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Updated 6/27: 3 Important Tax Updates for Sellers in Canada
Today we’re announcing three tax-related changes that impact you as a seller in Canada. Etsy is required to make these changes as a result of new regulations. They will all go into effect on July 1, 2022.
1. Etsy will start collecting Canadian sales tax including GST, HST, QST, and PST on orders placed by shoppers in Canada. Etsy will remit these taxes to the Canadian government on your behalf.
What this means for you: If you already have a GST/HST number, add it to your Etsy account and we won’t charge your Canadian buyers GST/HST on orders for physical items. If you don’t have a tax ID yet, consider registering for one as your business grows.
If you have a Quebec sales tax (QST) number, you can also add that to your account and Etsy won’t charge QST on orders shipped to buyers in Quebec.
You may already be collecting sales tax from your customers and remitting it to tax authorities. Adding your tax ID number ensures that your customers won’t pay GST/HST or QSTs twice—once from you and once from Etsy. Reduce the amount of tax your customers pay by adding your tax ID number.
Add your tax ID number here.
2. We’ll also start charging GST/HST on your seller service fees.
Due to these new tax regulations, Etsy is required to charge GST/HST on seller service fees in some instances. If Etsy has already collected GST/HST on the order, you won’t be charged sales tax on order-related fees (payment processing and transaction). GST/HST will always be charged on all other seller services fees such as listing fees, Etsy Ads or Offsite Ads fees, or Pattern subscription fees. You’ll see the tax you pay on your fees reflected in your shop payment account.
3. When these changes go into effect we’ll be getting rid of the existing sales tax tool.
We’re getting rid of this tool, which lets you set your own sales tax rates, to ensure that taxes are accurately represented to buyers. We’ll send more reminders about these changes before they go into effect. Add your GST/HST number to your account today to stay ahead of the updates.
If you need help registering for GST/HST or have other questions on your eligibility, please reach out to your tax and legal representative.
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New sales taxes in Canada: Answers to your FAQs
A few weeks ago, we announced new GST/HST and provincial tax requirements for sellers in Canada. We know taxes can be confusing so we’re following up with answers to some of your most frequently asked questions about these new requirements. Read on to learn more.
What is changing about taxes on Etsy for sellers in Canada?
Starting July 1, Etsy is required to start collecting GST/HST and provincial taxes from Canadian buyers when they purchase from shops in Canada. Whether or not Etsy needs to collect this tax from buyers varies based on the tax ID you’ve added to your account and provincial rules.
Why is Etsy making these updates?
The Canada Revenue Agency (CRA) and provincial governments recently introduced new regulations on ecommerce that require Etsy to collect GST/HST and provincial taxes on the sale of physical goods. Etsy will start collecting GST/HST and provincial taxes on July 1. You can read more about how the changes apply to ecommerce on this official government site.
Should I register for GST/HST?
Canadian tax regulation requires sellers to register for a GST/HST ID and to collect and remit the tax to the CRA once they’ve reached $30,000 CAD in sales, across any selling platform, not just on Etsy. This includes both brick-and-mortar sales and online sales. You know your business best, so it’s your responsibility to speak with a tax advisor to determine whether you need to register for a GST/HST, QST or other provincial tax IDs.
What does this mean for me if I don’t have a GST/HST on file with Etsy?
If you don’t have a GST/HST number on file, Etsy WILL collect and remit GST/HST from Canada buyers for sales of physical goods. You don't have to adjust your prices and you don't have to remit taxes yourself. Etsy will charge these taxes to the buyer at checkout, and remit them to the CRA. There is nothing you need to do. You’ll receive an invoice from Etsy that shows the GST/HST we collected from your buyers and remitted to the CRA.
In addition to collecting taxes on orders, we’ll also collect GST/HST on your seller fees, including the payments processing fee, transaction fees, advertising fees, and listings fees.
If you receive an order from a buyer in Canada and Etsy has already collected GST/HST from that buyer, then you will not be charged GST/HST on processing or transaction fees, but taxes will apply on the other fees. For all other orders, GST/HST will be collected and remitted on all fees.
How will it work if I DO have a GST/HST on file?
If you have a GST/HST number on file, Etsy WILL NOT collect and remit GST/HST from buyers in Canada for sales of goods. You should adjust your local prices to collect GST/HST as part of your profit and then remit to the CRA with your GST/HST filing. By adding a GST/HST ID to your Etsy account, you’re letting us know you’re responsible for handling your sales taxes.
GST/HST will be collected on all your seller fees, including the payments processing fee, transaction fees, advertising fees, and listings fees and remitted to the CRA.
What if I have a QST number?
Similar to GST/HST, Etsy will not collect QST from buyers in Quebec if the seller provides a QST number to Etsy.
QST will be charged on Quebec seller fees where the seller is QST registered.
If you do not have a QST number on file, similar to GST/HST, Etsy will collect QST on physical items from your buyers in Quebec if you have not provided a QST number. QST will also be charged on Quebec seller fees unless the fee relates to a transaction or processing fee where Etsy has already collected the QST on the physical item sold.
What if I have a PST or RST number on file?
Etsy will collect PST from buyers in Saskatchewan and British Columbia and RST from buyers in Manitoba regardless of whether or not you provide a PST or RST number to Etsy.
PST will also be charged on all seller fees in British Columbia.
What tax will I have to remit myself?
If you have a GST/HST or QST ID on file, you’re responsible for collecting and remitting the appropriate taxes to tax authorities yourself. If you’re not sure what your tax responsibilities are, consider speaking to a tax advisor.
Why is Etsy going to apply the tax to my fees?
These new tax regulations require marketplaces, including Etsy, to collect GST/HST, QST and BC PST not only on goods sold to buyers but also on the services we provide to sellers which we charge fees for. The taxes Etsy collects on seller fees are remitted directly to tax authorities. Depending on your circumstances you may be entitled to claim a refund of these fees from the tax authorities. We recommend you speak with your local tax advisor to find out if you’re eligible.