How to Sell on Amazon FBA Canada (Amazon.ca) in 2019

Popular Misconceptions About Americans Doing Business in Canada

• You will have to pay Canadian income tax
• Product regulations are different and more complex than in the United States
• You will need to setup a Canadian Bank Account
• Americans can work in Canada without a visa
• Canada is the largest Park in Montana

We are not accountants, but normally income you make in Canada will be exempt via tax treaty (assuming you have no permanent establishment in Canada). The reverse is true for Canadians doing business in the U.S. Check with an accountant to be sure of your tax liabilities though.  However, you will definitely be subject to a sales tax liability once you surpass a certain sales threshold.

Product safety requirements, labeling, etc are normally very similar to the U.S. (opposed to, for example Europe, where they are much different). As always though, check with a customs broker to be aware of any potential importing requirements before importing.

To sell on Amazon.ca, you can continue to use your American bank account and Amazon will simply convert the funds into US Dollars (normally with about a 3.5% commission. There’s no need to setup a Canadian bank account.

As an American, you cannot come to Canada to work without a Visa. There are certain activities you can perform in Canada for business, like visiting an accountant, visiting a client, etc. In other words, you can sell your goods on Amazon.ca and essentially pay good Canadian employees to ship your products but you can’t open up your own warehouse and start shipping products yourself without getting the proper work visa.

And finally, a lot of Americans believe Canada is a national park located within the northern part of the United States. It’s actually not! Canada is a real autonomous country formed in 1867 with its very own Prime Minister (sort of like a President).

Things to be Aware of When Selling on Amazon.ca

• Exchange rate is volatile
• Canadian duty rates are often higher than the U.S.
• No Amazon partnered Carriers going to Canada
• You need a Business Number to import anything ‘formally’ into Canada
• If sending UPS/FedEx etc. to Canada, make sure you send them DDP (Delivered Duty Paid) otherwise Amazon will reject the shipment
• Canada has Federal Sales tax (GST)

You can more or less charge the price you charge on Amazon.com, converted to Canadian dollars of course. In fact, you might even be able to charge more. However, the exchange rate is volatile. For example, in 2011 the Canadian dollar was actually worth more than an American dollar but in June of 2018, a single Canadian dollar is worth about $0.75US. You want to keep an eye on the exchange rate, if not monthly, then at least quarterly.  We adjust our prices many times throughout the year to reflect changes in the exchange rate.

Canadian duty rates also tend to be 25-50 higher than in the U.S. (ignoring the 2018 China-U.S. trade war).

If you import goods from China into the U.S. and then re-export them to Canada you have essentially double paid duties for both Canada and the U.S. (it’s technically possible to file to get your U.S. duties back but the paperwork is very pricy).

Pro-tip: The country of origin of your products never changes. For example, if you import a widget from China to the U.S. and then import it into Canada, Canada still considers that widget “Made in China”.

Also, with Amazon, there are no partnered carriers for shipping your goods from the U.S. to Canada. You need to arrange shipping from the U.S. to Amazon.ca warehouses on your own.

You will also need what Canada calls a Business Number to formally import into Canada. It’s easy to file for though.

When you’re shipping to Amazon.ca FBA you must make sure that all duties and taxes are paid prior to arriving at Amazon.ca. With UPS and FedEx you can ship via “DDP” (Delivered Duty Paid) which will basically have these charges passed on to you and keep Amazon from rejecting your shipment.

Sales Tax and GST/HST

Canada has a federal sales tax that is called GST/HST. Compared to the U.S. it is extremely simple. Each province sets it’s GST/HST rate, there’s only 13 provinces/territories, and you remit everything on one form.

There are four exceptions for Amazon.ca sellers: Quebec, British Columbia, Saskatchewan and Manitoba which have provincial sales tax (similar to sales tax in the U.S.). Not registering will not affect your ability to import into Canada or sell on Amazon.ca but you are supposed to collect these. Further, Quebec has a significant economic threshold of $30,000 that you may not exceed and Saskatchewan and Manitoba have a total population of less than 2.5million. For better or worse, many international sellers never register to collect provincial sales tax.

You cannot and should not skip out paying GST/HST in Canada. Technically anything you ship into Canada needs a business number (there’re ways to get around it with UPS/FedEx which I address below) so there will be a record of anything you bring into the country. So this means, at some point, a Canadian Revenue Agency agent is going to see you shipping a lot of goods into Canada and never filing a GST return. At some point the Canadian government will track you down.

