Etsy collects and remits GST/HST on some Canadian sales, but not all of them. Whether Etsy handles the remittance or you do depends on your registration status. Getting this wrong in either direction creates a problem: an unregistered seller who tries to collect and remit their own GST/HST on Etsy sales may be duplicating what Etsy already remitted, while a registered seller who assumes Etsy handles it may have a filing gap.
The distinction is worth understanding clearly before your next filing period.
How Canada’s Platform Rules Work
Canada’s GST/HST platform economy rules came into effect on July 1, 2021. Under these rules, a qualifying platform operator can be treated as the deemed supplier for sales made through the platform by vendors who are not registered for GST/HST under the regular rules.
The relevant mechanism is distribution platform operator status under the Excise Tax Act. When a distribution platform operator facilitates a sale of tangible personal property by an unregistered vendor to a Canadian buyer, the platform operator is deemed to have made the supply, not the vendor. The platform operator collects and remits the GST/HST. The underlying vendor is treated as having made a zero-rated supply to the platform operator for that transaction.
Etsy qualifies as a distribution platform operator under these rules. Etsy is registered for GST/HST in Canada and remits on qualifying sales where the seller is not registered under the normal GST/HST rules.
Unregistered Sellers: Etsy Collects on Your Behalf
If you are a Canadian Etsy seller who is not registered for GST/HST, Etsy is the deemed supplier for your sales to Canadian buyers. Etsy calculates, collects, and remits the applicable GST/HST on those sales. The tax appears as a separate charge to the buyer at checkout and does not flow through to you. You do not collect GST/HST, you do not remit it, and you do not include those transactions on a GST/HST return because you do not have one.
This does not mean your Etsy sales are irrelevant to your GST/HST position. Revenue from Etsy sales counts toward the CAD $30,000 small-supplier threshold even when Etsy is the deemed supplier. Your registration obligation is based on your total taxable supplies worldwide, not on who is handling the remittance for any given channel. An Etsy seller generating CAD $28,000 in Etsy revenue and CAD $5,000 from another source has exceeded the threshold and must register, regardless of the fact that Etsy was remitting on the Etsy portion.
The CRA’s small-supplier threshold rules apply on a combined basis across all channels and sources. Etsy’s remittances do not reduce your revenue for threshold purposes.
Registered Sellers: You Collect and Remit
Once you are registered for GST/HST, the deemed-supplier mechanism no longer applies to your Etsy sales. You are the supplier. You are responsible for collecting GST/HST from Canadian buyers and remitting it to CRA.
Etsy’s system needs to know you are registered. Providing your GST/HST registration number to Etsy through your seller account settings allows the platform to reflect your registered status and stop collecting on your behalf. The process for adding a tax registration number is in Etsy’s Shop Manager under Finances, then Legal and Tax Information. Without this step, you and Etsy may both be handling GST/HST on the same transactions, which creates an overpayment situation that requires CRA to sort out.
Once your registration number is on file with Etsy, you add GST/HST to the price your Canadian buyers pay. Etsy’s transaction fee is calculated on the gross order amount, which includes the tax portion of the sale. The tax flows through to you as part of the payment received, and you are responsible for reporting and remitting it on your GST/HST return.
What Etsy’s Monthly Statement Shows
Etsy provides a monthly statement that summarizes the sales and fees for the month. For Canadian sellers, this statement is the primary source for reconciling what happened in your Etsy account.
The statement includes:
Sales and credits. The total gross sales figure for the month, which is the amount buyers paid for your items including any shipping you charged. For registered sellers, this includes the GST/HST you collected. For unregistered sellers, the total should not include the platform’s GST/HST collection (which Etsy handles separately), though the presentation varies depending on how prices are displayed in your shop.
Fees charged. Listing fees (currently USD $0.20 per listing, charged in the currency of the sale context), transaction fees (6.5% of the order total including shipping and gift wrapping), and Etsy Payments processing fees. Etsy’s fee schedule covers the current rates. For Canadian sellers, these fees are typically subject to GST/HST, which means they carry an ITC-eligible tax component if you are registered.
