I’ve recently tried to decipher the fees Amazon Canada charge on some of my FBA orders and walked away scratching my head. From my understanding, all FBA orders are charged the following:
- Referral fee (percentage of the product sale price, usually 15%)
- Pick and Pack Fee ($1.55)
- Weight Based Fee (Variable)
- Tax Handling Fee (usually a few cents – It’s what Amazon charge for collecting sales taxes for you)
Now, here’s where it gets weird. If a non Prime customer buys something from me, Amazon charge them for shipping. They also collect sales tax on the shipping amount (based on the tax rate in the Province to which the item is shipping). Pretty straight forward. In my payments from Amazon, I see these amounts collected and they then deduct it from my payout as I’m FBA and don’t collect or charge shipping. But here’s where it gets interesting.
On a few of my orders, I’ve noticed that Amazon are also deducting a Referral Fee on the Shipping amount that they charged to the customer! I don’t get to keep any of the shipping fees collected as an FBA seller, so why are they charging me a referral fee for this amount? And then there’s the next complication regarding sales taxes.
Since I’m registered to collect and remit sales taxes in Canada, Amazon charge the customer the appropriate amount of sales tax due for their Province and pass this along to me for my own remittance. Amazon also add 13% HST (Harmonized Sales Tax) to all of their fees since they’re based in Ontario and this is mandatory. This isn’t a big deal to me, as it’s a pass through cost that I claim back when I file my own sales tax return. But here’s where it gets confusing when shipping charges are involved.
Let’s say an item ships to a Province that has a 5% sales tax rate, and said item is sold to a non-prime customer who pays for shipping. Amazon correctly charge them the 5% tax on the shipping portion. For instance, if the shipping was $10.00, they’d collect this amount plus the 5% sales tax, totalling $10.50 charged to the customer. Straight forward enough. You’d then expect that they’d deduct this $10.50 from my commissions when they do the shipping charge back. Nope! They add 13% tax to the shipping amount instead, and ding me for more than they actually collected! So in this example, they collect $10.50 from the customer, then ding me against my payout for $10.00 + 13% tax equalling $11.30! This leaves me out of pocket $0.80. And, as stated above, they’re sometimes charging me a referral fee on the shipping as well. In this case, the referral fee on the shipping charged would be $1.50 (15%). So I’m left out of pocket a total of $2.30 on this sale, for reasons I can’t explain!
I’ve an open ticket in with seller support and look forward to getting some answers on this. It’s left me a little confused, and fairly convinced that this has to be a billing error. I’ll keep you posted!
UPDATE: April, 9th, 2015
So I received an email back from Amazon and they acknowledge it was a technical error on their behalf. I now need to go back and check all of my orders for this error and suggest you do the same if you sell on .ca.
AmazonApr 09, 2015 09:29 AMGreetings from Amazon Seller SupportDear Seller,
Hi this is Louis a specialist from FBA. I have received an update from our engineers and we were able to notice that this was an error caused by the system, therefore we have gone ahead and reimbursed you for the $0.99 you should be able to see it posted on your account withing the next 3 to 5 days and it will be reflected on your next disbursement, if you have any other orders with the same issue please provide them to us to take further action.
Thank you for selling with Amazon,
Amazon.com Seller Support
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