5 Easy Steps to Get Started Selling on Amazon.ca

Here’s the easiest way to get started selling on Amazon.ca.

1. Send a small shipment to Canada – get your feet wet; Work it up to Pallets.
2. List your products on Amazon.ca.
3. Turn on Sponsored Ads for Canada!
4. Monitor the exchange rate every month.
5. Register for GST/HST.

Send a Small Shipment to Canada

As you probably did when you first started with Amazon.com FBA, you probably sent in a box or two of goods to test out FBA, and not a full 20′ container. The same goes for Amazon.ca. Send a box or two via UPS or FedEx to get your feet wet. The procedure is almost identical as sending to Amazon.com.

You will need to send your goods via UPS or FedEx or another service that allows you to be billed for any duties and taxes, also called DDP. Do not send via USPS. If you do Amazon will be asked to pay taxes when your product arrives and they will reject your shipment.

Pro-tip: In America, there is an $800 de minimis value (any orders less than this do not have to pay duties/taxes). In Canada, this de minimis value is just $40. 

List Your Products on Amazon.ca

When you sell your products on Amazon.ca you will need a new Amazon.ca professional account and you will also need to re-upload your products to Amazon.ca. Your inventory from Amazon.com does not transfer over to Amazon.ca. However, you manage your Amazon.ca from within one Seller Central account.

Your reviews from Amazon.com will transfer over until you get your first review on Amazon.ca

There are also a few other settings like shipping that you need to set-up for Amazon.ca but the whole process should only take a few minutes.

Turn on Sponsored Ads

The first thing you should do once you get your inventory to FBA is start using Sponsored Products if you’re using them for Amazon.com. You will pay dramatically less than what you pay for Amazon.com (see our stats below – we’re paying just 0.2% ACoS!)

Monitor the Exchange Rate Every Month

When you price your products in Canada, you’re likely simply converting from U.S. dollars to Canadian dollars and maybe adding a bit of a cushion. Monitor this exchange rate on a quarterly or monthly basis as it will change and you should change your prices accordingly.

Setting Up a Canadian Business Number

If you’re sending goods up to Amazon.ca FBA via UPS or FedEx as a trial, you can likely avoid this requirement for your first couple of shipments. However, once you do any significant volume you need a business number.

If you’re sending anything that requires a customs broker to clear (i.e. you’re sending an LTL shipment) you will definitely need a Business Number. A business number is simply a number that you can use to collect/remit GST/HST and to import goods into Canada. It’s similar to the U.S. EIN.

Registering for a Business Number in Canada is quite easy. You simply need to complete a form RC1. As of this writing, this form needs to be either faxed or mailed in (there’s no option for non-residents to do it online). Once you fill it in, you’ll be issued a Business Number within 10 days.  When you register for this business number you can also get your GST/HST and Importer numbers – this is on the RC1 form you fill out. There are simply check boxes for each one.

Alternatively, your customs broker can register you for a business number for free or a nominal fee (under $500). Pacific Customs Brokers can help you with this (let them know that EcomCrew sent you).

The form is self-explanatory and should take no more than 5-10 minutes (when it asks for social insurance number, simply leave this blank). When it asks for your estimated taxable sales in Canada it’s wise to enter something below $100,000 as otherwise you will be required to prepay half of your estimated GST (The Canadian Revenue Agency will determine in your second year if you need to prepay a percentage of your GST/HST).  One final note, if you’re registering as a corporation, submit a copy of your Articles of Incorporation with the form.

Pro-tip: If you want someone to set-up your business number and help with your sales tax filings you can contact David at Small Biz Pro – he has a lot of familiarity with non-Canadian sellers on Amazon.ca and can help you get set up for those who don’t want to self-register.

Conclusion

Hopefully, this article has outlined my arguments for why you should be selling on Amazon.ca (as well as who shouldn’t be) and also how to get up and rolling. Since late 2015, Amazon.ca has been a significant driver of growth for my company and I think it can do the same for a lot of other companies seeking 10-20% sales growth.

Have you had any experience selling on Amazon.ca or other Amazon market places? Do you have any questions about selling on Amazon.ca? If so, comment below.