How to Pay Taxes for Your E-Commerce Business

Mark Virgil Lofranco • 15 September 2024

When you run an online business, your website is your storefront, and your market can span the globe. Whether you're selling custom prints, vintage clothing, or unique art on platforms like Etsy, the key to managing your e-commerce business successfully involves understanding the tax rules.

Where there’s income, there are taxes. Here's a guide to help you navigate the tax implications of running an e-commerce business in Canada.


Do E-Commerce Businesses Pay Taxes in Canada?


Yes, both traditional and e-commerce businesses are subject to the same tax laws. Your tax reporting obligations depend on how your business is legally structured when registered:


  • Sole Proprietor: You operate the business alone, and it’s unincorporated.
  • Partnership: Two or more people run the business together.
  • Incorporation: The business operates as a separate legal entity.


Your business structure affects your tax liabilities, deductions, and the forms you file during tax season.


Do I Need to Register My E-Commerce Business in Canada?


Yes, all businesses must register. You’ll need to determine your business structure (sole proprietor, partnership, or corporation). Your structure impacts how you’re taxed, your liabilities, and the tax forms you use.


What if I Sell to Both Canadian and International Customers?


The Canada Revenue Agency (CRA) expects you to pay income tax on your earnings, regardless of where your customers are located. The key difference is that Canadian customers must pay sales tax, while international customers don’t.


Do I Have to Charge Sales Tax?


If your business earns more than $30,000 annually, you’re required to register for a GST/HST number and charge sales tax on transactions with Canadian customers. The applicable sales tax rate depends on the customer's province.


For example, if you sell an item to a customer in Québec, you’ll need to charge 5% GST and 9.975% QST.


Provincial Sales Tax Rates


Here’s a breakdown of the provincial sales tax rates across Canada:

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