Who this is for
- Canadian residents selling goods on Amazon or a similar online marketplace
- Sole proprietors weighing incorporation and corporations choosing how to sell
Not covered here
- Whether to incorporate at a given income
- Salary versus dividends from your corporation
- US sales tax and US income tax on stock held in the US
- Sales of services or digital products
Can I sell on Amazon in Canada as an individual, or do I need a corporation?
Tax law does not require a corporation to sell goods online. An individual who sells for profit is a sole proprietor and reports the profit on Form T2125 with the personal return (CRA: sole proprietorship). A corporation is a separate legal entity that files its own T2 (CRA: corporation). Whether the marketplace opens a seller account for an individual or only for a business is its own account rule, not a tax rule: read its seller terms.
| Sole proprietor | Corporation | |
|---|---|---|
| Legal status | No separate legal status from you | A separate legal entity |
| Who reports the profit | You, on Form T2125 with your T1 | The corporation, on a T2 |
| A business loss | Reported on your T1 | Stays in the corporation; shareholders cannot claim it |
| Profit left in the business | Part of your income that year, whether or not you take it out | Taxed in the corporation; yours only when paid to you |
| Paying yourself | Draws; no salary deduction | Salary, dividends or loan repayments |
| Debts and claims | Risks extend to your personal property and assets | Shareholders have limited liability, with exceptions |
| GST/HST small supplier limit | The same limit, counted with your associates | The same limit, counted with its associates |
| Return due | June 15; tax owing April 30 | six months after the tax year ends |
Sources for the table: sole proprietorship, corporation, owner pay, small supplier limit, individual due dates and T2 due date.
The choice is not simple when profit is well above what you spend, you hold stock in the US, you sell to buyers in several provinces, or GST/HST registration may already be due. Gather before deciding: the marketplace's seller reports (sales, fees, refunds, payouts), your GST/HST status, your province, where your stock sits, and what you plan to pay yourself.
How is a sole proprietor's Amazon income reported?
A sole proprietor reports business profit, which is sales less allowable expenses, on Form T2125 and files it with the personal T1 return (CRA: Form T2125). The result goes on lines 13500 to 14300 of the return (CRA: sole proprietorships and partnerships).
Profit also drives CPP contributions and instalments; see how self-employed income is taxed.
A payout is not the sale. Platforms report each reportable seller's payments, fees and commissions to the CRA once a year, broken down by calendar quarter, and give the seller a copy by January 31 of the next year (CRA: what information is shared). A seller of goods with fewer than 30 sales and no more than $2,800 in total in the period is excluded (CRA: who is affected). Record each sale at its selling price before fees, and the fees separately, so your totals can match that report. Keep GST/HST the platform collects on its own line, outside your sales: the Act treats the platform as the supplier (Excise Tax Act, section 211.23), but the CRA's platform pages do not say how that tax shows in income. See platform reporting to the CRA and when a marketplace collects GST/HST.
How is a corporation's Amazon income taxed and reported?
A corporation pays tax on its own profit and files a T2 even if it owes no tax (CRA: corporation). Tax owing is generally due 2 months after the year-end, or 3 months for a Canadian-controlled private corporation (CCPC) that meets the CRA's conditions (CRA: balance-due day). A corporation pays monthly or quarterly instalments, except in its first year and when its tax for the current or previous year is $3,000 or less (CRA: corporation instalment guide; Income Tax Act, subsection 157(2.1)).
The federal net rate is 9% for a CCPC claiming the small business deduction, on active business income up to its business limit (the amount taxed at the lower rate), and 15% on other business income, plus provincial or territorial tax (CRA: corporation tax rates). The limit is $500,000 for a corporation with no associated corporation; passive income and taxable capital can reduce it (CRA: T2 guide).
Profit the corporation keeps is not your income until it is paid to you. A dividend is included in your income, with a dividend tax credit intended to compensate you for the corporate tax already paid; corporate rates vary between provinces, so the total can differ from earning the income directly (CRA: dividends folio). Whether keeping profit inside is worth the extra filings is the question whether to incorporate answers; salary or dividends covers how owner pay is taxed.