Offsite Ads fees. If Etsy places your listings on external advertising networks and a sale results, Etsy charges an Offsite Ads fee of 15% of the order total for sellers with less than USD $10,000 in annual sales, or 12% for sellers above that threshold. Sellers who have not opted out (only sellers below the mandatory threshold can opt out) pay this fee when a qualifying sale occurs. This fee is also subject to GST/HST and is ITC-eligible for registered sellers.
Regulatory operating fees. Etsy charges a regulatory operating fee on some orders to cover marketplace compliance costs in certain jurisdictions. Whether and how this applies to Canadian orders should be reviewed on your statements, as it does not always appear and its taxability requires separate review.
Tax collected by Etsy. For unregistered sellers, a line showing GST/HST collected and remitted by Etsy on your sales may appear. This amount did not flow to you and is not your revenue. It does not appear on your GST/HST return.
The Etsy monthly statement is a useful starting point, but it is not a substitute for your own accounting records. Reconciling the statement against your books ensures that every transaction is accounted for at the correct amounts and that fees and taxes are correctly separated from gross revenue.
Revenue Recognition for Etsy Sellers
Your gross revenue from Etsy is the total amount buyers paid for your products and shipping before Etsy’s fees. It is not the deposit you received in your bank account. Etsy’s deposit is net of listing fees, transaction fees, payment processing fees, Offsite Ads fees, and any adjustments. Treating the deposit as gross revenue understates your income and misrepresents your cost structure.
For registered sellers, the GST/HST collected is also embedded in the gross order amount on Etsy’s statement. Revenue for income tax purposes is the net amount before fees, excluding the GST/HST collected. A sale of CAD $113.00 to an Ontario buyer, including 13% HST of CAD $13.00, produces revenue of CAD $100.00 and a GST/HST liability of CAD $13.00, before Etsy’s transaction fee is considered. The transaction fee is a business expense, not a revenue reduction at the top of the statement.
For unregistered sellers where Etsy is the deemed supplier, the buyer’s payment to Etsy includes a tax component that you never receive. Your revenue is the net amount Etsy deposits to you plus the fees Etsy deducted, which together represent the proceeds of the sale before platform costs. The GST/HST Etsy collected is not part of your revenue in any form.
Fees and Input Tax Credits
For registered sellers, the GST/HST component of Etsy’s fees is ITC-eligible. Etsy is registered in Canada, and its fees to Canadian sellers carry GST/HST. The tax on listing fees, transaction fees, payment processing, and Offsite Ads fees is recoverable against your GST/HST collected, provided you have the required documentation.
ITC documentation requirements for charges in the CAD $100 to $500 range include: supplier name, invoice date or tax-paid date, total amount paid, the GST/HST amount or a statement that GST/HST is included, and the supplier’s GST/HST registration number. For amounts over CAD $500, your own name or trading name and a brief description of the supply are also required.
Etsy’s monthly statement and billing documents are the primary support for these ITC claims. Confirming that the relevant details appear on the documents before filing avoids a denied claim on audit. The CRA ITC documentation rules cover the specific requirements at each dollar threshold.
Etsy fees are typically billed in USD, with the GST/HST calculated on the Canadian dollar equivalent. The exchange rate used by Etsy and the rate reflected in your books should be consistent. A material difference between the two can result in ITC claims that do not match the tax actually charged.
Multi-Channel Threshold Considerations
If you sell on Etsy alongside Amazon, Shopify, Walmart, or any other channel, the registration threshold is calculated on combined revenue. The CAD $30,000 limit is not per-platform; it is total taxable supplies worldwide, measured over a single calendar quarter or over the four preceding calendar quarters.
This means a seller generating CAD $12,000 on Etsy, CAD $10,000 on Amazon, and CAD $10,000 through a Shopify storefront has CAD $32,000 in combined revenue and is required to register, even though no individual channel has crossed the threshold. Once registered, the seller is the supplier on all channels, not just Shopify (where they were always the merchant of record). They must provide their GST/HST number to Etsy and ensure they are collecting on Etsy sales going forward.
The Etsy sales where the platform was the deemed supplier before registration count toward the threshold. CRA’s calculation of whether and when the threshold was crossed does not subtract the revenue on which Etsy was remitting.
