My client “Sam” got a CRA audit on his GST/HST return. He’d been trying to save money by filing his own GST returns, and it caught up with him. CRA found mistakes in one return, which led them to look at two more. That’s how it works: once they find issues with one filing, they pull the thread.
By the time Sam reached out to me, CRA was holding $28,635.28 of his money, with another $11,897.02 about to be held. He’d been going back and forth with the auditor for three months on his own, getting nowhere and losing sleep over it.
Here’s what happened and what you can learn from it.
Last updated: April 2026
How Sam Got Into Trouble
Sam is an Amazon FBA seller. Good at sourcing products, great at running PPC, solid sales numbers. But he decided to save on accounting fees by filing his own GST/HST returns. The problem? Amazon’s settlement reports aren’t straightforward. The way Amazon reports GST/HST collected, marketplace facilitator amounts, and fee breakdowns is confusing. Sam made errors in how he reported the numbers, and CRA noticed.
The Mistakes CRA Found
- Misreported GST/HST collected. Sam was using the wrong numbers from his Amazon reports. He was including marketplace facilitator tax (which Amazon collects and remits directly) as tax he collected himself. This made it look like he owed more than he actually did.
- Missing input tax credits. He wasn’t claiming all the ITCs he was entitled to. He missed the GST on his Amazon advertising fees, some shipping costs, and software subscriptions.
- Inconsistent reporting periods. The numbers on his returns didn’t reconcile cleanly with his bank statements and Amazon payouts.
None of these were intentional. He just didn’t understand the Amazon GST reporting well enough to get it right.
What Happened When He Tried to Handle It Alone
Sam spent three months trying to resolve the audit himself:
- He struggled to explain his Amazon business model to the CRA auditor, who wasn’t familiar with how FBA works
- He couldn’t figure out which documents would prove his case
- He second-guessed everything he sent them, worried he was making it worse
- The held funds were hurting his cash flow, which meant he couldn’t restock inventory
- He was avoiding the auditor’s calls because he didn’t know what to say
Three months of stress, lost revenue, and the problem was getting worse, not better.
What I Did When He Called Me
Sam finally reached out and I reviewed the audit letter and the documents CRA was requesting. Here’s the approach I took:
Step 1: Understand the Actual Issue
I pulled Sam’s Amazon settlement reports and compared them to what he’d filed. Within an hour, I could see exactly where the discrepancies were. The core issue was a reporting error, not fraud or underpayment. He’d actually overpaid on some returns because he was double-counting certain amounts.
Step 2: Call the Auditor
I picked up the phone and called the CRA agent directly. The agent was based in PEI, and being from the Maritimes myself, I opened with some friendly conversation to build rapport. This matters more than people think. CRA agents are human. If you’re cooperative and professional, they want to close the file cleanly just as much as you do.
Step 3: Explain the Business Model
I walked the agent through how Amazon FBA works, how the settlement reports are structured, and where Sam’s errors came from. I used simple examples the agent could follow and showed him exactly how to verify the corrected numbers using Amazon’s own reports.
Step 4: Provide Clean Documentation
I prepared a reconciliation showing:
- What Sam reported on each return
- What the correct numbers should have been
- Supporting documentation from Amazon settlement reports
- The adjusted amounts for each period
Step 5: Get Supervisor Approval
Before hanging up, I confirmed the next steps and asked for the agent’s supervisor to review and approve the resolution. This avoids the file sitting in a queue.
The Result
| Timeline | What Happened |
| March 8 | I called the CRA agent |
| March 12 | Submitted reconciliation documents |
| March 20 | CRA accepted the corrected returns |
| March 24 | $28,635.28 back in Sam’s bank account |
From first call to money returned: 16 days. Sam had been trying on his own for over 3 months.
The second amount ($11,897.02) that was about to be held? CRA released it without further review once the first file was resolved.
What You Can Learn From This
1. GST/HST Returns Are Where Sellers Get Audited Most
CRA audits GST/HST returns more frequently than income tax returns because the error rate is high and recoveries are large. Amazon sellers are particularly vulnerable because the reporting is complex.
2. DIY Filing Can Cost More Than It Saves
Sam saved maybe $500-$1,000 by filing his own GST returns. The audit, stress, cash flow disruption, and professional fees to resolve it cost him far more. If we’d been doing his GST/HST returns from the start, the errors never would have happened.
3. Don’t Wait Three Months to Get Help
The longer an audit drags on, the more CRA holds and the more returns they look at. Getting professional help early usually means a faster resolution and less money tied up.
4. CRA Agents Are People
Being cooperative, professional, and prepared makes a huge difference. Showing up with clean documentation and a clear explanation gets files closed. Being evasive, confrontational, or disorganized makes agents dig deeper.
Frequently Asked Questions
How long does a CRA GST/HST audit take?
It depends on the complexity and how quickly you respond. A straightforward review with proper documentation can be resolved in 2-4 weeks. If you’re unresponsive or can’t produce documentation, it can drag on for months. The fastest resolution happens when you provide complete, organized documentation upfront.
Can CRA hold my money during an audit?
Yes. When CRA audits a GST/HST return, they can hold refunds or credits pending the outcome. They can also reassess prior returns and hold amounts related to those. This is why getting the audit resolved quickly matters, especially for businesses that depend on cash flow.
Should I do my own GST/HST returns as an Amazon seller?
You can, but Amazon’s settlement report structure makes it tricky. If you’re going to do it yourself, make sure you understand the difference between marketplace facilitator tax and seller-collected tax, and reconcile your returns against your actual Amazon payouts. Many sellers find the peace of mind of having their accountant handle it is worth the cost.
Don’t Wait Until CRA Comes Knocking
If you’re an Amazon seller filing your own GST/HST returns and you’re not 100% confident the numbers are right, it’s worth having someone check. A review now costs a fraction of what an audit resolution costs later. Reach out and let’s make sure your filings are solid. Check out our bookkeeping pricing too.