What does a corporation protect me from, and what does it not?
A corporation separates business debts from its shareholders, who are not responsible for the corporation's debts (CRA: corporation). A sole proprietor has no separate legal status from the business, so the risks extend to personal property and assets (CRA: sole proprietorship).
The protection has limits. A personal guarantee makes you liable for that debt, and directors may be liable for amounts the corporation failed to deduct, withhold, remit or pay (CRA: corporation). For a seller, that is mainly GST/HST collected but not remitted and payroll deductions not remitted. A director who took the care a reasonably prudent person would have is not liable, and the exposure ends two years after they last stop being a director (Excise Tax Act, section 323; Income Tax Act, section 227.1). A shareholder who receives money or property from a corporation that owes tax, for less than its value, can be liable for that tax up to that value, with no time limit (Income Tax Act, section 160; Excise Tax Act, section 325). Whether a corporation shields you from product, injury or contract claims on goods you sell depends on provincial law, your contracts and your insurance. The CRA pages do not answer it, so ask a lawyer and an insurer before relying on a corporation for that protection.
Does GST/HST registration depend on whether I am a sole proprietor or a corporation?
No. The same small supplier limit of $30,000 applies to a sole proprietor, a partnership and a corporation, counted on worldwide taxable sales before expenses (CRA: when to register). You stop being a small supplier in one of two ways (Excise Tax Act, section 148). If one calendar quarter passes the limit, registration takes effect no later than the day of the supply that made you exceed the limit, and you charge GST/HST on that supply. If only the last four quarters together pass it, you stop being a small supplier at the end of the month following the quarter in which you exceed the limit. Either way, apply to register within 29 days of the effective date (CRA: when to register; Excise Tax Act, section 240).
Two points catch sellers:
- Incorporating does not reset the limit. The count includes sales by you and your associates, and a person who controls a corporation is associated with it (Excise Tax Act, section 127). A sole proprietor also counts every business they run.
- Sales where the marketplace collects the tax still count. The platform is treated as the supplier for collecting tax, but those sales still count toward your limit (Excise Tax Act, section 211.23).
A corporation that must register does so in its own name. You may also register voluntarily (CRA: when to register). See when to register for GST/HST.
Who collects GST/HST on my Amazon sales to Canadian buyers?
If you are not registered, the platform operator charges and collects GST/HST on qualifying goods sold through its platform. If you are registered, you charge and collect it yourself, including on sales the platform facilitates. Registration decides which applies, not whether you are a sole proprietor or a corporation (CRA: sales of goods through a distribution platform).
Qualifying goods are goods delivered or made available to the buyer in Canada, such as goods in a Canadian fulfilment warehouse. Goods sent by mail or courier from outside Canada to a buyer in Canada do not qualify.
The operator is not required to charge GST/HST on its platform services to a vendor who is not registered (same CRA page). See when a marketplace collects GST/HST.
Does my province change the answer?
Yes. A province adds its own tax on a corporation's profit, with its own small-business rate and business limit, and PST can apply whichever structure you pick. A corporation owes a province's tax only on income earned at its permanent establishments there, not where its buyers live. A fixed place of business such as a warehouse can be one, so ask before placing stock in a marketplace's warehouses (Income Tax Regulations, section 402; CRA: permanent establishment). The table shows examples.
| Province | Lower (small-business) rate | Higher (general) rate | Business limit |
|---|---|---|---|
| Ontario | 2.2% from July 1 (3.2% before; a tax year spanning July 1 uses both, by days) | 11.5% | $500,000 |
| British Columbia | 2% | 12% | $500,000 |
| Alberta | 2% | 8% | $500,000 |
| Saskatchewan | 1% | 12% | $600,000 |
Ontario, British Columbia and Saskatchewan come from the CRA's provincial table, which also lists the other provinces and territories. Quebec and Alberta are not in it because they do not have corporation tax collection agreements with the CRA. A corporation with a permanent establishment in Alberta files an Alberta return (AT1) as well (Alberta: corporate income tax). Quebec administers its own taxes: a Quebec resident files a separate Quebec return, a corporation's Quebec tax goes to Revenu Québec, and a business located in Quebec files GST/HST returns with Revenu Québec (CRA: Quebec; CRA: provincial and territorial corporation tax; CRA: RC4022). Whether to incorporate covers Quebec's small business deduction; QST is covered in charging GST/HST, PST and QST by province.
