Does Etsy Report Your Sales to the CRA? Canadian Seller Tax Guide

Whether you sell on Etsy as a side hustle or as your main business, the platform is a popular way for Canadian makers and creators to reach customers across the country and abroad. The marketplace welcomes a wide variety of products and niches, but running an Etsy shop brings extra responsibilities—most importantly, tax obligations.

You need to report the income you earn and, depending on your sales and where your customers live, you may also need to collect and remit sales tax. On top of that, many of these requirements must be managed through Etsy’s seller tools and reports.

Understanding how to calculate, collect and remit taxes is a vital part of running a compliant Etsy business. Ignoring these duties can lead to interest charges, penalties or an audit. Below, Vancouver tax expert and part-time Etsy seller Jennifer Long explains what Canadian Etsy sellers need to know about income tax, GST/HST, provincial sales taxes and bookkeeping.

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Etsy and income tax in Canada

All worldwide income of Canadian residents must be reported to the Canada Revenue Agency (CRA). That includes any money you earn from an Etsy shop, even if it’s a small amount. The guidance here applies to unincorporated small businesses, which most Etsy sellers operate as.

Most sellers are sole proprietors and report their business income on their personal T1 tax return using Form T2125 (Statement of Business or Professional Activities). That form summarizes the revenue you generated from self-employment and the expenses you incurred to earn it.

Start with your revenue

A common mistake is under-reporting income. Revenue means gross sales before taxes and before deducting fees—not only the net amount deposited in your bank account. Etsy’s reporting tools can help, but sellers are ultimately responsible for tracking and documenting all sales and fees. Keep accurate transaction records and a clear summary of annual revenue in Canadian dollars.

Calculate business expenses

Income tax on business earnings is payable on net profit—your gross revenue minus allowable business expenses. Track and categorize expenses carefully so you claim what you’re entitled to and avoid overpaying tax.

Common deductible costs for Etsy sellers include Etsy fees and payment processing fees, shipping costs, advertising on Etsy, and the cost of goods sold (raw materials). Other deductible expenses can include software subscriptions (design tools, accounting software), website hosting, hired help for marketing or bookkeeping, and business supplies.

When an expense is for both personal and business use (for example, a vehicle or home office), only the business portion may be deducted and must be prorated. If you buy an asset with a useful life longer than one year—like equipment, furniture or a vehicle—you can’t deduct the full cost in one year; instead you claim Capital Cost Allowance (CCA) over time.

Paying income tax and CPP

If you have employment income, your employer normally withholds tax and Canada Pension Plan (CPP) and Employment Insurance (EI) contributions. For self-employed income you must calculate and remit tax yourself. Self-employed filers must also pay both the employer and employee portions of CPP when they file.

Self-employed taxpayers have until June 15 to file, but any tax owing is due April 30 (dates may vary slightly by year). To avoid interest and penalties, set aside about 20%–30% of your net business income to cover income tax and CPP, though your precise rate depends on your total income and deductions. If your business grows, the CRA may require instalment payments during the year.

Does Etsy collect and remit sales tax?

Sales tax on online sales depends on where the buyer receives the product. GST/HST is federally administered and ranges from 5% to 15% depending on the province. The “place of supply” rule means you must charge the buyer’s provincial rate, not your home province’s rate, when applicable.

Not all small sellers must register for GST/HST. If your total worldwide taxable sales in a 12-month period are $30,000 or less, you are considered a “small supplier” and are not required to register or collect GST/HST. Once you exceed $30,000, registration is mandatory and you must collect and remit GST/HST until you close the account, even if your revenue later falls below the threshold.

You may choose to register voluntarily before hitting $30,000, which can be advantageous if you pay significant GST/HST on business purchases, because you can claim input tax credits (ITCs) to offset the tax you remit.

How Etsy’s GST/HST rules affect sellers

Following regulatory updates, Etsy’s handling of sales tax in Canada depends on whether a seller has a GST/HST registration:

Small sellers without a GST/HST number: Etsy handles collection and remittance of GST/HST on sales where required.
GST/HST-registered sellers: You are responsible for your own GST/HST obligations and must factor the tax into your pricing. Etsy does not automatically add provincial GST/HST for registered sellers, so plan prices to cover tax liabilities and remittances based on place of supply.

In some provinces Etsy also charges and remits provincial retail sales taxes on applicable products and transactions, including provinces with separate retail sales taxes. Rules for Quebec’s QST are similar to GST/HST: small suppliers are generally covered by Etsy, while those required to register must supply their QST number and remit accordingly.

Bookkeeping tips for Etsy sellers

Keep detailed records in case the CRA requests proof. Save monthly Etsy reports, transaction details, bank and credit card statements, and all receipts for business purchases. The CRA requires supporting documents to be kept for seven years after your Notice of Assessment.

Organize receipts by category—materials, shipping, marketing, subcontractors, vehicle expenses—and store them in an accessible way, either physically or digitally. Simpler shops often manage records with spreadsheets or downloadable templates, while growing businesses may prefer accounting software like QuickBooks Online, which can integrate with Etsy and automate data capture.

Get help when needed

Taxes are often the least enjoyable part of running a small business, and you don’t have to go it alone. If bookkeeping or tax obligations feel overwhelming, consult a tax professional familiar with e-commerce and marketplace rules, contact the CRA for guidance, or connect with other Etsy sellers to learn practical tips. Proper record-keeping and accurate filings protect your business and reduce the risk of costly audits or penalties.