Quick Answer
Canadian online sellers owe income tax on all profits and must register for GST/HST once revenue exceeds $30,000 in any 12-month period across all platforms combined. Marketplace facilitator rules, multi-province HST rates, and import duties add significant complexity.
Running an online store in Canada means managing two parallel tax systems: income tax on your profits and GST/HST on your sales. Add Quebec's QST, import duties on overseas inventory, and different rules for each marketplace platform, and the picture becomes complex fast.
Income Tax on E-Commerce Revenue
All revenue from online sales is taxable income in Canada. As a sole proprietor, you report e-commerce income on Form T2125 with your T1 personal return. Incorporated sellers file a T2 corporate return. Your taxable amount is gross revenue minus allowable business expenses.
Key deductible expenses for online sellers
- Platform fees (Shopify subscription, Amazon referral fees, Etsy listing fees)
- Cost of goods sold (COGS)
- Shipping and fulfilment costs
- Advertising (Meta Ads, Google Ads)
- Professional fees (accountant, bookkeeper)
- Home office expenses (proportional to business use)
- Payment processing fees (Stripe, PayPal, Square)
- Software subscriptions (accounting, design, automation tools)
GST/HST: The $30,000 Threshold
You must register for GST/HST within 29 days of the day your revenue exceeds $30,000 across all platforms combined. Once registered, you charge GST/HST, collect it from customers, and remit it to the CRA on a regular schedule.
| Province | Tax | Rate |
|---|---|---|
| Ontario | HST | 13% |
| British Columbia | GST + PST | 5% + 7% |
| Alberta | GST only | 5% |
| Quebec | GST + QST | 5% + 9.975% |
| Nova Scotia / NB / NL / PEI | HST | 15% |
Marketplace Facilitator Rules
- Etsy — collects and remits GST/HST on Canadian sales on your behalf
- Amazon.ca — NOT a marketplace facilitator; you must register and remit yourself
- Shopify — you run your own store; you are always responsible
- TikTok Shop — marketplace facilitator in Canada for GST/HST
Where It Gets Complicated
Even if Etsy collects GST/HST on your behalf, you still need to register yourself if you exceed $30,000 across all platforms combined. Etsy only handles its own platform's portion — you remain responsible for any other channels.
CRA Compliance for Online Sellers
The CRA has made e-commerce compliance a priority. Since 2023, Canadian platforms and payment processors are required to report seller data to the CRA. Unreported e-commerce income is increasingly difficult to hide — and costly when caught. Keep all platform statements, purchase receipts, and shipping records for a minimum of six years.
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