PST in British Columbia. A marketplace facilitator collects PST on facilitated sales of goods located in Canada to buyers in BC, and the seller is generally not required to collect it, but stays jointly and severally liable for PST the facilitator did not collect and remit. The marketplace's own services to sellers can also carry PST at 7%, depending on where the goods or the seller are (BC Bulletin PST 142). Saskatchewan and Manitoba have their own rules; see provincial sales tax.
What changes in my books?
Four things change.
- Bank and seller account. A corporation's sales belong in the corporation's account. Sales paid into your personal account are still the corporation's revenue, and the books show an amount you owe the corporation. A shareholder debt not repaid in time can be added to your income (Income Tax Act, section 15); see corporate income in a personal account and shareholder loans.
- Owner pay. A sole proprietor cannot deduct a salary paid to themselves or withdrawals; the CRA lists both under "Details of equity" on the T2125, not as expenses (CRA: T4002, chapter 3; chapter 2). A corporation pays its owner through salary, dividends or repaid loans. See salary or dividends.
- Year-end. Self-employed individuals generally use a December 31 year-end (CRA: T4002, chapter 1). A corporation has its own tax year, which its T2 and balance-due dates follow.
- Filings. A sole proprietor files the T1 with the T2125. A corporation files the T2, plus payroll filings if it pays salary (running payroll) and T5 slips by the last day of February after the dividend year if it pays dividends (CRA: T5 information return). Both file GST/HST returns once registered.
US-dollar sales and payouts add exchange-rate entries; see US-dollar sales and marketplace payouts.
I also sell on Amazon.com. Does my structure change which forms I give?
Yes. The form follows who the seller is (IRS: W-8BEN instructions; IRS: W-8BEN-E instructions).
| Seller on the US site | Form usually given |
|---|---|
| You, a sole proprietor who is not a US citizen or resident | Form W-8BEN |
| You, a US citizen or resident | Form W-9 |
| Your Canadian corporation | Form W-8BEN-E |
The form must match the seller, so a switch to a corporation means a new form in the corporation's name. Income effectively connected with a US trade or business needs Form W-8ECI instead, and a W-8BEN or W-8BEN-E stops being valid for it. Without a valid form the platform may have to withhold at 30% or the 24% backup rate (IRS: W-8BEN instructions; W-8BEN-E instructions). Stock held in US warehouses adds US sales tax and income tax questions; see Canadian sellers with US inventory, US platform forms for Canadian sellers and W-8BEN-E for a Canadian corporation.
Can I switch from sole proprietor to corporation later?
Yes, but the move is a transfer from you to a different legal entity, so stock, equipment, accounts and supplier terms change hands. Two joint elections can defer or remove tax on the transfer:
- Income tax: Form T2057, filed by the earliest income tax return filing deadline of either party for the transfer year (Income Tax Act, section 85).
- GST/HST: Form GST44, which a registered corporation files by the due date of its first GST/HST return covering tax that would otherwise arise on the transfer. It is not available if you are registered and the corporation is not (Excise Tax Act, section 167).
Your earlier sales count toward the corporation's small supplier limit, so if you had to register, the corporation usually does too.
Platforms report the seller's identity on the account (CRA: what information is shared), so a change of seller must reach the marketplace account as well as your books; how the marketplace handles it is its own rule. See moving a business into a corporation and books after incorporating.
Example
These examples are illustrative; all figures are in Canadian dollars.
