TAX question for Sellers from BC
Hello,
It’s my first year of selling on Amazon and I’m getting prepared for the tax season around the corner. I have a tax question for the sellers who are residents of the province of BC.
All of the referral fees paid to Amazon were taxed at 12% of which there is 7% PST since I’m a resident of BC. All this while, I was under the opinion that similar to GST/HST, there would be Input Tax Credits (ITC) for PST as well and that I can claim the taxes paid on the referral fees back into my income. However, today I spoke to someone from the Ministry of Finance office and found out that 7% tax paid on the referral fees has to be accounted as expense rather than being able to get it back. I was kind of confused and surprised and was looking for insights from someone who has been a seller from BC and has at least filed the tax once or twice.
Can someone please pitch in and help me understand if the information provided was accurate or is there a way to claim that money back as ITC?
Thanks in advance!
Best regards
TAX question for Sellers from BC
Hello,
It’s my first year of selling on Amazon and I’m getting prepared for the tax season around the corner. I have a tax question for the sellers who are residents of the province of BC.
All of the referral fees paid to Amazon were taxed at 12% of which there is 7% PST since I’m a resident of BC. All this while, I was under the opinion that similar to GST/HST, there would be Input Tax Credits (ITC) for PST as well and that I can claim the taxes paid on the referral fees back into my income. However, today I spoke to someone from the Ministry of Finance office and found out that 7% tax paid on the referral fees has to be accounted as expense rather than being able to get it back. I was kind of confused and surprised and was looking for insights from someone who has been a seller from BC and has at least filed the tax once or twice.
Can someone please pitch in and help me understand if the information provided was accurate or is there a way to claim that money back as ITC?
Thanks in advance!
Best regards
2 replies
Seller_BCsJXNkuO7q9e
Unfortunately the agent from the MOF is correct.
PST is only refundable to you if paid on the purchase of inventory intended for resale NOT on expenses you incur in running your business. No different than if your lawyer billed you for services and added HST / PST. You can claim the HST as an ITC but the PST is simply an expense that reduces your profit.
The seller fees charged by Amazon are an expense to your business and the PST is a fee on top of that.
The logic is the same in other PST provinces such as Manitoba and Saskatchewan except that sellers fees there seem to be non-taxable. So, selling in BC puts sellers at a distinct disadvantage.
If you can, consider incorporating next door in Alberta - would save you a bundle.
As a BC seller not only are you disadvantaged by having to pay the PST on seller fees - you're also hit with the Digital Services Tax like the rest of Canada. That puts you at a disadvantage relative to USA sellers. Read all about it here:
https://sellercentral.amazon.com/seller-forums/discussions/t/8dfaf825-5213-41b8-9ee5-cff0594628b6
Seller_7LrAV0m5llaI7
There is no input tax credit for PST on fees.
