Quick Answer
Incorporation makes sense for Canadian Amazon FBA sellers once they are consistently earning more than they need to live on. The small business corporate tax rate (9–12% depending on province) is significantly lower than personal income tax rates above $55,000, creating meaningful tax deferral on retained earnings.
Incorporation is one of the most common tax planning questions for growing Canadian Amazon sellers. The short answer: it depends entirely on how much you're earning and how much of that you need to spend personally each year.
Key Numbers: Federal Corporate Tax vs. Personal Tax
| Income Level | Personal Marginal Rate (ON) | Small Biz Corp Rate (ON) |
|---|---|---|
| $0 – $55,867 | 20.05% | 12.2% |
| $55,867 – $100,392 | 31.48% | 12.2% |
| $100,392 – $150,000 | 43.41% | 12.2% |
| Over $220,000 | 53.53% | 12.2% |
The Break-Even Point for Incorporation
Incorporation adds costs: setup ($1,000–$1,500), annual filing fees, accounting fees, and more complex bookkeeping. These costs are typically offset by tax savings once your Amazon business earns over approximately $80,000–$100,000 per year in profit, depending on your province and personal income needs.
Benefits Beyond Tax Savings
- Liability protection — personal assets shielded from business creditors
- Income splitting — pay family members dividends (subject to TOSI rules)
- Retained earnings — leave surplus cash in the company at the lower corporate rate
- Credibility — some suppliers and wholesale accounts prefer dealing with incorporated entities
Incorporation Is Not Always the Right Move
If you're withdrawing all your Amazon profits personally to fund your lifestyle, a corporation provides little tax benefit — you'll pay personal tax anyway when you pay yourself. The main benefit is deferral when you leave earnings inside the company. Talk to an accountant before incorporating.
MaxRefund Helps FBA Sellers Decide on Incorporation
We run the numbers for Canadian Amazon sellers considering incorporation — comparing your current tax bill against the projected savings under a corporation.
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