Digital-platform reporting rules include a narrow exclusion for some sellers of goods. To qualify, a seller must have fewer than 30 relevant sales and no more than $2,800 in total consideration during the reporting period. Failing either condition means the exclusion does not apply.
What triggers the reporting
The platform-reporting exclusion can apply to a seller of goods only when both of these conditions are met in a calendar year:
- fewer than 30 relevant sales, and
- no more than $2,800 CAD in total consideration
If either limit is exceeded, the seller is not excluded under this test. The rule applies to sales of goods, not to gig services generally. Verify the current test using the CRA guidance for platform sellers.
Sell 25 custom mugs at $150 each and you’re past $2,800 even after Etsy’s cut.
What Etsy sends to the CRA
Depending on the facts and the platform’s reporting obligation, reported information can include:
- Your legal name (as registered on Etsy)
- Your mailing address
- Your total number of transactions
- Total consideration by quarter
- Fees, commissions, or taxes withheld or charged by the platform
This is an annual information return, not necessarily a line-by-line handoff of every sale. Platforms must also make the reported information available to the seller by January 31 following the reporting period.
How the CRA uses this data
The CRA cross-references Etsy’s numbers against your Form T2125 (Statement of Business or Professional Activities). That’s the form where you report self-employment income.
If Etsy’s report plus its fees adds up to $5,000 but your T2125 shows $3,000, you’ve got a problem. A mismatch gives the CRA an easy reason to ask. Sometimes it’s a letter. Sometimes it’s a reassessment with interest, and penalties can apply.
The CRA doesn’t care whether the gap was intentional or just sloppy bookkeeping. The result is the same.
Gross vs. net: the number that trips people up
Gross is what buyers paid. Net is what’s left after Etsy’s fees - and net is what Etsy reports.
Etsy reports what it paid you after its fees, and lists those fees separately. The $2,800 test runs on that net number. Your T2125 starts with gross sales, then you subtract your cost of goods sold (COGS) and business expenses (including those Etsy fees) to arrive at net income.
So the gross number on your T2125 should roughly equal Etsy’s reported amount plus the fees it listed. The fees show up further down the form as deductions, not as a lower revenue figure at the top.
If you’re reporting $3,000 in gross sales when Etsy’s report plus its fees comes to $5,000, you’re not deducting expenses. You’re underreporting revenue. The CRA sees those as two very different things.
Selling on multiple platforms
Etsy isn’t the only platform reporting to the CRA. If you also sell on Shopify, at craft fairs, through Facebook Marketplace, or via your own website, all of that income counts toward your total self-employment earnings.
The CRA expects your T2125 to reflect all sources, not just the one that sent a tax slip. A seller doing $2,000 on Etsy, $1,500 on Shopify, and $800 at weekend markets owes tax on $4,300, even if only Etsy filed a report.
For a breakdown of how different platforms handle reporting, see our gig worker tax guide by platform.
GST/HST still applies
If your total self-employment revenue (across all platforms and channels) exceeds $30,000 in a single calendar quarter or over four consecutive quarters, you’re required to register for and collect GST/HST. This applies whether you’re selling candles, jewellery, or digital downloads.
Many Etsy sellers cross this threshold without realizing it because they’re only watching one platform at a time. Our GST/HST registration guide walks through the details.
What to do right now
1. Pull your Etsy sales summary. Go to Shop Manager, then Finances, then Payment account. Download your annual CSV, and keep the copy of Etsy’s report you get by January 31. That report is what the CRA already has: what Etsy paid you, plus the fees it took.
2. Match it against your T2125. Your gross revenue line should roughly equal what Etsy reported plus the fees it listed, plus income from any other platforms or direct sales.
3. Track expenses properly. Shipping supplies, Etsy fees, payment processing charges, packaging materials, raw materials: these are all deductible, but only if you have records.
4. Don’t forget about COGS. If you make physical products, the cost of materials goes on your T2125 as cost of goods sold, which directly reduces your taxable income.
For the full picture on how self-employment taxes work, start with our freelance taxes 101 guide.
Keep your records organized
Accountly can help you record income, categorize expenses, and prepare reports for your accountant. It does not import Etsy sales directly, so download your Etsy statements and reconcile them to the records you enter.
Frequently asked questions
Does Etsy send a tax slip to Canadian sellers?
The digital-platform rules use an information return rather than an employment slip. You’re still responsible for reporting your taxable income on the appropriate return.
What if my Etsy sales are under $2,800?
If you sell goods, have fewer than 30 relevant sales, and receive no more than $2,800 in total consideration, you may be an excluded seller under this test. Other reporting rules can still apply, and you’re required to report taxable income regardless of whether the platform reports it.
Does the $2,800 threshold include shipping charges and sales tax?
The information return reports consideration credited or paid, along with certain fees, commissions, or taxes. Use the platform statement and your transaction records to reconcile item prices, shipping, sales tax, refunds, and fees rather than assuming they are all treated identically.
Can I deduct Etsy fees and shipping costs on my taxes?
Yes. Etsy transaction fees, listing fees, payment processing fees, shipping costs, and packaging materials are all deductible business expenses on your T2125. They reduce your net income, not your gross revenue. Your gross should still roughly equal Etsy’s reported amount plus its listed fees, but the fees lower the amount you owe tax on.
What happens if the CRA flags a mismatch between my return and Etsy’s report?
The CRA will typically send a letter asking you to explain the discrepancy. If you can’t reconcile the difference, they may reassess your return, add the unreported income, and charge interest, and penalties may apply. The exact penalty depends on your circumstances, so see the CRA for current rules.
Do I need to charge GST/HST on my Etsy sales?
Only if your total self-employment revenue exceeds $30,000 in a single calendar quarter or over four consecutive quarters. This includes income from all platforms and sources, not just Etsy. Once you cross the threshold, register promptly (the CRA sets a short window). See our GST/HST guide for the full breakdown.
The information in this guide is for general informational purposes only and is not intended as accounting, tax, business, or legal advice. Accountly does not provide professional services or act as your accountant, tax advisor, or lawyer. No client relationship is created by your use of this material. Always seek advice from qualified professionals who understand your particular circumstances before acting on any information contained herein.