eBay and Etsy Seller Accounting and Tax in Canada (2026)

By Dellendo Farquharson, BOMCAS Canada

Tax year: 2026. Sources reviewed November 1, 2026.

Quick answer: eBay and Etsy seller accounting in Canada for 2026 means reporting business income on the T1 or T2, watching the $30,000 GST/HST small-supplier threshold across all platforms, reconciling insertion and final-value fees, and expecting Part XX digital-platform information from reporting operators each January. Handmade shops still need inventory discipline for materials and finished goods.

eBay and Etsy sit in different corners of ecommerce, but the CRA does not keep separate rulebooks for them. Both can make you a vendor of tangible goods, both take fees out of your payout, and both sit inside Canada’s digital-platform reporting net when they act as reporting platform operators. This article covers the shared Canadian framework for the 2026 tax year, with notes where handmade (Etsy) and auction or fixed-price marketplace (eBay) habits diverge.

BOMCAS Canada helps multi-channel sellers from Edmonton and remotely nationwide. See our services and virtual accounting firm pages, or the practical close process on bookkeeping services.

Tax year note: GST/HST rates cited from the CRA digital-economy rate list reviewed November 1, 2026: 5% GST; 13% HST (Ontario); 14% HST (Nova Scotia); 15% HST (New Brunswick, Newfoundland and Labrador, Prince Edward Island). Part XX rules have applied since January 1, 2024.

One business, two storefronts

If you sell on both eBay and Etsy, the CRA still sees one set of worldwide taxable supplies for the small-supplier test and one business (or corporation) for income tax. Combine gross merchandise sales before you decide you are “under $30,000 on Etsy alone.” Associates’ taxable supplies count too. Voluntary GST/HST registration remains available if you make taxable supplies and want ITCs on ads, shipping supplies, packaging and studio rent.

The same combined view applies when you add a seasonal craft fair table or a Shopify overflow store. Platforms are channels, not separate tax persons, unless you actually operate through separate legal entities.

GST/HST registration timing

Guide RC4022, Memorandum 2-2 and the CRA “when to register” table are the controlling references. Exceed $30,000 in a single calendar quarter and you charge tax starting on the supply that breaks the line, with registration due within 29 days. Exceed it only across four consecutive quarters and you generally become required to charge after the end of the following month. Public service bodies use $50,000; charities have additional gross-revenue tests that rarely help a typical seller.

Once registered under the normal regime, charge on taxable supplies you make in Canada, claim eligible ITCs, and file on the frequency the CRA assigns (monthly, quarterly or annual). Annual filers with a December 31 year-end still need to watch instalment rules if the CRA requires them.

Who collects tax on the buyer’s invoice?

Under the digital-economy qualifying-goods rules, a vendor registered under the normal GST/HST regime charges and remits on its own supplies, including those a platform facilitates. A registered distribution platform operator must collect on qualifying goods facilitated for vendors who are not registered. Qualifying goods generally include taxable goods delivered or made available in Canada (for example, from a Canadian warehouse) and generally exclude goods the supplier mails or couriers into Canada from abroad. Read the CRA scenarios: an unregistered Canadian seller shipping from a domestic cupboard can still push collection onto a platform, while a registered seller keeps the remittance obligation on the GST/HST return.

Place-of-supply for goods still follows delivery: mail or courier to a provincial address usually fixes the provincial HST rate. Configure any platform tax settings and your own invoices so Ontario buyers see 13%, Nova Scotia 14%, and GST-only provinces 5%, unless an exemption or zero-rating applies.

Non-resident buyers and export sales

Shipments of tangible goods to addresses outside Canada can be zero-rated when the export conditions in the Excise Tax Act schedules are met. Keep proof of export (carrier documents, tracking that shows delivery abroad, customs paperwork). A sale to a non-resident that is still delivered to a Canadian address is usually a domestic place of supply. Do not treat “buyer pays in USD” as an export by itself.

Part XX reporting sellers will see

Part XX (Reporting Rules for Digital Platform Operators) requires reporting platform operators to collect identification and activity data on reportable sellers, file with the CRA, and give sellers a copy of the reported information by January 31 after the calendar year. Relevant activities include selling goods for consideration. A goods seller may be an excluded seller for Part XX if the operator facilitated fewer than 30 relevant goods activities and total consideration paid or credited did not exceed $2,800 in the year. That exclusion is about platform reporting, not about whether the income is taxable.

When the January statement arrives (for 2026 activity, by January 31, 2027), reconcile consideration, fees and any tax withheld or charged to your ledger. Correct platform errors in writing; do not silently invent a different number on your T1. Operators must also keep Part XX records for at least six years, which mirrors the retention mindset sellers should use for their own files.

eBay-specific bookkeeping habits

eBay settlements blend final-value fees, promotional fees, shipping labels, regulated shipping programs and refunds. Book gross sales when the buyer is charged, recognise fees as expenses by type, and match refunds to the original order period when practical. Managed payments deposits are not revenue. If you sell vehicles or high-value collectibles, keep invoices that support both income inclusion and any capital versus inventory characterisation; frequent flipping of similar goods usually points to inventory.

