# Canadian Revenue Agency says I owe GST for Amazon sales in Canada HELP!!!



## Nancy Warren (May 5, 2014)

I got a letter from CRA saying I owe back GST. I had a phone call this morning with the person who wrote to me, thinking I could quickly clarify that since it's Amazon selling the books (headquarters Seattle USA) and not me, that I don't need to collect GST. She said that any book, e or otherwise, sold in Canada is GST applicable. In a previous thread someone said Amazon is submitting GST on our behalf, but I can't find any  information about that. I've been instructed (by CRA) to get Amazon to break out my Canadian sales by year AND province as the GST/HST rates are different, then I have to calculate the tax and remit that GST myself. I am freaking out.  

I assume I'm not the first Canadian author who's ever dealt with this. Advice Please?


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## KelliWolfe (Oct 14, 2014)

Topic from Jan '17 on this


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## ruecole (Jun 13, 2012)

When you submitted your GST did you input you earnings into the line for foreign sales? (Or whatever it's called?) If you inputted it into the Canadian earnings then that may be why they say you owe?


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## anotherpage (Apr 4, 2012)

Nancy Warren said:


> I got a letter from CRA saying I owe back GST. I had a phone call this morning with the person who wrote to me, thinking I could quickly clarify that since it's Amazon selling the books (headquarters Seattle USA) and not me, that I don't need to collect GST. She said that any book, e or otherwise, sold in Canada is GST applicable. In a previous thread someone said Amazon is submitting GST on our behalf, but I can't find any information about that. I've been instructed (by CRA) to get Amazon to break out my Canadian sales by year AND province as the GST/HST rates are different, then I have to calculate the tax and remit that GST myself. I am freaking out.
> 
> I assume I'm not the first Canadian author who's ever dealt with this. Advice Please?


Nancy,

"Amazon sells your copyrighted property on your behalf, collects sales tax on your behalf and remits to the CRA (and other tax agencies for sales in the UK, DE, US, etc, etc, etc), keeps a cut of the proceeds for their troubles and gives you the rest, which counts as income for tax purposes. That's it. It's as simple as that."

Basically.... unless you are selling directly on your website, it's not you doing the selling. It's Amazon or Itunes. They are the ones charging and then they are cutting you a royalty check after the fact. So your income comes from a USA based ( foreign-based company) You are NOT involved in the selling process.

Also bear in mind you can't go back to Amazon and get that information. The only information they give us is our 70% cut.

Be sure to see that thread someone gave https://www.kboards.com/index.php?topic=247213.0


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## RightHoJeeves (Jun 30, 2016)

I think you should probably call the Canadian tax people because this sounds like a scam.


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## Nancy Warren (May 5, 2014)

Thanks for the input. I did go back and look at those old threads and here was one comment from Glyn Stewart who is, himself, an accountant:

Amazon.ca does not collect GST or HST on ebook sales.

"Technically, if you buy ebooks from Amazon.ca you should self-remit the 5% to CRA at year end.  No one is going to do that, so CRA has occasionally come after the authors for the GST on at least their portion. (We are regarded as having an obligation to make sure our vendor does handle the taxes correctly, which they don't, and which we have no leverage to make them).

While there are arguments to be made both ways, given the scale of Canadian sales vs. everything else, I would suggest keeping that in mind as a risk and making sure you have that 5% of your Canadian sales on-hand if needed. It's easier to give the CRA a few hundred bucks and make them happy than to fight them."

So, I suspect I'm one of those unlucky authors who got nailed. I always thought that the online retailers were collecting and submitting GST for us, and, indeed, iBooks sends a notice telling me what they've taken and sent in. Luckily, my Amazon.ca sales aren't huge, but it's annoying and time consuming to have to resubmit GST returns. 

Also, the person I spoke to at CRA this morning said I have to remit 15% for any sales to Newfoundland and break out sales to all the different provinces as all their rates are different. That's the part that's doing my head in. It's not difficult to send in 5% of my Canadian Amazon earnings, but how in hell am I supposed to find out where each book was sold?  

Gaagghhhhh....

If anyone else has been through this, I'd love to hear from you. 

Thanks all


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## anotherpage (Apr 4, 2012)

Nancy Warren said:


> Thanks for the input. I did go back and look at those old threads and here was one comment from Glyn Stewart who is, himself, an accountant:
> 
> Amazon.ca does not collect GST or HST on ebook sales.
> 
> ...


Something about that doesn't ring true.

You are not involved in the Point of Sale so you do not have that information.

Second according to Amazon support and their website, Amazon.ca does collect tax on certain items. Please read this: https://www.amazon.ca/gp/help/customer/display.html/?nodeId=201516140 Otherwise they would not give BUYERS the option of being exempt for GST and PST. It even says, we will reverse the PST on your order if you are exempt. They even provide a fax number. Can you imagine them turning around and saying... sorry can't give you back the GST or PST as we never took it in the first place.

Also the terms and services of KDP statee: "5.4.8 Taxes. The Amazon parties (or their affiliates) are responsible for collecting and remitting any and all taxes imposed on their respective sales of Digital Books to customers."

It doesn't say "YOU are responsible for collecting and remitting any and all taxes imposed on sales of digital books to customers."

Authors responsibility in regardings to Amazon is to pay INCOME tax or taxes associated with receiving income not collect and remit on taxes that must go on the sales of digital books. (However, that's if you are working with Amazon) That's the key point. If you want to go via your website ( and not amazons website ) you are responsible for charging 5%, collecting and giving that to the CRA.

Third, your account should have asked you what INCOME were from the US and what income was from Canada.

Unless you were selling direct from your author website.

In theory if you are not selling directly to Canadians your tax form should have shown ( ZERO canadian income and $X for USA )

Then the tax man would go. Okay, there is nothing showing as canadian income and would have no reason to ask you for TAX as USA income is treated as excempt from GST/PST

Your income does not come from amazon.ca. Your income (royalty) comes from a USA based company who caters to canada.

You are not involved in the POS

I linked to a thread that has a link to CRA website that states clearly that its only to be charged at the point of sale. You are not involved in the point of sale ( because POS is controlled by a 3rd party USA website company that is a business not a payment processor like paypal. )

Here's what i found:

GST/HST is ONLY required to be collected at a point of sale. Yes, each point of sale. Here is a cut paste from "Guide T4012, T2 Corporation - Income Tax Guide (https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/t4012.html)" at https://www.canada.ca/content/dam/cra-arc/formspubs/pub/t4012/t4012-17e.pdf (more guides at After you register (http://www.cra-arc.gc.ca/tx/bsnss/tpcs/bn-ne/ftr-eng.html) )

"Example 3
A publisher in Ontario sells an order of historical fiction novels to a wholesaler in Ontario.
The novels are printed books for purposes of the rebate, and therefore, will be qualifying books. Because the rebate will apply to sales at any point in the distribution chain, the publisher will collect only the 5% federal part of the HST and pay or credit the rebate of the 8% provincial" (pg 4 of GST/INFO sheet BC/Ontario link as above) as an indie publisher pvt corporation (which is what I have) or indie sole proprietor OR a self published author (who does not have a company) you are not involved in a point of sale when you agree with amazon to have your intellectual property sold by them in ebook or (through createspace) a POD paperback they print up. You are receiving ROYALTIES from them. In amazon.ca a book that sales for $10 of yours will be collected by amazon.ca and they will give you roughly 70% (depending on pricing and other things I wont get into here) and they keep the 30% AND they charge the customer the tax. THEY are the first point of sale and tax has to be collected.

Now if you eventually go ahead in the manner of a traditional publisher and print up your own books and you sell to a local book wholesaler (who distributes to bookstores etc) and you get paid THAT is a point of sale and you collect tax from them. That situation is the example above from Revenue Canada's publication.

You simply tell them in plain English and referring to the publication (and others --do a search on the cra website Canada Revenue Agency Web site -- Site Web de l'Agence du revenu du Canada (http://www.cra-arc.gc.ca/)) the discrepancy is because your business both sells some books directly (ie if you have an online store or an ebay store where you sell some ebooks or printed out books of yours yourself) AND collect royalties from business entities like amazon who are using your copyrights via a contractual agreement of author to publisher (royalty payments) when they, the contracted party, SELL one of your items. Since THEY(amazon etc)are involved at the only point of sale they are required from the customers to collect the tax and send it in.

What is confusing for many new indie publishers is that they think of amazon etc as a customer. They are NOT your customer (like a book wholesaler would be to you in the above CRA example or a bookbuyer buying from your store). Rather you are in a legal contractual agreement for profit sharing with amazon (etc) over your intellectual properties (copyrights) and since they handle the only point of sale the onus is on them to collect the tax (and they do). Amazon.COM does this too (they have a gst number for canada).

For you to pay hst that happens only when you directly sell an item thru your store OR to a distributor and HE PAYS YOU up front (a point of sale) for you to ship him some books. You charge them hst for that point of sale. Then they turn around, up the price, and sell it to the bookbuyer and collect hst (a 2nd point of sale, notice its not double taxing because its not the same point of sale!).

Amazon does charge and collect tax for countries

https://www.amazon.ca/gp/help/customer/display.html/?nodeId=201516140


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## anotherpage (Apr 4, 2012)

Nancy Warren said:


> Thanks for the input. I did go back and look at those old threads and here was one comment from Glyn Stewart who is, himself, an accountant:
> 
> Amazon.ca does not collect GST or HST on ebook sales.


I would not be taking the advice of someone online and I would go and speak with your own accountant.

The question is not whether or not amazon.ca collects GST OR HST

The determining factor is are you involved in the POS as shown by the information from the CRA website which determines if you should charge, collect and submit.

Think about this for a second Nancy.

Do you really think Amazon is going to get a free pass operating in Canada but yet have to collect and submit tax in other countries?

