Why would you ask Amazon for 5% GST?

 

I assume the the ST stands for Sales Tax, so it shouldn't affect authors at all. It's a matter between the retailer and the buyer.

In the case of VAT, Amazon does set its prices as VAT inclusive, so it does behoove us to price accordingly. But I think that's a European phenomenon, as an artful way to hide the level of taxation. People tend to get upset when they find that more than half their income goes to the government.

 

NOTHING TO SEE HERE

 

Amazon.ca collects and pays GST on our behalf. Amazon.com is irrelevant.

EDIT: What Ellie said! She posted while I was still writing.

But I also wanted to add for any other Canadians reading this, don't jump the gun and get your GST number too soon. You have until you're earning 30K before you get one. Once you have the number, you have to collect and pay GST whether or not you've hit the 30K mark. (In the instances where you need to collect the GST, that is)

 

NOTHING TO SEE HERE

 

What Notjohn said. Canadian authors do not have to worry about GST. The retailer collects taxes and is responsible for reporting them to the appropriate agency, including CRA. For your accountant to suggest otherwise is... well... (word deleted to avoid looking like a beotch). Being an accountant, you'd think he would understand the differences, though.

Your responsibility as a self pubbed author is to simply report your earnings, that means what you receive, to CRA at tax time. Now, should you sell off your own website, THEN you'd collect GST yourself, and report that. Otherwise, leave it to the vendors to take care of that aspect for you.

The problem is that Amazon.ca does not collect GST on our behalf.

You are correct that, as the retailer and our sales agent, the responsibility lies on Amazon to do so, but they do not. (In Theory(tm), any purchaser of e-books in Canada is legally obligated to report and remit their own GST on them. Not going to happen and no one is expecting it to).

Since Amazon.ca does not do this, the CRA has been known to come back to Canadian authors asking for the GST. From their perspective, sadly, OP's accountant is correct - the funds we receive from Amazon.ca are to be treated as GST-inclusive, requiring us to remit a percentage to the CRA.

IF you are making enough Canadian sales to be required to collect and remit GST. That threshold is approximately $30,000 / year (all sales made in Canada, paperbacks, cons, etc, etc, included) at which point you need to get a GST number and may be on the hook for the GST on your .ca sales.

As in any situation regarding taxes, you are always best off talking to the professional who knows your exact situation. The above is generally correct given the current set up Amazon.ca is using, but your own tax situation is always unique.

 

Sadly, all indications are that Glynn Stewart is correct. And to answer the implied question, yes I'm over the 30k threshold this year for direct sales (where I deal with Amazon directly). There is some hope that Amazon has a US address, in which case I'd be dealing with an international vendor and would therefore be GST-exempt, but that seems unlikely.

My royalties through my agent are considered international and are therefore exempt, which is a damned good thing since that's the bulk of my revenue. TBH, I'll be moving Outland to my agent next year, so the problem will go away in the long term, but it looks at the moment like I could owe CRA a couple grand out of my royalties. It's probably easier to just eat it rather than trying to extract it from Amazon, though.

Just to clarify, this isn't about the GST collected on book sales. Amazon takes care of that. This is about the position of the CRA that the royalties I'm getting from Amazon are in effect me charging  for a product or service, and that I should be "charging" Amazon 5% GST on those royalty amounts. Even if most of the actual book sales are to fer'ners.

 

A small addendum to this. After I posted the above, I remembered that I had to fill out that form so that Amazon wouldn't withhold taxes for the IRS. I hope I remember that correctly - it's been a few years. Anyway, that would seem to indicate that Amazon is a foreign firm from my POV, and I'm not dealing with the Canadian arm of Amazon. I've sent off an email to my accountant.

 

Sadly, all indications are that Glynn Stewart is correct. And to answer the implied question, yes I'm over the 30k threshold this year for direct sales (where I deal with Amazon directly). There is some hope that Amazon has a US address, in which case I'd be dealing with an international vendor and would therefore be GST-exempt, but that seems unlikely.