Profit spent as it comes in
A seller has C$45,000 of sales on Amazon.ca and C$12,000 of profit, and spends all of it. With no profit left inside, a corporation's tax deferral has nothing to work on, so the question is whether its extra filings are worth it. If the seller stays a sole proprietor, the profit goes on a T2125. C$45,000 of taxable sales over four consecutive quarters is above the C$30,000 small supplier limit, so GST/HST registration is required whatever the structure; the effective date follows the two tests above.
Profit well above living costs
A seller nets C$150,000 and plans to take C$70,000 a year out of the business to live on. As a sole proprietor, all C$150,000 is personal income each year. Through a corporation, a reasonable salary is a deductible expense, so it is taxed once, personally. Profit left after salary is taxed in the corporation at the corporate rate, and if later paid out as a dividend it is taxed again personally, with the dividend tax credit meant to offset part of the corporate tax. With C$70,000 paid as salary, about C$80,000 is left in the corporation, before payroll costs and its tax. Whether leaving cash inside beats the extra filings and bookkeeping depends on province, how the owner is paid and what the corporation does with the cash, since passive income can reduce its small business limit.
Several provinces and US stock
A seller ships to buyers in Ontario and British Columbia and sells on Amazon.com from stock in a US warehouse. Liability, a W-8BEN-E (or W-8ECI) if a corporation is the seller, US tax questions on the stock and, for a seller or stock in BC, PST on marketplace services all enter the decision, so structure is set with advice before the stock moves.
Different for you?
- Your profit is well above your living costs: compare the structures with whether to incorporate and get corporate tax help on the numbers and the move.
- You hold stock in a US fulfilment centre, sell in several provinces, or are in Quebec or Alberta: settle structure before moving stock; see US inventory, charging GST/HST, PST and QST by province and get corporate tax help.
- Your sales may already be over the GST/HST limit, or returns are missing: see unfiled GST/HST returns and missed nil returns, and get bookkeeping help.
- Your books are behind, do not match the platform's reports, or sales went into a personal account: see catching up on overdue books and get bookkeeping help.
- You already incorporated and need the books moved: see books after incorporating and get bookkeeping help.
- The owner is new to Canada or a US citizen: see incorporating as a newcomer or non-resident and American owners of Canadian corporations.
Figures on this page
| Figure | Value | Source |
|---|---|---|
| General Canadian self-employed return filing date General filing date after the tax year when the taxpayer or spouse is self-employed; a balance remains due April 30 and exceptions can apply | June 15 | CRA: Due dates and payment dates Checked |
| General Canadian personal return filing and balance payment date General date after the tax year; the next business day may apply for a weekend or recognized holiday, and some returns have different filing dates | April 30 | CRA: Due dates and payment dates Checked |
| T2 corporation income tax return filing deadline The filing due date also applies to Form T2002 elections and revocations | Six months after the tax year ends | CRA: T2 Corporation Income Tax Guide, before you start Checked |
| Date a reporting platform operator must give a reportable seller its information Of the year following the calendar year in which the seller is identified as a reportable seller | January 31 | CRA: Guidance on the Reporting Rules for Digital Platform Operators, paragraph 6.2 Checked |
| Part XX excluded seller: most consideration for fewer than 30 sales of goods in the reportable period A seller is excluded if the platform operator solely facilitated fewer than 30 relevant activities for the sale of goods and total consideration paid or credited did not exceed this amount during the reportable period (a calendar year) | $2,800 | Income Tax Act, subsection 282(1), "excluded seller" (d) Checked |
| General corporate tax balance due date After the corporate tax year-end, for most income tax balances | 2 months | CRA: Due dates for corporate income tax payments Checked |
| Eligible CCPC tax balance due date After the corporate tax year-end, if the CRA's CCPC conditions are met | 3 months | CRA: Due dates for corporate income tax payments Checked |