Do you think the CRA is going to let Amazon get away with it when they don't let iTunes get away with it?

They have to collect and submit, just as iTUNES and other companies are.

And even if they are not. You are not responsible for what they don't do.

Why? Because they are the point of sale not you.

Again ... You are not the seller of books, Amazon is.

It sounds like your accountant has incorrectly filled in your income to make the CRA believe you are dealing directly with Canadians.


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## Joseph M. Erhardt (Oct 31, 2016)

I second the thought that this might be a scam.  Contact the Canadian authorities _yourself_, using a phone number gotten from a neutral source, and ask whether they _really_ have sent you a letter and phoned you.

Here in the U.S., I myself have had an arrest warrant issued on me by the Internal Revenue at least five times.  A voice on the telephone told me so.


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## Northern pen (Mar 3, 2015)

I haven't started my taxes this year, but last year my accountant spoke to CRA to get some clarity.

And there isn't really much. It is very grey area. It is very likely that you do owe gst on Canadian sales, although it is completely impossible to tell what province they come from.


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## ShaneCarrow (Jul 26, 2017)

Joseph M. Erhardt said:


> I second the thought that this might be a scam. Contact the Canadian authorities _yourself_, using a phone number gotten from a neutral source, and ask whether they _really_ have sent you a letter and phoned you.
> 
> Here in the U.S., I myself have had an arrest warrant issued on me by the Internal Revenue at least five times. A voice on the telephone told me so.


Thirding this. Scammers posing as tax officials has become really common in recent years.


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## MarkParragh (Oct 11, 2016)

> Here in the U.S., I myself have had an arrest warrant issued on me by the Internal Revenue at least five times. A voice on the telephone told me so.


Is there a reward for you by any chance, Joseph?


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## going going gone (Jun 4, 2013)

ShaneCarrow said:


> Thirding this. Scammers posing as tax officials has become really common in recent years.


I know of an elderly man who committed suicide over multiple tax scam phone calls. It's a nasty business.


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## WHDean (Nov 2, 2011)

Thevoiceofone is right. What Glyn said doesn't ring true. You should talk to an accountant or a tax lawyer about this. Don't take advice from online sources.

Keep this top of mind when dealing with CRA:* Neither the agency nor its representatives have a legal duty of care. That means they are not obligated to tell you what's in your best interest or even give you correct advice.* As others have said, you could have put the income on the wrong line. They will not tell you this because they're not obligated to help you save on your taxes. I know, it's hard to wrap your head around, but it's true.


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## C.F. (Jan 6, 2011)

kw3000 said:


> Keep in mind I am not an accountant,
> 
> but...
> 
> ...


The OP is having an issue with GST, goods and services tax (kind of like sales tax). It has nothing to do with income or income tax.


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## KelliWolfe (Oct 14, 2014)

kw3000 said:


> all sales through Amazon - regardless of which Amazon store (UK, Canada, Australia, etc) you've garnered sales from -
> 
> all Amazon sales are considered U.S. income because Amazon is a U.S. company -
> 
> therefore you report ALL Amazon income as foreign income...


Amazon is a multinational corporation with local divisions in various countries. Where it has an established presence it is considered local for tax purposes. This is why you get separate payments from Amazon.ca, Amazon.uk, Amazon.in, etc. rather than one big check from General Zon every month.

Amazon also fights tooth and nail to avoid having to pay local taxes where it does business, including GST in Canada. They've been fighting for over a decade in the US, they recently lost in Australia, and they're currently in the middle of fighting to keep from having to pay GST in India and Brazil. As far as I can tell they do not collect GST from sales ON EBOOKS made through Amazon.ca, so payments from that store are GST-inclusive.

About Sales Tax on Items Sold by Sellers on Amazon.ca


> Kindle books, subscriptions and active content titles sold by various publishers are subject to tax based on the publisher's tax reporting obligations and the taxability of digital books in those provinces. As a result, tax for Kindle books sold by the publisher may differ from the tax to which you've been accustomed for Kindle products.


Essentially Amazon is arguing that you are no different than any other Amazon Marketplace seller and it's *your* responsibility (or the purchaser's) to pay the tax. Technically this would also apply to ebooks purchased by Canadians from Amazon.com (which I gather happens a lot), but good luck figuring that out.

This is about to come back and bite Netflix customers in Canada, because the GST also applies to digital services - which Netflix does not pay because they _are_ a US corporation with no base of operations in Canada. That means each customer is supposed to pay GST based on their monthly subscription fee, and Ottowa wants their cut and is doing their best to figure out how to collect.


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## anotherpage (Apr 4, 2012)

northstar said:


> I got nailed by the CRA for reporting US royalties as foreign income (as I thought I should). I was told the income from any book sales goes onto line 104.


If you are not involved in the POS or capable of issusuing an invoice directly to a Canadian customer you are not responsible for GST collection.

You receive income from a USA based company. It's FOREIGN INCOME.

You have not dealt directly with a canadian buyer ( Unless you are selling books from your personal website ).

Amazon has dealt with customers originating from Canada ( like a guitar store that sells your guitar on consignment)

YOU ( WE ) are not involved in the point of sale ( POS ) when having books sold through companies such as amazon, barnes, itunes

YOU ( WE ) have entered an agreement with a 3rd party company that is present in the USA, they cut us the check ( but we are not employed by them )

Your income is foreign based as you are NOT getting it from a Canadian customer. Amazon is not your customer ( regardless of where they are or how they issue royalty to you). They are also not a payment processor but a business and that's why they are collecting VAT from customers instead of telling UK authors to take portion of their royalty and pay the VAT. They are collecting and submiting. Whether they are doing that for Canada is to be seen.

You might see in your bank account the payments from them divided by canada, uk, france and so on but the SOURCE is from the company that is based in Amazon Seattle. ( Just like Clickbank pays a commission to you and sells your product on your behalf )

Those customers are not yours and you have not dealt with them directly.

I have a sneaky suspicion that you are writing down that you made money from amazon.com, amazon.ca, amazon.co.uk and so on. And so the CRA is assuming you have dealt with Canadians directly at the point of sale ( which you have not )

What should be told to your accountant is that you have entered an agreement in which Amazon ( USA COMPANY ) who takes your product and distributs it. ( yes you can set a suggested price BUT they can change that price, that's why they have terms that state they can.... why? because they class it as their product ) They deal with the POS in many countries and basically selling products then cutting you a portion of the profits ( royalty).

At no point are you dealing with UK, USA, CANADIAN, FRENCH etc customers.

You are dealing with AMAZON ( USA ) the company.


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## anotherpage (Apr 4, 2012)

KelliWolfe said:


> Amazon is a multinational corporation with local divisions in various countries. Where it has an established presence it is considered local for tax purposes. This is why you get separate payments from Amazon.ca, Amazon.uk, Amazon.in, etc. rather than one big check from General Zon every month.
> 
> Amazon also fights tooth and nail to avoid having to pay local taxes where it does business, including GST in Canada. They've been fighting for over a decade in the US, they recently lost in Australia, and they're currently in the middle of fighting to keep from having to pay GST in India and Brazil. As far as I can tell they do not collect GST from sales ON EBOOKS made through Amazon.ca, so payments from that store are GST-inclusive.
> 
> About Sales Tax on Items Sold by Sellers on Amazon.caEssentially Amazon is arguing that you are no different than any other Amazon Marketplace seller and it's *your* responsibility (or the purchaser's) to pay the tax. Technically this would also apply to ebooks purchased by Canadians from Amazon.com (which I gather happens a lot), but good luck figuring that out.


First, you are right Amazon is operating in various countries through fulfilment houses, yet they are the POS, not you. Even though each amount is divided instead of one lump sum that isn't done for you to determine GST. GST must be done at the POS ( and shown to the buyer so there is no hidden tax ), if it's not done the ownership falls with amazon as they are the ones selling. You are not selling to customers. You are not selling to Amazon. You are providing the rights and licensing to a seattle based company called Amazon to distribute where they choose, and how they choose, and whatever price they choose (That's why they say they reserve the right to change pricing as they choose. KDP terms of services covers this )

Which brings me to my next point.

1. KDP terms and services: "5.4.8 Taxes. The Amazon parties (or their affiliates) are responsible for collecting and remitting any and all taxes imposed on their respective sales of Digital Books to customers."

It does not say the author is responsible for collecting and remitting any and all taxes imposed on sales of digital books to customers through them. It says they are the ones who collect and remitt.

But what it does say next is the following "You are responsible for any income or other taxes due and payable resulting from payments to you by an Amazon party under this Agreement."

This means it is our responsibility is to pay INCOME tax or taxes associated with receiving income NOT collect and remit on taxes that must go on the sales of digital books. (However, that's if you are working with Amazon) That's the key point. If you go via your website ( and not amazons website ) you are responsible for charging 5%

2. This link back us what they say in their terms and services. https://www.amazon.ca/gp/help/customer/display.html/?nodeId=201516140 as it points out that there are those who might be exempt from PST and GST and if so they can contact Amazon and request to have it reversed and they will reverse it. They cannot reverse what they haven't charged. This backs up what their terms of services states which is they COLLECT and they REMIT regarding items.

3. That link you gave which is the second article down after the one above: https://www.amazon.ca/gp/help/customer/display.html/?nodeId=201516160&tag=vglnk-ca-c547-20 Just restates "Kindle books, subscriptions and active content titles sold by various publishers are subject to tax based on the publisher's tax reporting obligations and the taxability of digital books in those provinces. As a result, tax for Kindle books sold by the publisher may differ from the tax to which you've been accustomed for Kindle products." It says BUYERS are subject to tax based on the obligations and the taxability of digitial books in a proviince. Those will vary according to straight products. Because the tax for digital is different to pysical. It doesn't mean they "AMAZON" are not collecting

Ultimately our responsibility is not whether or not they are charging GST/PST. A Canadian authors job is to explain to the tax man WHY they marked their IPP (digital income) at zero rate. And the reason is because Amazon and their customers are not our customers and we are not involved in the point of sale. We have licensed the right to a IPP to a USA based company for them to distribute as they please. Essentially exporting to the USA our product.



