Peer-to-peer

The peer-to-peer economy involves the selling of goods from one person or party (seller) directly to another (buyer).

On this page

• Understanding the peer-to-peer economy
• Income tax obligations
• GST/HST obligations
• Keep records of all your transactions

Understanding the peer-to-peer economy

The peer-to-peer economy includes situations where third-party sellers connect with buyers through online platforms such as websites, applications, and marketplaces to sell their products.

Common platforms may include, but are not limited to:

• Kijiji
• Etsy
• eBay
• Amazon

Income tax obligations

Report and pay tax on all your income earned from peer-to-peer sales as self-employment income by completing line 26000 of your income tax and benefit return and Form T2125, Statement of Business or Professional Activities.

• Line 26000 – Taxable income
• Form T2125, Statement of Business or Professional Activities
• How to fill in Form T2125

If you have more than one business, you must complete and file a T2125 form for each business you operate. This also applies to any income you earn from business done outside of Canada.

Tax obligations on foreign income

If you are a Canadian resident and paid foreign income tax on foreign-sourced income, you could be eligible for the federal foreign tax credit.

If you paid income tax to more than one country and the total foreign income tax paid to all countries where you earned income is more than $200, a separate calculation is required for each country for which you claim a foreign tax credit.

• Federal foreign tax credit

Peer-to-peer sellers who are not resident in Canada are subject to Canadian income tax on most Canadian-sourced income paid or credited to them during the year unless all or part of that income is exempt under a tax treaty. More information on non-residents is available at Non-Residents and Income Tax - Canada.ca.

Claiming expenses

You can claim eligible expenses associated with income you earned through the peer-to-peer economy. To claim expenses, you must keep proper financial records.

For more information on what qualifies as an eligible business expense, see Business expenses.

Business–use–of–home expenses - Canada.ca.

Examples of eligible expenses include:

• costs from using a platform to sell products
• marketing costs to increase traffic to your online store, if those costs are associated with earned income
• cost of materials or services within or outside of Canada such as:
  • raw products (for example, wood, wool, paint, beads)
  • software licences
  • editing or translation services

GST/HST obligations

Generally, if you earn more than $30,000 over four calendar quarters by supplying taxable goods or services, you have to register for, collect, and remit (send) the related goods and services tax / harmonized sales tax (GST/HST) to the Canada Revenue Agency.

• When to register for and start charging GST/HST
• General information for GST/HST registrants

Already registered for GST/HST?

If you are registered for the GST/HST, you may be eligible to claim input tax credits for the GST/HST paid on purchases and expenses related to your commercial activities.

Generally, you can claim an input tax credit for the GST/HST paid or payable on expenses for your business activities. A tax professional can advise you on your tax obligations.

• Input tax credits (ITCs)
• Calculate input tax credits – ITC eligibility percentage

Keep records of all your transactions

Record your income and your expenses, including sales you make to buyers in Canada and other countries. There may be other considerations, depending on the area of the platform economy you are operating in.

• Business records
• Keeping records