For a broader look at how the registration threshold works across multiple platforms, see GST/HST for Multi-Platform Canadian E-Commerce Sellers.
Quebec QST
Quebec Sales Tax (QST) operates on a parallel structure to GST/HST, administered by Revenu Quebec. Platform rules similar to the federal GST/HST deemed-supplier mechanism apply under Quebec’s QST legislation.
Etsy is registered for QST and operates as a specified digital platform for QST purposes. For unregistered Quebec sellers, Etsy remits QST on sales to Quebec buyers in a manner consistent with its GST/HST obligations. For registered Quebec sellers, the same requirement applies as under GST/HST: register your QST number with Etsy and handle your own QST collection and remittance.
The QST registration threshold and the GST/HST registration threshold differ in some respects. Sellers with activity in Quebec should review both independently rather than assuming a single registration status governs both. Revenu Quebec administers QST separately from CRA, and for most Quebec businesses also administers the GST/HST account, but the accounts remain separate. The Revenu Quebec guidance on digital platform operators covers how QST platform rules apply.
Common Mistakes
Assuming Etsy always handles GST/HST. The platform rules apply to unregistered sellers only. Once you are registered, you are the supplier and Etsy should not be collecting on your behalf. Failing to update Etsy with your registration number after registering can result in tax being collected twice on the same sales.
Not providing your GST/HST number to Etsy after registration. Etsy defaults to the deemed-supplier position if it does not have a registration number on file. Providing the number through your account settings is a required step, not optional. Until it is done, your registered status has not changed your tax-handling situation on Etsy.
Counting Etsy deposits as gross revenue. The deposit is net of listing, transaction, and payment processing fees, and in some cases Offsite Ads fees. Recording it as revenue understates gross income and eliminates the fee deductions that belong on the books as separate expense line items.
Including Etsy-remitted tax in your GST/HST return. For unregistered sellers, the GST/HST that Etsy collected and remitted on your behalf is not your liability and should not appear on your GST/HST return. If you have since registered and are reviewing prior periods, the periods when Etsy was the deemed supplier should be treated separately from periods when you became the supplier.
Calculating Etsy’s transaction fee on the wrong base. Etsy’s 6.5% transaction fee applies to the total order amount including shipping and any gift wrapping charges, and for registered sellers it applies to the gross order amount including the GST/HST you charged. The fee base is broader than the product price alone. An ITC claim on the transaction fee should reflect the tax on the full fee, not a fee calculated only on product prices.
Missing the registration trigger when revenue crosses CAD $30,000. Etsy’s platform remittances do not eliminate the threshold obligation. Sellers who cross CAD $30,000 in combined revenue while relying on Etsy to handle the tax are still required to register, at which point they become the supplier and need to update their Etsy account accordingly.
Related Guides
- Etsy Fee Breakdown for Canadian Sellers covers how Etsy’s fee layers affect per-order margin for Canadian sellers, including transaction fees, payment processing, Offsite Ads, and the relationship between gross sale price and net deposit.
- GST/HST for Multi-Platform Canadian E-Commerce Sellers covers how the registration threshold applies across channels and how different platforms handle the deemed-supplier question differently.
- Shopify GST/HST and Tax Settings for Canadian Stores explains why Shopify is not a marketplace facilitator and how GST/HST obligations work for sellers who operate their own Shopify storefront.
- GST/HST for Canadian Amazon Sellers covers how Amazon’s marketplace facilitator mechanism works and where it overlaps with or differs from Etsy’s approach.
Scope of This Guide
This guide covers GST/HST and QST considerations for Canadian sellers operating on Etsy. It does not cover:
- US sales tax on Etsy sales to American buyers
- EU VAT or UK VAT on international orders
- Quebec QST registration and filing mechanics in full detail
- Provincial sales tax (BC PST, SK PST, MB RST) on Etsy sales
The authoritative source for Canadian GST/HST platform rules is the Canada Revenue Agency digital economy guidance. For Quebec QST, refer to Revenu Quebec.
If you are not certain whether your Etsy registration status is reflected correctly in your account settings, or whether prior periods were handled correctly given your registration history, that is the right question to work through before the next filing period.
Get in touch to discuss your situation.