> Okay, so we split out the Amazon.ca sales for the year on our KDP dashboard and pay 5% of that to the CRA, is what it sounds like to me. Maybe Glynn Stewart is correct.


No you don't split it out because YOU are not the POINT OF SALE ( amazon the usa based company is )

If you were selling from *YOUR WEBSITE* to Canadians, yes you would have to split it out and charge them the 5% percentage:

But you are not selling from your website ( at least i hope not ), neither do you own amazons websites.

You provide amazon with a product, text information, a category and a suggested price. (As they have said many times in emails when discussing pricing. "We retain discretion over our retail prices" That's because they are the ones operating the business. You are merely giving them the rights and license to do whatever the hell they like with your product.

ANd hence the ownership is on Amazon to collect and submit. ( whether they do that or not is none of your business ) because you are not involved in the POS transaction.

*It's like taking a guitar into a USA guitar shop and placing it on consignment. If the guitar store sells it to someone in Canada, they charge tax at the point of sale, and then after they phone you and say... hey WE just sold your guitar, come get your cut of the profits. You then get your share of the money ( income ) and pay INCOME tax on that income (not to be confused with GST/PST). But you were not involved in the point of sale, they were.

If that guitar shop does not charge the customer tax ( is the ownership on you? ) No, because you are not the one doing business with customers. You are doing business with the guitar shop who is in USA. And if that guitar shop has a website in Canada, UK, FRANCE etc, they are still the ones responsible even if they pay your royalties in canadian, usa, uk or whatever.*

And remember that's using the analogy of a PHYSICAL product. Things get very gray when you start dealing with digital products and intangible personal property (IPP)

However, if you GIVE to your accountant a sheet that has broken down the sales as it shows in KDP ( Yes, you are going to get into trouble because you are suggesting to the CRA you are the POS dealing with different companies, and specifically canadians who they assume you have sold directly to)

And that's why the tax man in many countries around the world are going after Amazon to charge tax, not you, because they know Amazon is the POS and Amazon is the one running the book store (or guitar shop for example ). All those customers are not yours, they are Amazons.

What these other Canadians authors have probably told their accountants is that they get money from amazon canada, amazon uk, amazon usa......

When in reality.... AMAZON ( usa based company that oversees its international urls ) is the one who has received money from amazon canada, amazon uk, amazon usa etc

Not you.

You get your money from AMAZON ( US COMPANY ) a long time AFTER the pos. After they have taken their 30%.

At no point are you DIRECTLY dealing with someone in Canada and hence you cannot charge them a percentage of tax because you are not involved in the POS to be able to determine where they are.

The stuff inside KDP is only there for Amazon to clarify country sales, however, that has no bearing on WHO is paying you. It's a USA company that is paying you.

You can't go into Amazon and take your INCOME amounts and figure out 5% on that, because the percentage of tax is based on the TOTAL amount of the sale not your royalty alone or the amount amazon has taken. It has to be based on the POS amount. So determining who is responsible for the percentage is based on who is opearting the business and involved in the POS ( amazon ) not you.


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## anotherpage (Apr 4, 2012)

kw3000 said:


> I completely understand what you're saying, and it makes total sense. I get it.
> 
> BUT, the CRA is telling these authors something different, and when in doubt we have to listen to the CRA, do we not?


Oh without a doubt.

If someone has screwed up explaining this to their accountant and their accountant has filed paperwork that leads the CRA to believe you are the POS and are selling directly to Canadians. And you didn't pay that 5%, yes, they will come knocking wanting their money.

WHY?

Because they have NO IDEA that amazon ( USA COMPANY ) is the POS and has your book listed for $2.99 ( didn't charge 5% ), and you got $2.04 and amazon took the rest.

They don't know that.

According to their records because of the way the accountant has worded it. They think that $2.04 income has come directly from a canadian customer and you are the POS and you forgot to charge 5%

Best of luck trying to reverse their thinking. You will have to pay or have one hell of a good lawyer to explain it.

However, all of that could be saved if in the beginning had they been told that $2.04 income came from a USA company and you weren't involved in the POS. They probably wouldn't even be contacting you as they have no other information that would lead them to believe any different.


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## WHDean (Nov 2, 2011)

kw3000 said:


> I completely understand what you're saying, and it makes total sense. I get it.
> 
> BUT, the CRA is telling these authors something different, and when in doubt we have to listen to the CRA, do we not?


This is why you have to talk to a tax lawyer or chartered accountant (not just a bookkeeper, etc.). CRA will only come after you if you've submitted in a way that makes it appear as though you're involved in the point of sale (as Voice says above). If what you sent looks like Amazon Marketplace sales, eBay sales, etc., you have to charge and remit GST.

Again, everyone should get this through their heads: CRA does not have any responsibility to help you pay less tax. They go by what you submitted unless it benefits them to read it otherwise.


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## WHDean (Nov 2, 2011)

kw3000 said:


> Alright, so the lesson here is the authors who've been told by the CRA to pay up simply made a mistake in how they reported. I guess reporting as foreign income is the way to go then. Thanks to you and Voice for clarifying. Maybe this isn't so complicated after all.


Let me add for the umpteenth time that I'm not giving anyone tax advice. I'm advising them to talk to a tax expert who's been given a copy of Amazon's TOS because the claims made about paying sales tax make no sense.

What I personally might or might not do aside, I see no reason why people would not report income from Amazon in Line 104 Royalties:

https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/personal-income/line-104-other-employment-income/line-104-royalties.html

Amazon's TOS specify that you are receiving "royalties" (TOS 5.4) and that Amazon assumes responsibility for all applicable sales taxes (TOS 5.4.8 ).

ETA: As Voice has pointed out, people must be entering their royalties as business income, which means sales, which means GST is owing.


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## WHDean (Nov 2, 2011)

kw3000 said:


> I realize you're not giving tax advice, I have people I can talk to for that, but still I appreciate your clarifying a lot of this stuff. I agree, Line 104 Royalties seems to be the way to go, but of course, I'll be checking with my accountant on that.


Sorry about sounding nutty about the advice thing. I hate to see people getting squeezed, but I'm leery of saying anything online about legal/tax stuff.

People got nailed a few years ago for eBay and other online sales, and CRA is still fishing for people trying to get around it. I suspect that authors publishing through Amazon are falling into the trap of thinking they're doing something wrong because CRA called them and said so. CRA is just beating the bushes for tax cheats. And CRA does not care whether you _should be _filling under royalties or business income; they only care about bringing in money.


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## anotherpage (Apr 4, 2012)

WHDean said:


> ETA: As Voice has pointed out, people must be entering their royalties as business income, which means sales, which means GST is owing.


Just to be clear here, I'm not pointing out that the reason the CRA is contacting authors because they are reporting royalties as business income.

You actually have to report it as business income on line 135 if you have incurred expenses.

I'm saying that there is a good chance your accountant is receiving information from you that leads them to believe that the income source comes from dealing directly with Canadians and that your business involves point of sale. The accountant is then through their filing informing the CRA you have dealt with Canadians directly.

When really Amazon is taking your books (product) on consignment (Under a licence agreement) and cutting you a royalty(commission) IF they sell your books. ( They are the ones selling books not you unless you are doing it from your website). In which case if you are doing it from your website, you are involved in the point of sale and should charge tax accordingly.

You might have the expenses of covers, editors, promotion ( creating flyers on the street to alert people to that guitar in the shop ) and these are _valid business expenses._ But you are not involved in the point of sale as that Amazon website, the credit processor, that shopping cart and those customers gained on Amazon do not belong to you and you have NO control or involvement over that exchange.

In some countries, the tax people know this and that's why they are going directly to Amazon and telling them you must charge tax if you wish to operate a book business ( a guitar shop ).

It is cleared stated in KDP Terms of Service "5.4.8 Taxes. The Amazon parties (or their affiliates) are responsible for collecting and remitting any and all taxes imposed on their respective sales of Digital Books to customers."

It does not say "YOU are responsible for collecting and remitting any and all taxes imposed on sales of digital books to customers."

Our responsibility is to pay INCOME tax or taxes associated with receiving income not collect and remit on taxes that must go on the sales of digital books. (However, that's if you are working with Amazon) That's the key point. If you go via your website ( and not amazons website ) you are responsible for charging 5%

All accountants and the CRA should get a copy of the terms of service from KDP as it makes it pretty damn clear who is responsible for charging tax on digital books.

All you are doing is LICENSING a right to Amazon (you aren't selling to Amazon or their customers) as indicated in the agreement.

5.5 Grant of Rights. You grant to each Amazon party, throughout the term of this Agreement, a nonexclusive, irrevocable, right and license to distribute Digital Books, directly and through third-party distributors, in all digital formats by all digital distribution means available.


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## anotherpage (Apr 4, 2012)

WHDean said:


> I see no reason why people would not report income from Amazon in Line 104 Royalties:
> 
> https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/personal-income/line-104-other-employment-income/line-104-royalties.html
> 
> Amazon's TOS specify that you are receiving "royalties" (TOS 5.4) and that Amazon assumes responsibility for all applicable sales taxes (TOS 5.4.8 ).


Also bear in mind and this is very important....that is says at that page.

"If your royalties are from a work or invention of yours and there are no associated expenses, report the income on line 104."

*That's if there are NO associated expenses.*

"If there were associated expenses, report the income on line 135."