International eBay sales add currency conversion. Record CAD equivalents using a reasonable, consistent method (platform FX rate on the settlement date is common) and keep the settlement PDF that shows the conversion.

Etsy-specific bookkeeping habits

Handmade and craft-supply shops live or die on materials tracking. Yarn, blanks, packaging and unfinished pieces sitting in a studio at year-end are inventory under the CRA inventory page, not a full write-off the day you bought them at the wholesale store. Track:

• raw materials and supplies that become part of the product;
• work-in-progress for custom orders not yet shipped;
• finished goods ready to ship;
• tools and equipment that should go on the CCA schedule instead of COGS.

Etsy listing fees, transaction fees, advertising and Shipping Label charges belong in expense accounts tied to the shop, not netted only against the bank deposit. Off-platform Pattern or wholesale orders may change who collects sales tax; keep those channels coded separately. Studio home-use claims, if any, follow the business-use-of-home rules on Form T2125, not employee home-office rules.

Inventory, COGS and CCA

Cost of goods sold is opening inventory plus purchases (and eligible landed costs), minus closing inventory. Count what you can; estimate only with a method you can defend. Computers and systems software acquired after March 18, 2007 generally fall in Class 50 at 55%; much application software sits in Class 12. Confirm any enhanced first-year CCA on the CRA classes page for eligible property acquired after April 15, 2024 and available for use before 2027. Sewing machines, kiln equipment and cameras often land in Class 8 (20%) unless a more specific class applies; check the asset against the CRA list rather than guessing.

Provincial PST and QST

B.C. Bulletin PST 142 (revised March 2025) generally has online marketplace facilitators collect PST on facilitated retail sales to B.C. purchasers, while sellers may still need PST registration for sales outside those marketplaces. Saskatchewan, Manitoba and Quebec each run separate retail or QST systems. If you wholesale to Canadian boutiques outside the platforms, map those B2B invoices for GST/HST and any provincial tax exemptions supported by certificates.

Income tax and record retention

Sole proprietors use Form T2125; corporations file T2 returns. Owner product pulls are not free: record them at a reasonable amount and keep GST/HST in mind if you are registered. Hold source documents at least six years from the end of the last tax year they relate to for income tax. For help structuring the corporate versus personal split, see corporate tax and personal tax. Broader service descriptions also live on bomcas.com/services.

Payroll for studio assistants or contract makers should sit on a proper remittance calendar; our Canada payroll services page outlines the employer-side filings that sellers outgrow quickly once they hire help.

Practical 2026 checklist

1. Export annual eBay and Etsy reports; reconcile to bank and any third-party payout provider.
2. Combine platform totals for the GST/HST threshold test.
3. File GST/HST on time; reconcile platform-collected tax.
4. Count materials and finished goods; compute COGS.
5. Match Part XX seller statements when they arrive in January 2027.
6. Separate personal purchases made with shop accounts.

If you are still deciding whether you need outside help at all, our overview on when a small business needs a tax accountant sets expectations without hype. Contact options are on bomcas.ca/contact-us and bomcas.com/contact.

Frequently asked questions

Are hobby sales on Etsy taxable?

If you are carrying on a business, the CRA expects you to report the income. Occasional personal sales of used household goods can fall outside a business, but a repeated Etsy shop with an intention to profit is business income. When in doubt, document your facts.

Does the $30,000 GST/HST threshold include eBay and Etsy together?

Yes. The small-supplier test looks at worldwide taxable supplies from all your businesses plus associates, not each platform in isolation.

What is the Part XX $2,800 / 30-activity exclusion?

For goods sellers, a seller can be an excluded seller for Part XX if the platform facilitated fewer than 30 relevant goods activities and total consideration paid or credited did not exceed $2,800 in the calendar year. Exclusion from Part XX reporting does not by itself remove GST/HST or income-tax obligations.

How do I treat craft supplies I still have at year-end?

Unsold raw materials and finished goods belong in inventory, not as a full immediate expense, when you are calculating cost of goods sold the CRA way.

eBay collected HST on my Ontario sale. Do I still file a GST/HST return?

If you are a normal-regime registrant, you still file. Platform-collected amounts need careful reconciliation so you neither double-remit nor under-report. If you are not registered and the platform was required to collect on qualifying goods, your income-tax reporting of the sale still remains.

Can I deduct eBay Promoted Listings and Etsy Ads?

Advertising costs incurred to earn business income are generally deductible. Keep invoices and allocate personal versus business use if an account is mixed.

Disclaimer: This article is general information based on CRA, provincial and (where noted) law-society publications reviewed on November 1, 2026. It is not tax, legal or accounting advice. Rules change, and your facts matter. Confirm figures on the official sites before you file or elect.

Talk to BOMCAS Canada

Questions about your online sales books or GST/HST filings? Call BOMCAS Canada at 780-667-5250 or email info@bomcas.ca. Clients elsewhere in Canada are served remotely. Hours are 9:00 a.m. to 5:00 p.m.

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