Tax deductions for online sellers & resellers in Canada
If you sell online you can generally claim the cost of your stock, platform and payment fees, packaging and postage — and the point where a hobby becomes a business is what decides whether you declare the income at all. In Canada you report it through Form T2125 with your personal return.
Ecommerce and reselling — Etsy, eBay, Depop, Shopify, print-on-demand and market stalls — is the second-largest digital side hustle, and the costs of getting an order out the door are generally claimable where they meet the three rules below: platform and payment fees, packaging, postage and the space you pack in. Because fees come out before the money reaches you, capturing the gross sale and the fee separately is what makes sure you claim the full amount.
The three rules for any claim
- You paid for it yourself and weren’t reimbursed.
- It directly relates to earning your income.
- You have a record — a receipt, invoice or bank statement.
Where you stand in Canada
Self-employment income goes on Form T2125 and is added to your other income, taxed at combined federal and provincial rates. You also pay both the employee and employer halves of CPP contributions on your net self-employment earnings.
- GST/HST rate
- 5%
- Registration
- CAD 30,000 turnover/yr
- Returns
- Annual, quarterly or monthly
- Authority
- Canada Revenue Agency
What you can usually claim
These are the costs of doing the work — the same list wherever you are based. How each one is claimed follows the rules in Canada, set out below.
Cost of stock and materials
What you pay for the goods you sell, or the raw materials you make them from, including import duties and freight to get stock to you.
Platform, listing and payment fees
Selling fees, listing fees, transaction and payment-processor fees, and store subscriptions. These are deducted before you see the money, so they are easy to miss without a record.
Packaging and postage
Boxes, mailers, labels, tape and protective materials, plus postage and courier costs you pay to get orders to customers.
Home storage and workspace running costs
The running costs of the area you use to store stock or pack orders can generally be apportioned to the business use.
Advertising and photography
Paid promotion, product photography, and tools you use to list and market products.
How Canada treats them
Vehicle and travel
Vehicle costs are claimed on the business-use share, worked out from a logbook of business versus total kilometres.
Home workspace
Business-use-of-home expenses are claimed on the share of your home used for work, and generally cannot create or increase a business loss — the unused part carries forward.
Equipment and higher-cost gear
Equipment is claimed through Capital Cost Allowance, at the rate for the class the asset falls into, rather than deducted in full up front.
This is general information, not personal tax advice — what you can claim depends on your circumstances, so check with the CRA or a registered tax adviser, and keep records to back up every claim. Official guidance from Canada Revenue Agency →
Keep in mind
- Items you bought for yourself and later happened to sell.
- The private share of your home running costs.
- You are generally a "small supplier" until taxable supplies exceed the registration threshold either in a single calendar quarter or across four consecutive quarters — the single-quarter trigger is the one people miss after one big month. Cross either and GST/HST registration is required, and the rate you charge depends on your customer’s province, not yours.
Online sellers & resellers in Canada — common questions
What can online sellers & resellers claim in Canada?
The spending travels even though the rules do not: cost of stock and materials, platform, listing and payment fees, packaging and postage, home storage and workspace running costs and advertising and photography. What changes is how you claim it — in Canada, equipment is claimed through Capital Cost Allowance, at the rate for the class the asset falls into, rather than deducted in full up front. This is general information, not personal tax advice — what you can claim depends on your circumstances, so check with the CRA or a registered tax adviser, and keep records to back up every claim.
How do online sellers & resellers in Canada report self-employed income?
You report it through Form T2125 with your personal return. Self-employment income goes on Form T2125 and is added to your other income, taxed at combined federal and provincial rates. You also pay both the employee and employer halves of CPP contributions on your net self-employment earnings. This is general information, not personal tax advice — what you can claim depends on your circumstances, so check with the CRA or a registered tax adviser, and keep records to back up every claim.
Can online sellers & resellers in Canada claim a home workspace?
Business-use-of-home expenses are claimed on the share of your home used for work, and generally cannot create or increase a business loss — the unused part carries forward. This is general information, not personal tax advice — what you can claim depends on your circumstances, so check with the CRA or a registered tax adviser, and keep records to back up every claim.
Do online sellers & resellers in Canada need to register for GST/HST?
GST/HST in Canada — rate: 5%; registration: CAD 30,000 turnover/yr; returns: Annual, quarterly or monthly. Whether you have to register turns on your own turnover and where your customers are, so check the current position with Canada Revenue Agency before assuming you are under it. This is general information, not personal tax advice — what you can claim depends on your circumstances, so check with the CRA or a registered tax adviser, and keep records to back up every claim.
More on self-employed tax in Canada — the Canada hub.
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