If you have expenses ( covers, editors, promotions, internet, computer costs and so on), those royalties (income from amazon) go on line 135 ( which is beside self-employment business income )

99% of Canadian authors if they are paying for covers, editors and promotions will have their amazon income appear on line 135 not 104. (104 is only if you have no associated expenses)

Be sure to have a good CPA who can do this for you.


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## WHDean (Nov 2, 2011)

thevoiceofone said:


> Also bear in mind and this is very important....that is says at that page.
> 
> "If your royalties are from a work or invention of yours and there are no associates expenses, report the income on line 104."
> 
> ...


Yeah, I wasn't clear above. Talking about this in public gives me the heebie-jeebies. By "business income" I meant that the GST problem is happening when people enter royalties as business income to deduct expenses. The accountant must be filling in such a way that they appear to be vendors using Amazon's marketplace. Either that or CRA's beating the bushes for people trying to pass off sales as royalties. There really are no other explanations.

Personally, if my expenses were nominal, I'd use the royalties category.


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## ruecole (Jun 13, 2012)

Well, I really appreciate you guys discussing this. It can be soooo confusing and I've found not many accountants seem familiar with the unique circumstances of self-publishing. They either need to educate themselves or you need to find an accountant who understands this stuff!


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## Nancy Warren (May 5, 2014)

I cannot tell you how much I appreciate all your help and kindness on this issue. I always do my GST myself but I think you're right, Voice of One, I should turn this over to a Canadian tax professional. I've looked at the CRA site, and Amazon, and wasted so much time without getting an 'aha, here is the answer'. I think you're right, and it's up to Amazon to collect and remit GST exactly the way Apple does. But we don't get those info slips like we do from iTunes, so I cannot prove it. If anyone has a good accountant to recommend, please PM me. I'm in BC but it probably doesn't matter too much.

Thank you again, fellow Canucks.


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## 87552 (Nov 4, 2015)

I am fairly new to Canada, and I can tell you that CRA (like any tax office) likes to act weird at times. I have a degree in Accounting, and I am the senior financial manager for a tech company; I have been around tax forms, balance sheets, income returns all my life.

As most people have said; if you generate income, you pay taxes on the income you generated. This is income tax. The HST/GST or basically value-added tax is the amount you collect on behalf of a government (keeping it very basic in the definition), where you have to forward that sum to the government (minus your expenses, where you pay to buy stuff with GST added to them).

However, unless you SELL something on your own and write invoices, you have no obligation to pay GST, TVA, KDV, VAT, etc. Amazon has to (do not confuse this with selling stuff without an invoice/unregistered/under the counter.)

You will only pay the generated income tax. If CRA says otherwise, sue them.

Still, if you feel uncomfortable with those forms that are basically designed to confuse you (maybe even on purpose), it is best to go for an accountant. If you do that before mid-March, they don't charge the extra. At least, that is what my firm's accountant has told me.

I just remembered how much I hate accounting =)


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## Steve Vernon (Feb 18, 2011)

I don't have anything to add to this, but I am definitely going to have to follow this thread.


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## WHDean (Nov 2, 2011)

Nancy Warren said:


> I cannot tell you how much I appreciate all your help and kindness on this issue. I always do my GST myself but I think you're right, Voice of One, I should turn this over to a Canadian tax professional. I've looked at the CRA site, and Amazon, and wasted so much time without getting an 'aha, here is the answer'. I think you're right, and it's up to Amazon to collect and remit GST exactly the way Apple does. But we don't get those info slips like we do from iTunes, so I cannot prove it. If anyone has a good accountant to recommend, please PM me. I'm in BC but it probably doesn't matter too much.
> 
> Thank you again, fellow Canucks.


In addition to everything else, take Amazon's Terms of Service with you to the accountant/lawyer. This is your contract with Amazon and it explains your relationship--i.e., what you were paid (= royalties).

And you don't have to prove the retailer paid the GST. That's between Amazon and CRA. I don't know how anyone got the idea that authors are responsible for paying the GST for Amazon.

ETA:

This story is worth reading because it talks about recent Supreme Court rulings on CRA's "duty of care." The Court said CRA has a _general_ but not a _specific _duty of care. The general duty means, basically, that CRA has to respect your rights even if you don't know them. But CRA has no specific duty of care. This means they have no obligation to help you file your taxes. So if you file in such a way that you appear to be a vendor, for example, when you're really just a receiver of royalties, CRA has no obligation to point this out to you, even if they recognize it. This is extremely important to bear in mind because we're used to dealing with all other gov't departments, which do have that duty, so we assume that what they tell us must be right.

http://business.financialpost.com/legal-post/judges-affirm-that-canada-revenue-agency-has-duty-of-care-to-taxpayers


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## WHDean (Nov 2, 2011)

kw3000 said:


> The only thing I can think is that maybe an author who is selling direct from their own website, or other platforms, as part of their business model mentioned being responsible for paying GST (which in that case they are, since they are involved at point-of-sale) and authors who only sell on Amazon/Kobo/Apple etc mistook that advice as pertaining to them and so the myth perpetuated that all Canadian authors are responsible to pay GST? That's my guess anyway.
> 
> I know for me, I got confused over income tax versus GST/HST. Then again, I am a simpleton.
> 
> ...


That's possible. I can't say for sure, of course, but I suspect it went something like this. Author files in a way that makes him look like a vendor. More than likely, he takes his sales report to his accountant, and his accountant interprets what the author calls "sales" as "sales income" instead of royalties. Soon after CRA calls the author and demands GST. Author says Amazon doesn't charge GST on ebooks. CRA says author still owes "his share" of the GST/HST. So the author comes to the conclusion that authors have to pay the GST that Amazon didn't.

Now, it makes perfect sense for someone to draw this conclusion based on these facts. And what CRA is asking for makes perfect sense given these facts. The author would have to collect GST were he a vendor and Amazon merely a fee-for-service distributor. Think of a craft market where the organizer sells tables to vendors. The organizer has to charge and remit GST on sales of the tables to vendors, and vendors have to charge and remit GST on the products they sell. Etsy and eBay are web-based versions of this. Even if these service providers take a cut directly at the point of sale, the vendor still has to charge GST on the total sale price and pay GST on the net of the sale (= balance after the service provider's cut/minus any surcharge). And even if a platform does not charge GST, vendors would still have to deduct it from their net and remit it.

The problem is that the author filed the wrong way to begin with. He should have been reporting his income to his accountant and to CRA as royalties on intellectual property sold by an independent entity. This is no different from royalties on any other IP. If I design a robot butler and sell the design to KUKA in return for royalties, I don't have to remit GST on every sale of the robot to a Canadian.


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## anotherpage (Apr 4, 2012)

I was discussing this with another Canadian author and they shot off an email to Amazon to ask them directly if they were collecting GST/PST on digital ebooks and how were they doing it.

That author shot me the email response from Amazon. I won't paste it here but I will paraphrase it.

They said yes they were responsible for collecting the GST/HST imposed on the sale of KDP books and submitting that to the Canada Revenue Agency on our behalf. They said that they don't deduct the GST from our royalties, they only collect it from the customer. The way it works according to them is that KDP calculates what the GST would be based on that list price and deducts the GST from the list price BEFORE they calculate royalties on the books sold to anyone in canada. They said that this was the same method they used to calculate royalties on all amazon sales where taxes like GST had to be collected from customers. They said that this collection of tax has no impact on the royalty we get from a book because they calculate our royalties based on the tax-exclusive price that is provided.

So essentially they are saying that if you type in $2.99 ( amazon figures out how much GST needs to be paid to the CRA, that gets removed from whatever they take for themselves and then they tell you what your royalty is ) So if our royalty is $2.04 on $2.99. That royalty amount is after they have taken their cut and the GST. 

My author friend asked if they could provide their GST number. They basically said that because they are collecting the GST from the customers and submitting it to CRA on behalf of the authors they aren't able to provide the GST number. 

I still think they should provide Canadian authors with some kind of PDF that details how much GST they paid the CRA ( Like iTUNES) as that way authors like Nancy who started this thread can provide that to the tax man if they get hassled. And it would clear it up.

Summary:

1. You are not involved in the POS with any of Amazon customers.
2. Amazon customers are not yours.
3. You do not issue invoices because of point #1 and #2 ( Unless you are selling direct from your website, then you must charge accordingly ).
4. You are in an agreement that has given the rights and license to Amazon to distribute and do whatever they like with your books in return they pay a royalty IF they make a sale. Essentially you are not a bookseller, you are a content licenser who licenses content. You don' t have sales you have royalties from this agreement.
5. According to an Amazon rep, Amazon calculates GST on "Suggested" list prices, and this is done BEFORE they determine your royalty. They charge customers in canada the list price and in that price, collect the GST and remit it to the CRA on behalf of authors. ( They currently do not provide you with any form that shows how much they paid so there is no way of knowing if that's correct but that shouldn't be a concern because of point #1).
6. You pay income tax on those royalties.

Disclaimer: The entire thread should not be taken as serious advice, it is just what we have been able to determine from Amazon's website, CRA website and an exchange with Amazon support team. Be sure to consult with a CPA accountant and abide by all CRA rules.

Be prepared to pay the CRA whatever they ask if you can't back it up with paperwork, lawyers or a good accountant.


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## notjohn (Sep 9, 2016)

American authors should be aware that the IRS defines "royalty" very differently. When we earn money from book sales, it is *earned income* reported on Schedule C, because we created the book.

If our spouse or child inherits the royalty, everything changes. It is now a property acquired by inheritance, so like a purchased oil well or apartment house it yields *unearned income*, which is reported on Schedule E.


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## ShadyWolfBoy (Sep 23, 2015)

I wasn't going to wade in on this, but since my name is all over this thread with certain unpleasantness implied about my knowledge base, I guess I may as well.