| Federal corporate instalment tax threshold No federal instalments when specified taxes payable for the current or previous year are at or below this amount; special tax categories and adjustments apply | $3,000 | CRA: Corporation Instalment Guide Checked |
| Canadian federal net corporate tax rate with the small business deduction For CCPCs claiming the small business deduction on active business income up to the business limit; not indexed | 9% | CRA: Corporation tax rates Checked |
| Canadian federal net corporate tax rate after the general tax reduction Basic rate 38%, 28% after the federal abatement, 15% after the general tax reduction; not indexed | 15% | CRA: Corporation tax rates Checked |
| Federal small business deduction business limit Maximum for a CCPC not associated with another corporation; shared among associated corporations and reduced for taxable capital over $10 million or passive income over $50,000; prorated for tax years under 51 weeks; not indexed | $500,000 | CRA: T2 Corporation Income Tax Guide 2025, Chapter 4 Checked |
| Federal director liability limit after leaving office Income Tax Act subsection 227.1(4) limits when recovery proceedings may begin; Excise Tax Act subsection 323(5) limits when a GST/HST director assessment may be made. Both run from when the person last ceased to be a director. | Two years | Income Tax Act, subsection 227.1(4) Checked |
| GST/HST small supplier threshold Worldwide taxable sales, including zero-rated supplies, with associates, in one calendar quarter or over the last four consecutive calendar quarters; excludes financial services, sales of capital property and goodwill | $30,000 | CRA: When to register for and start charging the GST/HST Checked |
| Effective date of GST/HST registration after one calendar quarter passes the small-supplier limit You also have to start charging GST/HST on that supply | No later than the day of the supply that made you exceed the limit | CRA: When to register for and start charging the GST/HST Checked |
| When small-supplier status ends if only the four-quarter total passes the limit Registration is effective no later than the day of the first supply you make after you stop being a small supplier | The end of the month following the quarter in which you exceed the limit | CRA: When to register for and start charging the GST/HST Checked |
| GST/HST application window after first taxable supply made other than as a small supplier CRA's most-business examples say register within 29 days of the effective date; Excise Tax Act subsection 240(2.1)(b) sets the general trigger | 29 days | CRA: When to register for and start charging the GST/HST Checked |
| Ontario lower corporate tax rate from July 1, 2026 Rate from July 1, 2026, on qualifying small-business income; a tax year crossing that date uses day-weighted rates | 2.2% Tax year 2026 | Ontario: Corporate income tax Checked |
| Ontario lower corporate tax rate through June 30, 2026 Rate through June 30, 2026, on qualifying small-business income; a tax year crossing July 1 uses day-weighted rates | 3.2% Tax year 2026 | Ontario: Corporate income tax Checked |
| Ontario higher corporate tax rate Provincial or territorial general corporate income tax rate | 11.5% Tax year 2026 | CRA: Corporation tax rates Checked |
| British Columbia small business corporate income tax rate Applies to qualifying CCPC active business income allocated to British Columbia | 2% Tax year 2026 | British Columbia: Corporate income tax rates and business limits Checked |
| British Columbia general corporate income tax rate Provincial rate on taxable income allocated to British Columbia that does not qualify for the lower rate | 12% Tax year 2026 | British Columbia: Corporate income tax rates and business limits Checked |
| Alberta lower corporate tax rate Provincial or territorial rate on qualifying small-business income; conditions and business limit may differ from the federal rules | 2% Tax year 2026 | Alberta: Tax overview Checked |
| Alberta higher corporate tax rate Provincial or territorial general corporate income tax rate | 8% Tax year 2026 | Alberta: Tax overview Checked |
| Saskatchewan lower corporate tax rate Provincial or territorial rate on qualifying small-business income; conditions and business limit may differ from the federal rules | 1% Tax year 2026 | CRA: Corporation tax rates Checked |
