Quick Answer
Canadian dropshipping businesses are taxed like any other business: all profits are taxable income, and you must register for GST/HST once revenue exceeds $30,000. You sell goods to Canadian customers and collect GST/HST — even though you never hold the inventory yourself.
Dropshipping in Canada is a fully taxable business — even though you never touch physical inventory. The CRA treats dropshipping income the same as any other business income, and all standard tax obligations apply.
How Dropshipping Income Is Taxed
Your taxable income is gross dropshipping revenue minus all eligible expenses. As a sole proprietor, report on Form T2125. As a corporation, on T2. Key deductibles:
- Cost of goods (what you pay your supplier per order)
- Shopify or WooCommerce subscription fees
- Advertising (Meta Ads, Google Ads, TikTok Ads)
- Apps and software (DSers, AutoDS, Oberlo replacement tools)
- Payment processing fees (Stripe, PayPal)
- Virtual assistant or customer service contractor fees
GST/HST for Dropshippers
Once your dropshipping revenue exceeds $30,000 in any 12-month period, you must register for GST/HST. You then charge GST/HST to Canadian customers on top of your selling price, collect it, and remit it to the CRA after deducting ITCs on business expenses.
The Dropshipping GST/HST Complexity: Who Charges What?
In a typical dropshipping model, your supplier ships directly to your customer. If your supplier is in Canada, they may charge you GST/HST on the wholesale price. You then charge GST/HST on your retail price to the customer. You claim an ITC on the supplier's GST/HST and remit the net difference to the CRA. Keep all supplier invoices showing the GST/HST paid.
Where Are Your Sales Made? Province Matters
Your customer's delivery address determines which GST/HST rate to charge. Customers in Ontario pay 13% HST; customers in Alberta pay 5% GST only; customers in Nova Scotia pay 15% HST. Your Shopify or WooCommerce checkout must be configured to calculate and charge the correct rate for each province.
MaxRefund Handles Tax and Bookkeeping for Canadian Dropshippers
We manage GST/HST filings, bookkeeping, and tax returns for Canadian dropshipping businesses. Remote, bilingual, and built for e-commerce.
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