Firstly, I _am_ a Chartered Professional Accountant for the person who was suggesting I should get notes from their Chartered Accountant. The information I have provided here is inevitably high level and incomplete as anyone's own personal situation is complex. For tax and accounting situations, it is always better to find and engage a local CPA (I'm not, in fact, aware of any plain 'Chartered Accountants' left in Canada as that designation is now legally invalid) who is fully aware of their situation.
(I am also, relatively obviously I suspect to anyone who googles me, no longer working as an accountant so some of my information may be out of date now)

My suggestion to the OP boils down to "find a CPA." If you're having complexities with the CRA and the dollars involved are significant, you want the best taxation advice possible.

The general information provided in this thread is correct in that that Amazon is the sales agent and is responsible for submitting GST/PST/HST. You have no obligation to submit GST as you are not receiving sales.

However.

There is a recurring dispute between Amazon and CRA as to whether they need to remit GST/PST/HST on ebooks. If you look at an e-book on .ca, for example, you will see that it does not have GST broken out as part of the price. Amazon is not currently collecting GST on kindle, even though it is contractually and legally their obligation.

This should not fall back on us. As others have stated, we are receiving a royalty. Except that whether what we receive from Amazon actually counts as a royalty from a tax perspective is actually in some question, a question that has not yet been resolved.

For the vast majority of authors, your Amazon.ca sales are likely small enough that it is simply not worth it to fight the CRA. If they want 5% of your Canadian sales, just give it to them. It's cheaper than engaging the Big Four to go over your tax form and fight CRA for you.

What they are asking for in this case, however, is unreasonable as there is no way Amazon will give you that data.

I would recommend digging up the tax forms Amazon sends you that state you were paid in the USA for your Amazon.ca sales and having your accountant take that to CRA as proof of non-resident income.

For those who think this is a scam because CRA has no reason to contact you...sorry, no such luck. You can always call CRA back at the main line to verify the situation, but this is a recurring problem Canadian authors are having with our tax man. I have yet to see one of these cases where it reads like CRA is correct per the Income Tax Act, but unless challenged CRA's interpretation of the Act is considered final.


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## ShadyWolfBoy (Sep 23, 2015)

THIS! A thousand times this. Getting a tax expert and going over the situation with them is far more likely to help resolve your situation than taking the advice of folks on the internet.

(Also, I don't know about WHDean, but I actually have a legal obligation to say that I am not giving advice and I strongly suggest you speak to a specialist whenever I touch on accounting matters. Advice requires me to see a LOT more data and, frankly, would involve me charging for my time. Actual tax experts cost less than what it would take to get me to go over your taxes for you )



WHDean said:


> Let me add for the umpteenth time that I'm not giving anyone tax advice. I'm advising them to talk to a tax expert who's been given a copy of Amazon's TOS because the claims made about paying sales tax make no sense.
> 
> What I personally might or might not do aside, I see no reason why people would not report income from Amazon in Line 104 Royalties:
> 
> ...


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## anotherpage (Apr 4, 2012)

Glynn Stewart said:


> There is a recurring dispute between Amazon and CRA as to whether they need to remit GST/PST/HST on ebooks. If you look at an e-book on .ca, for example, you will see that it does not have GST broken out as part of the price. Amazon is not currently collecting GST on kindle, even though it is contractually and legally their obligation.


Well according to Amazon support team they are collecting GST and remitting on digital books sold through amazon.ca or they are not educating their support team on what they are doing because the email that my author friend sent specifically referenced DIGITAL books ( not print ) and asked about GST. So yes, i agree it is contractually and legally their obligation.

An Amazon support rep replied to my friend to say they were collecting and then went on to give a detailed explanation as to why Amazon isn't showing the GST as they should. ( According to them they calculate it based on the suggested price you give them before calculating royalty).

The way Amazon really should be doing it is listing a book online at $2.99 and adding 5% on top and showing the customer that. (so the customer can see).

What is strange is that under PRICING in KDP, there is a section beside the price referred to as WITHOUT GST (click marketplace) to see all stores and examples. If you go look at this you will notice that every store is showing beside the price either the words WITHOUT VAT or WITHOUT GST (for australia and india) The only countries where pricing doesn't have WITHOUT VAT or GST beside it is amazon.ca, amazon.com.br and amazon.com.mx.

However based on my purchase of an eBook on amazon.ca they charged me tax on top of my price (it's seen after purchase not before), and the same applies for paperbacks.

I plan on having my author friend contact them again and find out why that is, and why their email says they are collecting when in KDP under "pricing" (marketplaces) it's not showing the price set as having been affected by any tax.

Still it has nothing to do with us as we are not the POS. Amazon is. And Amazin is not a payment processor like paypal. They are actually operating a business like iTunes and that's why they collect tax from customers. (We are not invoicing, they are not our customers, we are not selling to them directly, we have entered a license agreement with Amazon for them to distribute as and how they please. According to their terms of service we are making income from profit sharing (royalty) and ownership is on them to collect any tax and remit it.)

KDP TERMS AND SERVICES: 5.3.4 Customer Prices. To the extent not prohibited by applicable laws, *we have sole and complete discretion to set the retail customer price at which your Digital Books are sold through the Program*. We are solely responsible for processing payments, payment collection, requests for refunds and related customer service, and will have sole ownership and control of all data obtained from customers and prospective customers in connection with the Program.

5.4.1 Royalties. If you are not in breach of your obligations under this Agreement, for each Digital Book sold to a customer through the Program, *the Amazon party that made the sale* (or whose affiliate made the sale) will pay you the applicable Royalty set forth in the Pricing Page, net of refunds, bad debt, and any VAT, sales or other taxes charged to a customer or applied with respect to sales to a customer.

5.4.8 Taxes. The *Amazon parties (or their affiliates) are responsible for collecting and remitting any and all taxes imposed on their respective sales of Digital Books to customers.*

The question is why are they saying via email they are collecting GST on digital but then nothing under pricing in KDP is indicating that.

So having said that, I agree with Glynn on the one point that if the tax man comes after you for money unless you have deep pockets or a good lawyer you might find it easier to just pay them what they are asking.


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## ImaWriter (Aug 12, 2015)

I have a .com account, so I can't verify this, but the last time this came up someone who does have a .ca account said they were being charged HST for their ebook purchases.


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## anotherpage (Apr 4, 2012)

A purchased ebook on amazon.ca ( it was not in kindle unlimited )

They charged GST/HST

Here's the screenshot










So that answers that.

I can also confirm from having looked at a paperback purchase around Christmas they charged tax on top. (It's seen after you pay which is what may lead people to believe they aren't collecting when they are).

I guess the only question is then why they don't show under marketplace (in KDP pricing) the second price with the words "Without GST" like they do with other countries?

Either way this proves they are charging GST/HST on digital ebooks. "Thanks to poster "Iamawriter" above for pointing that out. I don't know why we didn't think of doing that sooner."


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## ShadyWolfBoy (Sep 23, 2015)

That's fascinating.  Just checking my own most recent e-book purchase, GST/HST is showing as $0.00.

No wonder the CRA is confused!


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## AnnaBF (Aug 25, 2014)

I went back through my invoices for my ebook purchases for the past year. Some invoices have the GST and some don't. And I can't figure out what distinguishes them - what triggers the tax/notax.


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## anotherpage (Apr 4, 2012)

AnnaBF said:


> I went back through my invoices for my ebook purchases for the past year. Some invoices have the GST and some don't. And I can't figure out what distinguishes them - what triggers the tax/notax.


Any book in kindle unlimited doesn't show up as having been charged GST/HST. I'm guessing that's because they charge it at the membership level but the book above was an ebook not in kindle unlimited and that showed GST/HST.


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## Joseph M. Erhardt (Oct 31, 2016)

notjohn said:


> American authors should be aware that the IRS defines "royalty" very differently. When we earn money from book sales, it is *earned income* reported on Schedule C, because we created the book.
> 
> If our spouse or child inherits the royalty, everything changes. It is now a property acquired by inheritance, so like a purchased oil well or apartment house it yields *unearned income*, which is reported on Schedule E.


Indeed, and if you ever retire from writing, there will come a point where the earned Sched C income from the book royalties becomes unearned Sched E income as royalty royalties. 
(I don't recall the time period--a year or two, I think.)


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## Kate Lowell (Apr 18, 2015)

I just got hit with this and had a short phone conversation with the non-registered department and then GST rulings over it. They seem to believe that all royalties no matter their origin are subject to GST due to the fact that they are being deposited in a Canadian bank account and that when they are deposited, and they wanted me to make a determination of who owned the book at the time of sale. They also include all worldwide sales in determining the threshold, but when I went back and listened to that conversation again, I realized that there was no mention by the Rulings gentleman of which monies they expected to have GST remitted on. (My cell records all calls made on it--one-party rule for recording in Canada.) 

According to rulings, both the author and Amazon have to be registered for the GST and an election has to be made between Amazon and the author in which it's agreed that Amazon will collect the applicable sales taxes and remit them on the behalf of the author. There is a form GST506 that you can fill out--don't fill this one out! It's a trap! as the general would say. It makes you jointly and severally responsible for the taxes, so if they can't collect from Amazon, they'll just turn to the easier mark with shallower pockets and less ability to fight them. Our agreement with Amazon includes that election and it's been quoted several times in the course of this thread, but to be effective both parties have to be registered. (It's obvious that Amazon doesn't care, since there's no place to input that information)

As well, the licensing of intellectual property to an entity based outside Canada is automatically zero rated according to the Excise Tax Act--look under exports. The only gray area there (in a piece of legislation that has more shades of gray than Christian) is that goods intended to be sold and consumed/used in Canada will be subject to the tax, but it could be argued that since it's being fulfilled by Amazon Digital Services, that it's an import and the consumer is responsible for that tax (or Customs, but figure out how to track that...)

