Tax Guide for Amazon Sellers and E-Commerce Businesses: GST/QST Rules, Income Reporting, and Deductible Expenses — CPA Firm Near You, Montreal

Introduction

Amazon sellers, Shopify store owners, Etsy creators, and other e-commerce entrepreneurs in Quebec face complex tax obligations. Online sales may trigger GST/QST registration earlier than expected, and income must be tracked across multiple platforms with different reporting formats. Many sellers miss deductions, underreport income, or miscalculate inventory costs. This guide explains how e-commerce businesses must report income, apply GST/QST correctly, manage inventory, and maximize deductions — and how a CPA firm near you in Montreal can help ensure full tax compliance.

Legal and Regulatory Framework

Under the Income Tax Act and the Taxation Act of Quebec, all revenue from online sales must be reported, whether generated through Amazon, Shopify, Etsy, eBay, WooCommerce, or other platforms. Most online product sales are taxable supplies, requiring GST/QST registration once annual revenues exceed the small-supplier threshold. Marketplaces may collect some taxes on behalf of sellers, but the seller is still responsible for accurate reporting. Deductible expenses include product cost, packaging, shipping, advertising, software, platform fees, returns, storage fees (including Amazon FBA), and a portion of home office or warehouse costs. CRA and Revenu Québec require detailed bookkeeping, invoices, receipts, and inventory records to support all claims.

Key Court Decisions

Courts have ruled that e-commerce businesses must track inventory accurately using recognized accounting methods such as FIFO or average cost. Judges have denied deductions where sellers failed to document cost of goods sold, shipping fees, or advertising expenses. Cases involving dropshipping confirm that revenue must be reported even when products never physically pass through the seller’s hands. Courts also emphasize that platforms sending payout statements do not absolve sellers of GST/QST obligations.

Why CRA and Revenu Québec Target Amazon Sellers and E-Commerce Businesses

Online sellers are frequently audited because platform data is readily available to authorities. Auditors compare declared revenue with Amazon 1099-K equivalents, payout reports, and Shopify analytics. Missing invoices, undocumented cost of goods sold, and inconsistent inventory valuations are major red flags. Businesses that exceed the GST/QST threshold without registering are immediately targeted. Dropshipping and FBA operations draw attention due to complex logistics and the risk of underreporting.

Mackisen Strategy

At Mackisen CPA Montreal, we help e-commerce entrepreneurs develop complete tax and accounting systems. We determine GST/QST obligations, categorize revenue by platform, and reconcile payouts with declared income. We build inventory tracking frameworks, optimize cost of goods sold, and maximize deductions for ads, shipping, software, and packaging. Our team prepares year-end filings, manages capital cost allowance, and implements bookkeeping workflows tailored to Amazon FBA, Shopify, and multi-channel sellers. If audited, we defend your calculations, reconstruct inventory records, and reduce reassessments.

Real Client Experience

A Montreal Amazon seller operating through FBA underreported sales and overstated advertising expenses. CRA compared platform data with tax filings and initiated an audit. We reconciled inventory, validated supplier invoices, corrected sales-tax reporting, and reorganized bookkeeping. The reassessment was significantly reduced, and the seller now operates with a fully compliant system.

Common Questions

Do Amazon and Shopify sellers need to register for GST/QST?

Yes, once annual taxable revenues exceed the small-supplier threshold.

Does Amazon collect GST/QST for sellers?

Amazon may collect some taxes automatically, but sellers are still responsible for accurate tax reporting and compliance.

What expenses can e-commerce businesses deduct?

Cost of goods sold, packaging, advertising, shipping, storage (FBA), platform fees, software, and home office costs may be deductible.

How important is inventory tracking?

Critical. Inventory errors are one of the main causes of CRA and Revenu Québec reassessments.

Why Mackisen

With more than 35 years of combined CPA experience, Mackisen CPA Montreal helps businesses stay compliant while recovering the taxes they’re entitled to. Whether you’re filing your first GST/QST return or optimizing multi-year refunds, our expert team ensures precision, transparency, and protection from audit risk.