My royalties through my agent are considered international and are therefore exempt, which is a damned good thing since that's the bulk of my revenue. TBH, I'll be moving Outland to my agent next year, so the problem will go away in the long term, but it looks at the moment like I could owe CRA a couple grand out of my royalties. It's probably easier to just eat it rather than trying to extract it from Amazon, though.

Just to clarify, though, this isn't about the GST collected on book sales. Amazon takes care of that. This is about the position of the CRA that the royalties I'm getting from Amazon are in effect me charging for a product or service, and that I should be "charging" Amazon 5% GST on those royalty amounts. Even if most of the actual book sales are to fer'ners.

But Amazon is not buying your books, so why on earth would they pay you GST?

 

NOTHING TO SEE HERE

 

I just looked at my last order on the .ca site, and sure enough, they collected GST from me.

Amazon charges GST/HST/PST on physical merchandise. Not on ebooks.

This should be a fight between them and the CRA, not one involving us, but it's one I have heard of them involving authors in.

[quote author=bizmuth]
Just to clarify, though, this isn't about the GST collected on book sales. Amazon takes care of that. This is about the position of the CRA that the royalties I'm getting from Amazon are in effect me charging for a product or service, and that I should be "charging" Amazon 5% GST on those royalty amounts. Even if most of the actual book sales are to fer'ners.
[/quote]

That...that is an epic fustercluck of epic proportions that I really hope they don't throw in my direction.

As you said in your later post, however, the US tax forms you fill out with Amazon should be pretty solid proof that is not the case. Good luck!

 

My accountant spoke to tax peeps for me. whole thing is kinda grey area.

but basically it comes down to this...

don't worry about GST.

The only sales that could end up being problematic are canadian ebook sales. And if you like most people canada pretty low are your revenue streams....

 

If you're making 30K on the .ca store you're likely making six figures on .com so 5% GST on Canadian sales are pretty much the definition of nothing if they decide to tag you with it.

And once you get into six figure earnings, CRA will tag you with "reassessments" of a few grand pretty much like clockwork with explanations no one can figure out, and you learn to just write them a cheque and cross your fingers that they'll be off your back until next year.

 

Okay, first, just to clarify the "royalties" thing. I reiterate, this has nothing whatsoever to do with the GST collected by Amazon when someone buys a book.

If I was a computer programmer, and I did some work for a Canadian company, I would have to charge them GST on my bill, i.e. 6 hrs @ $75/hr = $450, + 5% GST = $472.50 ttl. If the company is non-Canadian, I don't have to do that.

My accountant thinks that the royalties that Amazon pays me (if they come from Amazon Canada) are the same 'kind' of income as a billing for work done, and therefore I should be charging Amazon GST on top of the royalties. OR, I have to remit 5/105 of my royalties to CRA if I want to just eat it.

It's looking less like Amazon is a Canadian entity, though, for purposes of this transaction. I had to fill out and sign a form when I set up my account with Amazon so that they wouldn't withhold tax at source. I think it was a W-something, and I'm in the process of searching for the URL to look at it (can anyone help with that?). Anyway, if my memory is correct, it's for the IRS, which would make the entity that I'm dealing with American by definition. If I can just find that form and take an image of it, it should settle things.

 

If you're making 30K on the .ca store you're likely making six figures on .com so 5% GST on Canadian sales are pretty much the definition of nothing if they decide to tag you with it.

And once you get into six figure earnings, CRA will tag you with "reassessments" of a few grand pretty much like clockwork with explanations no one can figure out, and you learn to just write them a cheque and cross your fingers that they'll be off your back until next year.

No, I'm not making $30K on amazon.ca . I'm making more than $30K from Amazon in total on one book. Mostly US sales. But as mentioned above, that's not the issue.

 

Ok, found the form. It's the 1042-S, and I have to re-confirm it each year. It's a tax declaration for a non-US citizen, to prevent Amazon from withholding taxes for the IRS. It identifies Amazon with a US address. Therefore, Amazon should be a foreign source of income from the CRA's POV. I'm just waiting for my accountant to verify this, but I think it's basically settled.