With respect to percentages, if you can't figure out where the person who bought your book lives, then the percentage automatically defaults to the highest one in the country, which means paying 15% HST as per the Atlantic provinces. Something to keep in mind...

It's my general thought process that CRA hasn't really caught up to this new economy, they're still trying to get things in place to deal with it, and in the meantime, policies and procedures are fueled more by rumors and closing accounts than actually knowing the ins and outs of their jobs and the legislation at the level where you're running into these people. There is tremendous pressure within the departments to complete a certain number of files each month and because pretty much everyone at this level is working contract-to-contract, the people who aren't 'performing' to the expected level are easily let go.

That being said, I'm waiting for my lawyer to get back to me, my accountant has been given the rundown and he seems keen to deal with this, and I have an appointment with my MP in two and half weeks to discuss what a shitshow the excise tax act is and to see if we can pin down when CRA's not having a duty of care crosses the line into bullying. Wish me luck, because if I have to pay another 15% to the government on top of what I'm already sending them, I'm either going back to hobby writing or I'm emigrating.

If everyone's okay with it, I'd like to show this thread and the linked ones to the lawyer and the MP. I suspect, because writers tend to be solitary and thus not very visible, they don't realize how many people in the country are making a little bit of money on the side with their writing.


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## C. Gockel (Jan 28, 2014)

I am so sorry OP and others are dealing with this. Our accountant is also a lawyer. If he facks up, it's in our contract that he goes to court on our behalf and fixes this crap. You might check the contract with your CPA?


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## Elizabeth Barone (May 6, 2013)

Has anyone contacted Amazon regarding this issue? This does NOT sound right to me.


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## NoLongerPosting (Apr 5, 2014)

Removed due to site owner's change to TOS.


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## Kate Lowell (Apr 18, 2015)

Rickie Blair said:


> Kate, your entire post sounds like a nightmare. I hope this doesn't become CRA's current hobby horse. If it does, I'd be willing to join any group of Canadian indie authors who need legal/accounting advice. Maybe we can get a group deal from someone?
> 
> Also -- this is really Amazon's problem. If they're not willing to collect Cdn sales tax on Cdn sales of ebooks, then our only recourse is to refuse them the right to sell our ebooks in Canada. Which is ridiculous (if we could even do it, which I doubt). Amazon used to do this in the States, too, but they've since cleaned up their act and now charge sales tax in states where it applies, I believe. Why can't they do the same thing here?
> 
> CRA is zeroing in on the small fry, which is us, but completely ignoring all the non-Canadian ebooks sold on Amazon to Canadian buyers without charging sales tax. That's got to be many many many many times the amount of sales tax lost on our meager sales. They really don't have a clue. Their fight is with Amazon, not us, but they don't have the cajones to take on the Zon. So they're batting us around the ring instead.


Going down the list here...
This is definitely CRA's new hobby horse, along with some other things going on. They're frustrated with Amazon and maybe hoping we'll herd enough cats together to put pressure on Jeff. But they don't understand, because they haven't been in our shoes, that Jeff doesn't really care about the Canadian market. We're convenient and hungry, but if we started making things tough for him, he'll just change something to make things tough for us. And I called a couple of writer's associations across Canada this morning--they were clueless, not even aware that this was starting to happen. The lady in Ontario really didn't even want to hear about it, kind of an ostrich thing was how it came across to me. I'm staring at the RWA page right now, debating whether to make the leap, though I've been told that they're not much force in respect of things like this. I might make the jump anyway--it's only one year, and if I'm going to be required to remit 15% of my gross earnings on top of the income tax I send in, then this job isn't tenable for me anymore. Back to hobby writing, which at least carries the cachet of being able to say, "I don't care what the market's buying!" 

Amazon started collecting and remitting appropriate taxes in the US because the government made them do it--that's really what it comes down to. But amending legislation around here is a nightmare and the government, like any other corporation, would rather do it the easy way. Which means going after people who are under their power and subject to the looser regulations that surround CRA's ability to deem amounts owing and to collect on those amounts and who may not be able to afford a lawyer or have the reading comprehension necessary to understand what's going on.

I'm really convinced that they don't think there are many of us so it's not likely that we can organize effectively. The writer's groups talk all the time about how writers only average about $10,000 a year through sales and grants, but I suspect most of us who make more money than that just don't bother with those groups, so it's like we don't exist. Mostly because we're too busy reading the market, working on building our business and networking with other effective authors to spend time running around announcing our existence. I mean, everyone knows we have lots of musicians making money in Canada--why is Margaret Atwood the only Canadian author most of the population can think of off the top of their head? Honestly, we need one union, for both trad and indie, where everyone is under the same umbrella with branches across the country. Then we'd start to look like something to be paid attention to.


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## NoLongerPosting (Apr 5, 2014)

Removed due to site owner's change to TOS.


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## Kate Lowell (Apr 18, 2015)

Hahaha, that's my fallback position! If I can't get them to lay off the fat US dollars, I plan to minimize the damage as much as I can. And then I'll have to raise Canadian prices and maybe stick something in the blurb about including tax in the price.


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## Anna_ (Jan 18, 2015)

I purchased an ebook a few weeks ago and I was charged GST. I'm not sure why CRA wants money that Amazon is collecting. Could there be something in the way a book is being uploaded on Amazon that does/doesn't charge GST? If CRA is shaking you down for GST and Amazon is already collecting it, CRA is collecting twice.


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## NoLongerPosting (Apr 5, 2014)

Removed due to site owner's change to TOS.


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## Gone To Croatan (Jun 24, 2011)

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## BethanyKris (May 31, 2016)

First post here from me ever.   

I'm a Canadian author making low six figures. I report GST every year from Amazon Canadian sales. It's not a big deal. KDP provides you with a report every month that shows you exactly what you made in the Amazon Canada store. Simply keep those numbers aside. At the end of the year when you do your taxes, you'll have to do a separate GST as well and this is where you put that. Just the sales in Canada. On a better note, you also get to claim all the HST/GST you paid for things for your business and it counteracts the GST they want you to claim. 

I've never had to pay in GST because of this. They always owe me usually in the hundreds. 

Someone suggesting to remove your books from the Canadian site seems like an overreaction, really. It takes all of ten minutes for me to go through my reports, collect Canadian income for the year, and do my GST. It's not a difficult process and if you're doing it right where you're reporting the HST/GST you've spent in business expenses, you'll likely get money back.


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## Kate Lowell (Apr 18, 2015)

That's kind of what I figured, but there's a lot of confusion about it all and once CRA gets an idea in their head, even if it's wrong, it can be pretty hard to shift them. I don't much care about paying GST on my Canadian royalties, but I for damn sure want something on paper from them declaring that this is 'the official way it is and will be done', for when verification decides that I'm hiding income.

On a related sidenote, I paid my estimate of my 2017 taxes tonight. Ouch.


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## Nancy Warren (May 5, 2014)

I didn't realise this thread had been revived. I'm sorry others are going through this! I have no problem with my posts being shared with lawyers etc.

There is a lot of confusion over this. I contacted KDP help and they confirmed that THEY are both collecting and remitting Canadian GST exactly as they do with VAT.  We should not have to calculate and send in GST on our own unless we are selling books off our own site. I printed out the reply and the relevant TOS and mailed it to the person I was dealing with at CRA. In our last phone call she seemed satisfied.


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## Guest (Apr 30, 2018)

My meager understanding of sales tax is:
If I sell a bunch of books to a distributor or retailer (Amazon, etc.) I can not collect sales tax from them.
They would even laugh if I sent them an invoice for it.
That's because they have a tax-exempt certificate since the items are for resell.
But then the distributor or retailer has to collect sales tax from their customer and remit that to the tax man.
Unless we sell from our own site, we don't collect the tax.


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## C. Gockel (Jan 28, 2014)

Nancy Warren said:


> I didn't realise this thread had been revived. I'm sorry others are going through this! I have no problem with my posts being shared with lawyers etc.
> 
> There is a lot of confusion over this. I contacted KDP help and they confirmed that THEY are both collecting and remitting Canadian GST exactly as they do with VAT. We should not have to calculate and send in GST on our own unless we are selling books off our own site. I printed out the reply and the relevant TOS and mailed it to the person I was dealing with at CRA. In our last phone call she seemed satisfied.


I'm so glad you've gotten this straightened out!


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## Nancy Warren (May 5, 2014)

C. Gockel said:


> I'm so glad you've gotten this straightened out!


And that would be two of us


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## Kate Lowell (Apr 18, 2015)

Nancy Warren said:


> There is a lot of confusion over this. I contacted KDP help and they confirmed that THEY are both collecting and remitting Canadian GST exactly as they do with VAT. We should not have to calculate and send in GST on our own unless we are selling books off our own site. I printed out the reply and the relevant TOS and mailed it to the person I was dealing with at CRA. In our last phone call she seemed satisfied.


Thank you, Nancy! I'm glad too that you got that straightened out.  If we can get someone who will actually send an email like that from KDP, that's great. I'll keep everyone updated on what the lawyer says, though. It's a terrible thing to say, but I don't entirely trust the CRA in this. Imagine that!


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## NoLongerPosting (Apr 5, 2014)

Removed due to site owner's change to TOS.


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## BethanyKris (May 31, 2016)

What Rickie said. 

Also, I am not in the business of fighting with the CRA, you know? 

I mean, if you want them in your business and digging through your files and accounting, then go ahead and fight them on it. But it's easy and measly to claim the GST, and again, if you're claiming the GST/HST you spend in a year for business expenses, they're more often than not going to owe you. 

You can prove with your Amazon reports which sales were Canadian, and which ones were from other countries. Easy peasy. 

In other news, logged onto my CRA account this morning to see my accountant filed my taxes (I get her to wait until the last day every year) to find my owning balance is $11,577.47 for this year. 

