind of thing we check for sellers, and we share the plain-English version in the newsletter.