Taxes on reselling in Canada

Personal items or a business?

The CRA treats income as business income when you carry on an activity for profit, or with a reasonable expectation of profit. Buying things in order to sell them for more, and doing it regularly, is what makes reselling a business.

Clearing out your own closet is different. Your own clothes, furniture and other things for personal use are personal-use property. If you sell one for less than you paid, there's no gain, and the loss can't be claimed. The CRA also treats the cost and the selling price of a personal item as at least $1,000, so most everyday items never produce a gain at all.

Many people do both. Keep the two apart: only the reselling side is business income.

How reselling profit is taxed

Your profit is your sales, minus the cost of the items you sold, minus your expenses. It goes on form T2125 and is added to your other income, so it's taxed at your normal rate. As a self-employed person you may also owe Canada Pension Plan contributions on that profit.

What you can deduct

• What you paid for the items you sold (through cost of goods sold, not as an expense)
• Platform selling fees, plus the GST/HST charged on them if you aren't registered for GST/HST (registrants claim it back as an input tax credit instead)
• Shipping you paid for, and packaging like mailers and tape
• The business share of your cell phone and internet
• Vehicle costs for sourcing trips, if you keep a log of business kilometres

The T2125 guide shows which line each one goes on.

GST/HST

You need to register for GST/HST once your sales from reselling, plus any other business income, go over $30,000 in four calendar quarters together, or in a single quarter. Until then you're a small supplier. Check how close you are.

Separately, platforms collect GST/HST from buyers on goods sold through them by sellers who aren't registered, and send it to the CRA themselves. That tax is theirs to handle, and it doesn't mean you need to register.

Platform reporting

Since 2024, platforms send the CRA a yearly report on each seller who makes 30 or more sales, or is paid more than $2,800, on that platform in a calendar year. The report shows your sales; it doesn't decide whether they're taxable. Check whether you'll be reported.

Records to keep

Keep your records for six years from the end of the tax year they relate to: receipts for what you bought, a record of each sale, platform fee statements, shipping receipts and your vehicle log. The Second Loonie tracker keeps your items, sales and expenses together, and its year-end summary exports them as CSV files.

Deadlines

If you're self-employed, your return is due June 15, but any tax you owe is due April 30. Paying late brings interest even when filing by June 15 is on time. If you live in Quebec, Revenu Québec has its own return and rules, and you contribute to the QPP rather than the CPP. This guide covers the federal side.