It's over 10k less than it was last year (yay for more write-offs!), but yikes all the same. 

The only refund I ever get now is with my GST/HST filing. Hahaha.


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## NoLongerPosting (Apr 5, 2014)

Removed due to site owner's change to TOS.


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## A. Pepper (Apr 19, 2018)

Perhaps the worst part is your accountant charging you for the time they spend trying to figure it out. That amounted to far more than the $$ of GST owed. FWIW, my CDN sales are quite low, so my input tax credits were higher than the collectible tax, and I ended up with a small refund.

I don't think I should be paying it at all, but I'll do what the accountant says. We're just prawns to the CRA anyway.


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## Kate Lowell (Apr 18, 2015)

Saw this today: http://www.cbc.ca/news/canada/nova-scotia/canada-revenue-agency-halifax-artist-sculptor-tax-bill-1.4639086 Looks like we're not the only ones that CRA is targeting. I guess the arts just aren't that important, right?


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## WHDean (Nov 2, 2011)

Rickie Blair said:


> Intrigued, I went back further and counted exactly. Here are my exact tallies for the past six months (i.e. Nov. 1 to today):
> 
> My ebook purchases on amazon.ca that _did_ charge sales tax: 6
> My ebook purchases on amazon.ca that _did not_ charge sales tax: 18.
> ...


Or it tells you the GST/HST on KDP purchases is* inclusive*. In other words, Amazon deducts the GST/HST from the sale price. This is explained in the TOS about the U.S. VAT, and people have received this same explanation from Amazon about how GST is paid.

But this is neither here nor there. No one who is not involved in the point of sale should be remitting sales tax. The earlier part of the thread suggests reasons people might be going wrong and getting calls from CRA and the documents you should be sending to your accountant or tax lawyer. Most of what's appearing in the revival of this thread was explained in the first two pages.


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## Anna_ (Jan 18, 2015)

Rickie Blair said:


> Intrigued, I went back further and counted exactly. Here are my exact tallies for the past six months (i.e. Nov. 1 to today):
> 
> My ebook purchases on amazon.ca that _did_ charge sales tax: 6
> My ebook purchases on amazon.ca that _did not_ charge sales tax: 18.
> ...


That's what I was wondering. If somehow some books were being excluded or something wasn't being ticked off in the upload process, but I think you're probably right about trad publishers making sure GST is charged.


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## NoLongerPosting (Apr 5, 2014)

Removed due to site owner's change to TOS.


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## WHDean (Nov 2, 2011)

Rickie Blair said:


> Well, it would explain it if this was the case on every sale. But it's not. In some cases (as I noted above) the GST is clearly added on. In others, it's not. Whatever process Amazon uses, it should be same on every sale.
> 
> Although, I agree that it shouldn't be our problem. Still, I'd rather pay the GST myself than get into a debate with CRA over it.


You wrote:



Rickie Blair said:


> _All of the purchases that were charged tax were for traditionally published books_.


Do trad publishers self-publish through KDP? No. And that's the difference. GST on KDP ebooks is inclusive. That's what Amazon says on its taxes FAQ and in its TOS, as pointed out up thread.

By the way, CRA loves people who pay taxes they don't owe.


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## Kate Lowell (Apr 18, 2015)

WHDean said:


> You wrote:
> 
> Do trad publishers self-publish through KDP? No. And that's the difference. GST on KDP ebooks is inclusive. That's what Amazon says on its taxes FAQ and in its TOS, as pointed out up thread.
> 
> By the way, CRA loves people who pay taxes they don't owe.


I'm having a moment of search idiocy--could you link to the part where it says that GST is inclusive on ebooks that are self-published? I can't find it at all and my eyes are burning out of my head looking. Or is it on the page where we set our prices? And you are so right about CRA loving people who pay taxes they don't owe.

I'm going to need to document that page reads taxes are covered in the taxes paid on the program subscription too. Because you know that's going to get questioned at some point, because it looks like $$.


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## WHDean (Nov 2, 2011)

Kate Lowell said:


> I'm having a moment of search idiocy--could you link to the part where it says that GST is inclusive on ebooks that are self-published? I can't find it at all and my eyes are burning out of my head looking. Or is it on the page where we set our prices? And you are so right about CRA loving people who pay taxes they don't owe.
> 
> I'm going to need to document that page reads taxes are covered in the taxes paid on the program subscription too. Because you know that's going to get questioned at some point, because it looks like $$.


Near the end of Amazon's _Kindle Direct Publishing Terms and Conditions_, you'll see these formulas (and others) for calculating your royalties:



> 35% Royalty Rate x (List Price - applicable VAT) = Royalty
> 70% Royalty Rate x (List Price - applicable VAT - Delivery Costs) = Royalty


"VAT" means "value added tax" (= sales tax). *The GST is a VAT*. As you can see, it's subtracted from your list price, meaning it's inclusive on the selling price, not added to it at the point of sale.

The TOS also specify that you receive royalties (= you're not a vendor) and that Amazon remits the VAT (= GST) as part of the agreement. You should take a copy of the TOS to your accountant or send it to CRA because CRA is treating you like a vendor. But you are not selling to Amazon and you're not involved in the point of sale and have no way of collecting GST.

All this talk of whether Amazon does or does not remit GST is irrelevant. All that matters is that you're not involved in the point of sale. You're in a royalty agreement only.

ETA: Earlier in the TOS, you'll also see the clause stating that you receive a royalty and that Amazon remits any VAT owing:



> 5.3.1 Providing Your List Price. The list price you provide to us is referred to in this Agreement as your "List Price." For some marketplaces, *you will provide us a List Price inclusive of value added or similar taxes that are included within the customer purchase price of a product ("VAT"). *Where your Royalty is calculated based on your List Price, it will be calculated based on your List Price exclusive of the VAT applicable to the customer. You may change your List Price through the KDP website, and your change will be effective within 5 business days. The Pricing Page has additional requirements for List Prices that you must comply with.





> 5.4.1 Royalties. If you are not in breach of your obligations under this Agreement, for each Digital Book sold to a customer through the Program, the *Amazon party that made the sale (or whose affiliate made the sale) will pay you the applicable Royalty set forth in the Pricing Page, net of refunds, bad debt, and any VAT, sales or other taxes charged to a customer or applied with respect to sales to a customer.* If your List Price for a Digital Book is higher than permitted under the Pricing Page, we will be entitled to deem it modified so that it is equal to the maximum List Price permitted when calculating Royalties due to you under this Agreement.





> 5.4.8 Taxes. *The Amazon parties (or their affiliates) are responsible for collecting and remitting any and all taxes imposed on their respective sales of Digital Books to customers*. You are responsible for any income or other taxes due and payable resulting from payments to you by an Amazon party under this Agreement. Accordingly, unless otherwise stated, the amounts due to you hereunder are inclusive of any taxes that may apply to such payments. The Amazon parties maintain the right, however, to deduct or withhold any and all applicable taxes from amounts due by them to you, and the amounts due, as reduced by those deductions or withholdings, will constitute full payment and settlement to you.


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## Kate Lowell (Apr 18, 2015)

Thank you! I thought it might have been that, but I wasn't sure. Now, to try to explain that to CRA...


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## Kate Lowell (Apr 18, 2015)

Back with something of an update...

When I went through my phone calls with CRA, it's not the sales GST they're after from us. What they're trying to claim is that we're providing a service to Amazon and therefore should be charging them GST. Since we all know pigs will fly before that becomes possible, it means that we have to be prepared to pay a % of everything we earn to CRA for the privilege of bringing money into the country.

This requires several assumptions on their part, in a branching chain of yes-no answers that could lead anywhere from paying 5% on only sales and not including KU pagereads, to paying 15% on everything you earn including from other countries because it's the service of licensing the copyright that's being taxed, not the sales to the specific consumers. 

So I sat down with Wayne Easter this morning. For those who aren't aware, he's the head or chair of the Finance Committee. If something's screwed up, it's their job to figure it out. We talked about how our interaction with Amazon is structured, I showed him my payment reports and what it looks like on my bank statements, showed him screenshots of the different versions of what we're supposed to do, explained some areas where I was having trouble getting answers from either the CRA or Amazon. I explained to him that for every $100 in gross revenue a self-published writer claims, approximately 90% of that will be imported money--it's not recirculated Canadian funds but money that foreign consumers are injecting into our economy. I showed him my income and expense info and told him that if I got hit by the worst case scenario, at the very least I was moving away from the Island and taking all that spendable money to another province that didn't have hst, but that I also had friends in different parts of the world touting the benefits of living in their country and being a non-resident. Or the other option, where I could decide that what I was getting out of working this hard wasn't worth it, and I could go back to hobby writing and write whatever I damn well pleased instead of chasing the market like I do.

He is, I think, on our side. We also talked about how Canada has a long history as a creative country and how this is a business that would be easy to do, either as a main business or as a side business, from way out in the boonies where jobs are hard to get. Someone staying home with the kids could carve out a couple of hours a day to write and bring in money. Someone who's only seasonally employed could write during the off season. And all the spin-off industries in editing, formatting, covers, illustration, and marketing/virtual assistants. And we talked about the damage this uncertainty does.

What he's asked me to do is write a letter. He's asked me to reach out to all of you and get your input on where dealing with this issue has been confusing, has taken time away from your business, has cost you time trying to decipher the often contradictory information found on the internet and through speaking to CRA. He needs a list of questions from us that will push the committee into bringing a little more clarity to the act and how its implemented. I have until the legislature closes. Please help me put this letter together so that future authors that hit this $30K threshold aren't left flailing about and paying more than they need to. If you've considered reducing your production because you were afraid of getting embroiled in this mess, I especially want to hear this. As far as I understand, he doesn't need names of anyone, just experiences and stories. If you have suggestions or things that can be brought up, you can send them to [email protected] and I'll get them, even though that pen name is inactive at the moment.

