Quick Answer
Canadian Shopify sellers can deduct all ordinary and reasonable business expenses from their taxable income — platform fees, advertising, COGS, shipping, home office, and professional services. The key is keeping receipts and coding expenses correctly in your books.
Running a Shopify store generates significant deductible business expenses. The CRA allows you to deduct any expense that is reasonable, incurred to earn business income, and properly documented. For most Shopify sellers, this means the following categories.
Platform and Marketplace Fees
Your monthly Shopify subscription fee is 100% deductible as a business expense. Additional deductible fees include:
- Shopify Payments transaction fees (or third-party gateway fees)
- Shopify App Store charges (apps you use to run your store)
- Shopify POS fees (if you also sell in person)
- Domain registration and renewal fees
Cost of Goods Sold (COGS)
The most significant deduction for product sellers is the cost of inventory sold during the year. COGS calculation:
Opening inventory + Purchases during the year − Closing inventory = COGS
Only deduct the cost of goods you actually sold, not everything you purchased. Unsold inventory on hand at year-end is a balance sheet asset, not an expense.
Advertising and Marketing
All amounts paid for advertising your Shopify store are deductible:
- Meta Ads (Facebook and Instagram) and Google Ads spend
- Influencer marketing fees
- Email marketing software (Klaviyo, Mailchimp)
- SEO tools and services
- Product photography (professional shoots)
Shipping and Fulfilment
- Postage and courier fees paid to ship orders
- Packaging materials (boxes, poly mailers, tissue paper)
- Third-party logistics (3PL) fulfilment fees
- Return shipping costs you absorb
Home Office Deduction
If you run your Shopify business from home, you can deduct a proportion of your home expenses based on the percentage of your home used exclusively for business. Deductible home office expenses include rent, utilities, internet, and insurance.
The CRA Requires Proportional Allocation
You can only deduct the business-use percentage of shared expenses. Calculate this as the business workspace square footage divided by total home square footage. The CRA can disallow home office claims that aren't supported by clear documentation of the business space.
Maximize Your Shopify Tax Deductions
MaxRefund helps Canadian Shopify sellers claim every legitimate deduction. Our bookkeeping service tracks your expenses throughout the year so nothing is missed at tax time.
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