| Saskatchewan higher corporate tax rate Provincial or territorial general corporate income tax rate | 12% Tax year 2026 | CRA: Corporation tax rates Checked |
| Saskatchewan provincial small-business limit Provincial limit; the federal business limit may be lower | $600,000 Tax year 2026 | CRA: Corporation tax rates Checked |
| British Columbia PST general rate | 7% | British Columbia: Provincial sales tax (PST) Checked |
| T5 filing deadline T5 slips are filed and sent to recipients by this date; weekend and holiday rules may shift the CRA due date | The last day of February after the dividend year | CRA: T5 information return due date Checked |
| Withholding rate on US-source FDAP income paid to foreign persons Applies to the gross amount of US-source FDAP income not effectively connected with a US trade or business; a treaty may lower it. Also the rate on pay to non-resident independent contractors for services performed in the US. | 30% | IRS: Fixed, determinable, annual, or periodical (FDAP) income Checked |
| Backup withholding rate on reportable payments Current federal backup withholding rate for payments subject to the rule | 24% | IRS: Backup withholding Checked |
| Federal section 85 rollover election deadline The proprietor and corporation jointly elect on Form T2057 under Income Tax Act subsections 85(1) and 85(6) | The earliest income tax return filing deadline of either party for the transfer year | Income Tax Act: subsection 85(6) Checked |
| GST44 filing deadline for a registered recipient The supplier and recipient make the election jointly; the registered recipient files it, unless CRA allows a later date | The due date of its first GST/HST return covering tax that would otherwise arise on the transfer | Excise Tax Act: subsection 167(1.1) Checked |
Primary sources
- CRA: Sole proprietorship
- CRA: Sole proprietorships and partnerships
- CRA: Form T2125, Statement of Business or Professional Activities
- CRA: Self-employed business, professional, commission, farming and fishing income, chapter 1
- CRA: Self-employed business, professional, commission, farming and fishing income, chapter 2
- CRA: Important dates for individuals
- CRA: Corporation
- CRA: When to file your corporation income tax return
- CRA: Instalment dates and balance-due day for corporations
- CRA: Corporation tax rates
- CRA: T2 Corporation Income Tax Guide, chapter 4
- CRA: Income tax folio S3-F2-C2, taxable dividends from corporations resident in Canada
- CRA: When to register for and start charging the GST/HST
- Excise Tax Act, section 148 (small suppliers)
- Excise Tax Act, section 127 (associated persons)
- Excise Tax Act, section 211.23 (qualifying supply through a distribution platform)
- CRA: Sales of goods through a distribution platform
- BC Ministry of Finance: Bulletin PST 142, online marketplace facilitators and sellers
- CRA: Reporting rules for digital platforms, what information is shared
- IRS: Instructions for Form W-8BEN
- IRS: Instructions for Form W-8BEN-E
- Income Tax Act, section 85 (transfer of property to a corporation)
- Excise Tax Act, section 167 (supply of a business)
- Income Tax Act, section 15 (shareholder debt)
- Alberta: Corporate income tax
- CRA: Reporting rules for digital platforms, who is affected
- CRA: Self-employed business, professional, commission, farming and fishing income, chapter 3
- CRA: Corporation instalment guide
- Income Tax Act, section 157 (corporation instalments)
- Excise Tax Act, section 240 (registration required)
- Excise Tax Act, section 323 (liability of directors)
- Income Tax Act, section 227.1 (liability of directors)
- Income Tax Act, section 160 (property transferred not at arm's length)
- Excise Tax Act, section 325 (transfers not at arm's length)
- Income Tax Regulations, section 402 (income earned in a province)
- CRA: Permanent establishment
- CRA: Provincial and territorial corporation tax
- CRA: Quebec income tax package
- CRA: RC4022, General information for GST/HST registrants
- CRA: Form T2057, Election on Disposition of Property by a Taxpayer to a Taxable Canadian Corporation
- CRA: Form GST44, GST/HST Election Concerning the Acquisition of a Business or Part of a Business
- CRA: T5 information return, due date
About this guide
Published by Cloud Accounting under standing professional approval. This version has no separately recorded personal review. It explains general rules for the tax year shown. It is not advice for your situation.
Changes
- : First published.