Who We Help · E-commerce · Etsy & Handmade
Etsy sellers: the platform handles less than you think.
Etsy really does collect US sales tax on every marketplace order — that part is handled. What it never touches: your Canadian income tax, your GST/HST once worldwide sales pass $30,000, the W-8BEN that stops US withholding, and the customs paperwork that now rides on every US-bound parcel. That\u2019s the half that lands on you.
By the AnalytIQ Accounting team · Last reviewed: August 12, 2026
What Etsy does and doesn't handle
| Layer | Who actually handles it |
|---|---|
| US sales tax | Handled — Etsy is a marketplace facilitator in every sales-tax state; you file nothing in the US for marketplace orders |
| GST/HST on Canadian orders | Handled only while you\u2019re unregistered — once you register and add your GST number, collection on physical items becomes yours |
| Your income tax | Never handled — every dollar of profit is reportable in Canada (T2125 or T2), 1099-K or not |
| US withholding | Your W-8BEN in the tax interview is what prevents it — and it expires every three years |
| Customs on US orders | Yours — and since de minimis ended, every parcel clears customs |
The $30,000 threshold counts your American sales
The GST/HST registration test is worldwide taxable sales — your zero-rated US orders count even though they carry 0% tax. Cross CAD $30,000 in four quarters and you have 29 days to register. Most makers should register early anyway: you collect nothing extra on US sales and reclaim the GST on materials, tools, and Etsy's own seller fees.
Customs just became a maker's problem
The US$800 duty-free threshold is gone — a $40 handmade order to Ohio is now a customs entry. Two things protect your margins: shipping delivered-duty-paid (Etsy is moving US-bound orders that way, and carrier fee claw-backs hit sellers who don't), and the fact that genuinely handmade-in-Canada goods generally qualify as CUSMA-originating — 0% duty, but only with the HS codes and origin documentation done right. We set that up once and it runs.
Micro-business, real books
Etsy fees, offsite-ads fees, shipping labels, refunds, and materials make hobby-looking shops genuinely complicated. We keep it simple: clean monthly numbers, the right registration timing, and a tax return that claims everything you're entitled to — including the home-studio costs most sellers skip.
Sources: Etsy — what Etsy remits to Canadian tax authorities · CRA — GST/HST registrants.
Common questions.
I didn\u2019t get a 1099-K. Do I still owe tax?
Yes — the 1099-K is a US information form that mostly doesn\u2019t apply to Canadians with a W-8BEN on file. Canada taxes your worldwide profit either way.
Is my shop a hobby or a business for CRA?
If you sell with a reasonable expectation of profit, it\u2019s a business — report the income, deduct the expenses. "Hobby" status mostly means you lose the deductions, not the tax.
Etsy started collecting Canadian tax on my orders. Why?
Marketplace rules — Etsy collects GST/HST for unregistered sellers. Once you register and add your number, physical-item collection shifts to you, which is exactly when sellers should talk to us.
Related reading
Make things. We\u2019ll mind the tax.
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