If you sold $2,800 or more on Etsy last year, or hit 30 transactions, Etsy has already reported your sales data to the CRA. Not a summary. Not a flag. A line-by-line handoff of your name, address, transaction count, and gross sales.
This is the part most Etsy sellers in Canada miss until it’s too late.
What triggers the reporting
Etsy reports your information to the CRA if you meet either of these thresholds in a calendar year:
- 30 or more transactions, or
- $2,800 CAD or more in gross sales
You don’t need to hit both. One is enough. And “gross sales” means the full sale price before Etsy fees, shipping costs, or refunds are deducted.
If you sold 25 custom mugs at $120 each, you’ve crossed $2,800 before summer.
What Etsy sends to the CRA
Etsy’s report includes:
- Your legal name (as registered on Etsy)
- Your mailing address
- Your total number of transactions
- Your gross sales amount in CAD
This isn’t a tax return. It’s a data feed. The CRA receives it and holds it until your T1 comes in.
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 tells the CRA you grossed $5,000 but your T2125 shows $3,000, you’ve got a problem. The mismatch triggers an automatic review. Sometimes it’s a letter. Sometimes it’s a full reassessment with interest and penalties.
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
This is where most sellers get confused.
Etsy reports your gross sales. That’s the total amount buyers paid, before Etsy takes its cut. Your T2125 also starts with gross sales, but then you subtract your cost of goods sold (COGS) and business expenses to arrive at net income.
So yes, the gross number on your T2125 should match (or come close to) what Etsy reported. The difference shows 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 reported $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 any 12-month period, 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. That’s the number the CRA already has.
2. Match it against your T2125. Your gross revenue line should align with what Etsy reported, 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.
Let Accountly handle the reconciliation
Accountly imports your Etsy sales data and reconciles it against what needs to appear on your T2125. You can track income from multiple platforms, categorize expenses, and generate the reports your accountant actually needs, without a year-end scramble through spreadsheets and CSVs.
Frequently asked questions
Does Etsy send a tax slip to Canadian sellers?
Etsy doesn’t issue a T4A or T5018 like a traditional employer would. Instead, they report your sales data directly to the CRA under platform reporting rules. You’re still responsible for reporting the income yourself on Form T2125.
What if my Etsy sales are under $2,800?
If you’re below both thresholds (under $2,800 in gross sales and fewer than 30 transactions), Etsy won’t report your data to the CRA. But you’re still legally required to report all self-employment income on your tax return, regardless of the amount.
Does the $2,800 threshold include shipping charges and sales tax?
Yes. Etsy reports gross sales, which includes the item price and shipping charges collected from buyers. Etsy fees and refunds are not subtracted before reporting. This is why the number Etsy reports is often higher than what you actually deposited.
Can I deduct Etsy fees and shipping costs on my taxes?
Absolutely. 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, so they won’t change the gross number the CRA sees from Etsy, but they will 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 plus a penalty (usually 10% of the unreported amount for a first offence, and 20% for repeat omissions).
Do I need to charge GST/HST on my Etsy sales?
Only if your total self-employment revenue exceeds $30,000 in any rolling 12-month period. This includes income from all platforms and sources, not just Etsy. Once you cross the threshold, you have 30 days to register. See our GST/HST guide for the full breakdown.
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