Thank you all.


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## Tulonsae (Apr 12, 2015)

Content removed due to TOS Change of 2018. I do not agree to the terms.


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## Kate Lowell (Apr 18, 2015)

This is everywhere in the country. It's a matter of what year you declare $30,000 in gross revenue from everywhere (not just Canada, I see a lot of people making that mistake), and when the Non-Registrant department notices your income tax account. If your worldwide gross income is below $25,000, you're not big enough for them to go looking for you. In between is iffy. But there is absolutely an algorithm in the system that looks for professional or business income above $30K and checks for a GST account.

I'm going to try to work with Wayne to get our royalties treated the same way natural resource royalties are supposedly treated, particularly since SOCAN gets special treatment and Amazon isn't acting any differently from SOCAN. (To be honest, I don't know why we call them royalties--they're business income, really--but it seems like that's the traditional way to refer to any money made in the arts)

I've also reached out to Amazon and requested something from them that can be shown to CRA if you get audited or contacted by Non-Reg. I have received a scanned letter, based on Appendix B Part B of this page https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/4-5-1/exports-determining-residence-status.html#P124_7938 stating that Amazon Digital Services LLC is not a registered entity with respect to the GST. I have no idea if it's going to be sufficient--GST Rulings told me it would be, but CRA right now couldn't find it's way out of a paper bag with a map and a flashlight, so I've sent it off to my accountant for his opinion. If you go the letter route, you'll need to have it escalated to their tax department.

There's also the issue of Rulings trying to tell me that I'm providing Amazon a service by uploading my books to them for sale, which by default makes everything I earn from them subject to GST at 15% (because I'm in an HST province) down to 5% for places like Alberta. In this case, I would argue it is Amazon providing the service and that any GST involved is a portion of their 65/30% that they keep for the service, in much the same way as a company with a working royalty interest in natural resource (our royalty interest in this interaction would be similar to a gross overriding royalty). I'm trying to be prepared on all fronts, because every single call I've had with them has devolved into me explaining something and them trying to turn it into a situation where I have to pay them money. Literally redefining things in the middle of the phone call, which is part of the pressure tactics I'm seeing used to get you to give up.

The upshot of it all is that nobody knows anything and the bike's on fire and we're on fire and everything's on fire. The Excise Tax Act was never built with our industry in mind and writers were always such small potatoes that we were easily ignored if we ran afoul of them, or easily allowed to slip under the radar. With current spending (and fixing Phoenix) there's a huge push to collect as much money from the Canadian taxpayer as is possible, to the point of some things I think are morally dubious, though still perfectly legal. But, we're a growing industry, just starting to be noticed. If there was ever a time to get together and say, "WTF, Justin?" this is it.

Back to taking all the swear words out of my report for Wayne...


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## WHDean (Nov 2, 2011)

Don't tread on Kate. (You need to replace that cat avatar with a rattlesnake  )


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## NoLongerPosting (Apr 5, 2014)

Removed due to site owner's change to TOS.


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## Sarah Ettritch (Jan 5, 2012)

Rickie Blair said:


> And call me a cynic, but I suspect the hand of traditional publishers somewhere in this. It would be an easy way to shut down indie competition.


Speaking of traditional publishers, how are they and traditionally-published authors treated by the CRA? Are they expected to remit HST/GST? The way I see it, a traditionally-published author has a book published by a publisher, which sells that book to a distributor or wholesaler (or uploads the book directly to one of the online bookstores). The only difference between a traditionally-published author and an indie author is fewer middlemen. If indie authors are performing a service for Amazon and the other bookstores, then are traditionally-published authors performing a service for publishers? If not, why not? What's the difference?

I'd be curious to know (a) if traditionally-published authors are being contacted by the CRA to remit HST/GST for the service they perform for publishers, and (b) if publishers are being contacted to remit HST/GST (after all, aren't they performing a service for Amazon, a distributor, or some other entity)?

(Note that I don't believe that indie or traditionally-published authors are performing a service. I think it's BS the CRA is pushing. I'm just wondering why indie authors are performing a service, but traditionally-published authors are not.)


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## Ashly Kim (Dec 30, 2014)

Joseph M. Erhardt said:


> Here in the U.S., I myself have had an arrest warrant issued on me by the Internal Revenue at least five times. A voice on the telephone told me so.


Is it Agent John Smith? He's after me, too


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## ShayneRutherford (Mar 24, 2014)

@Sarah Ettritch. I believe the difference comes down to who owns the rights to publish. A publisher buys first print rights from the author to publish the book. We as indie publishers retain our own print rights.


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## Tulonsae (Apr 12, 2015)

Content removed due to TOS Change of 2018. I do not agree to the terms.


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## dgcasey (Apr 16, 2017)

Joseph M. Erhardt said:


> Here in the U.S., I myself have had an arrest warrant issued on me by the Internal Revenue at least five times. A voice on the telephone told me so.


The police must be really busy picking up all the rest of you tax scofflaws because I've been waiting for a couple of years now for them to knock on my door. When I told the tax guy on the phone to, "bite me" he said the police would be right over. I'm still waiting.


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## Kate Lowell (Apr 18, 2015)

They absolutely don't understand how it works with respect to the Excise Tax Act. Or maybe we don't--the more I read, the more different ways I could see that they could decide to classify us. I'd like to see it treated the way royalties in natural resources are treated. I'm terrified of it being treated as a consignment sale or provision of service. At this moment, there is no standard policy on it as far as I can tell, and our business structure can be classified in so many different ways under the Act, it's difficult to determine which way they'll jump.

Tulonsae, none of this has any bearing on regular Canadian Income Tax, except that if our earnings are considered to be subject to GST and if they are considered to already include that GST we are 'charging' Amazon when it hits our bank accounts, then we have to remember to take that GST amount out before filing our regular income taxes. If we don't want to be charged that extra tax, it's on us to prove that the company we've signed a contract with is not registered for the GST, which means contacting every single distributor, aggregator, and outlet that your books show up on to get an official statement (acceptable to the CRA) that they are not registered for it. Which I can only imagine will be fun trying to get from Apple Books and Google Play. CRA will likely buy the argument that books sold in other countries are not subject to GST, but that depends on your statements being broken down by country of sale.


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## anotherpage (Apr 4, 2012)

BethanyKris said:


> First post here from me ever.
> 
> I'm a Canadian author making low six figures. I report GST every year from Amazon Canadian sales. It's not a big deal. KDP provides you with a report every month that shows you exactly what you made in the Amazon Canada store. Simply keep those numbers aside. At the end of the year when you do your taxes, you'll have to do a separate GST as well and this is where you put that. Just the sales in Canada. On a better note, you also get to claim all the HST/GST you paid for things for your business and it counteracts the GST they want you to claim.
> 
> ...


Why would you do that when Amazon is doing that on your behalf. I think you have made this even more confusing. Go back and read.


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## anotherpage (Apr 4, 2012)

Nancy Warren said:


> I didn't realise this thread had been revived. I'm sorry others are going through this! I have no problem with my posts being shared with lawyers etc.
> 
> There is a lot of confusion over this. I contacted KDP help and they confirmed that THEY are both collecting and remitting Canadian GST exactly as they do with VAT. We should not have to calculate and send in GST on our own unless we are selling books off our own site. I printed out the reply and the relevant TOS and mailed it to the person I was dealing with at CRA. In our last phone call she seemed satisfied.


I have mentioned this before. I contacted them and i can see when purchasing that they collect GST ( they are the ones that submit that)


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## anotherpage (Apr 4, 2012)

okey dokey said:


> My meager understanding of sales tax is:
> If I sell a bunch of books to a distributor or retailer (Amazon, etc.) I can not collect sales tax from them.
> They would even laugh if I sent them an invoice for it.
> That's because they have a tax-exempt certificate since the items are for resell.
> ...


Exactly

Its just like walking into a guitar shop with a guitar and putting it there on consignment. We would not charge the guitar store to resell it.

The guitar store would sell it, collect tax from the customer and submit that as part of their business. Then give you your share of the profits. The point of sale doesn't belong to you and you are not selling your guitar to the guitar store. ( there is no service being given by you or sale by you, it's consignment) Nothing more than agreement.


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## anotherpage (Apr 4, 2012)

WHDean said:


> Or it tells you the GST/HST on KDP purchases is* inclusive*. In other words, Amazon deducts the GST/HST from the sale price. This is explained in the TOS about the U.S. VAT, and people have received this same explanation from Amazon about how GST is paid.
> 
> But this is neither here nor there. No one who is not involved in the point of sale should be remitting sales tax. The earlier part of the thread suggests reasons people might be going wrong and getting calls from CRA and the documents you should be sending to your accountant or tax lawyer. Most of what's appearing in the revival of this thread was explained in the first two pages.


Exactly refer to the first 2 pages of this thread.


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## anotherpage (Apr 4, 2012)

Kate Lowell said:


> Back with something of an update...
> 
> When I went through my phone calls with CRA, it's not the sales GST they're after from us. What they're trying to claim is that we're providing a service to Amazon and therefore should be charging them GST. Since we all know pigs will fly before that becomes possible, it means that we have to be prepared to pay a % of everything we earn to CRA for the privilege of bringing money into the country.


You need to explain that you are NOT providing a service to them. You are not selling your books to them. You are like women who walks into a guitar shop with a guitar looking to place it on consignment. (You do no charge the guitar store to do this). They put it on the shelf and it sits there until a customer wants to buy it. The customer pays the retail price + tax to the guitar store. The guitar store gives you your share and they submit that tax as part of the running of their business. They are the POS, not you. You are not providing a service to Amazon. Amazon is not your customer. You get royalty from a license agreement.


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