Selling on eBay in Canada: Personal Sales, Hobby or Business?

Do I report my eBay sales on my Canadian tax return?

Yes, if the sales are business income or produce a taxable capital gain. Selling your own used things at or below the $1,000 personal-use level usually produces no gain to report. A Canadian resident reports worldwide income, and the CRA says that income earned through a digital platform may make you self-employed (CRA: understanding your tax obligations). Its peer-to-peer page covers goods sold on online marketplaces, eBay among them (CRA: peer-to-peer). A sale ends up in one of three places:

The CRA sets no sales amount below which business income is not taxable. The GST/HST limit decides registration, and the platform limits decide only what the platform reports to the CRA. The federal income tax rules are the same in every province.

A case is not simple when you buy items to resell, repeat the same kind of sale, sell to buyers outside Canada, your sales have reached the thousands of dollars, a platform has reported or will report your sales to the CRA, you are near the GST/HST small-supplier limit, or you never reported earlier sales. Gather:

• What each item cost, with receipts or other proof
• Sale records, payout reports and the platform's year-end summary
• Fee and shipping statements
• The returns you filed for each year you sold

When is selling my own collection or used things not business income?

Selling items you bought and kept for your own use or enjoyment is generally not a business. The Income Tax Act treats property used primarily for the owner's personal use or enjoyment, or that of a related person, as personal-use property (Income Tax Act, section 54). A childhood card collection, games you played and a coin set you displayed can fit that description.

Such a sale can still be taxable. The CRA says the facts of a transaction decide whether it is a capital or an income transaction (CRA: T4037). A sale that is not business income is treated as a sale of capital property, and any gain goes on Schedule 3 (CRA: completing Schedule 3).

Is selling as a hobby treated differently from a business?

The CRA page on what a business is sets out no separate hobby test. Its question is whether you intend to carry on the activity for profit and have evidence of that intention (CRA: what is a business?). The CRA's audit manual asks first whether your predominant intention is to make a profit. Where the activity has a personal element, such as collecting for enjoyment, it then asks whether you run the activity in a sufficiently commercial manner, which it treats as the same as having a reasonable expectation of profit (CRA: Income Tax Audit Manual, chapter 27). The CRA pages used here do not say how an activity without a profit intention is taxed beyond the capital rules above, so a case that is neither clearly personal nor clearly a business needs its facts reviewed. Buying items to resell is a sign of a business whatever the collecting history.

What happens when I sell personal items for less than I paid, or for a gain?

For personal-use property, the Act treats both what it cost you and what you sold it for as at least $1,000 (Income Tax Act, subsection 46(1); CRA: T4037). Each item is tested on its own, so loose items worth less than the floor each usually leave no gain, unless the Sets rule below treats them as one property. A gain arises only when the sale price, less selling costs, is above the greater of that floor and your actual cost.

• Under $1,000: an item that cost you less than $1,000 is treated as costing $1,000, and one that sold for less is treated as selling for $1,000.
• Gain: the sale price minus what the item cost you (the CRA calls this the adjusted cost base) and minus your selling costs, such as the platform's fees and shipping you paid (Income Tax Act, section 40). 50% of a capital gain is taxable, and the taxable amount goes on line 12700 (CRA: completing Schedule 3).
• Gift or inheritance: your cost is not what the giver paid. For a gift it is generally the item's fair market value on the day you received it. For an inheritance not from a spouse or common-law partner it is the deceased person's deemed proceeds, usually the value just before death (CRA: T4037). Keep proof of that value.
• Loss: you generally cannot deduct a loss on personal-use property (CRA: T4037).
• Sets: items that would ordinarily be sold together as a set, sold in several sales to one buyer or to buyers who are not at arm's length (for example, relatives), are treated as one property when the whole set was worth more than the floor (Income Tax Act, subsection 46(3)).
• Listed personal property: the Act lists prints, etchings, drawings, paintings, sculptures and similar works of art, jewellery, rare folios, rare manuscripts and rare books, stamps and coins (Income Tax Act, section 54). The same floor applies, but a loss on these can be deducted only against gains from other listed personal property, carried back three years or forward seven years (CRA: T4037). Trading cards, toys and video games are not named in that list.

When does buying and reselling on eBay become business income?

Buying items in order to resell them is a strong sign of a business. The Income Tax Act's definition of business includes an adventure or concern in the nature of trade (Income Tax Act, subsection 248(1)). The CRA sets no number of sales or amount of sales that decides it; the facts do.

The CRA's archived bulletin on trading adventures asks whether you dealt with the property as a dealer would, whether the nature and quantity of the property rule out an investment, and whether your intention fits other evidence of a trading motive. It adds that an intention to sell at a profit is not enough by itself, and that a single or isolated transaction does not rule out a trade (CRA: IT-459, archived). The CRA no longer updates that bulletin, so treat it as background, not current policy.

Is my card, game or coin collection capital property or inventory?

It depends on why you hold the items, which is a question of fact.

An item held as an investment may be capital property, but a collectible used primarily for personal enjoyment still follows the personal-use rules even if you hope it rises in value; the floor is unavailable only if the item is outside the personal-use definition in section 54. The CRA says capital property does not include the trading assets of a business, such as inventory, and that capital property is usually bought for investment purposes or to earn income (CRA: T4037). Section 46 sets the floor. Subparagraph 40(2)(g)(iii) generally denies a loss on personal-use property other than listed personal property (Income Tax Act, section 40).

A person can do both: sell a kept collection and also buy stock to resell. Keep separate records, because each follows its own rule.

If an item you kept for personal use actually becomes resale stock, you are deemed to have sold it at its fair market value on that day, and to have reacquired it at that value (Income Tax Act, paragraph 45(1)(a)). The CRA says the same for assets moved into a sole proprietorship (CRA: fair market value). Record the original cost and the fair market value on the change date. Subsection 45(2) lets you elect, in the return for that year, to be treated as not having begun the income use; whether it fits a move into resale stock needs review before you set the inventory cost.

If it is business income, what do I report and what can I deduct?

Business income from online sales goes on Form T2125 as self-employment income (CRA: peer-to-peer). Report the sales, then subtract the cost of goods sold and the eligible expenses.

1. Sales. At amount 3A of the form, enter gross sales before platform fees, including GST/HST collected or collectible (CRA: T4002, chapter 2). At amount 3B, subtract the GST/HST, provincial sales tax, returns, allowances and discounts that amount 3A includes; the GST/HST quick method has its own further adjustment (CRA: form T2125). A payout can be smaller than the sale because the platform keeps its fees. Report the sale, then claim the fee.
2. Cost of goods sold. Take an annual inventory, a list of goods held for sale, valued either at the fair market value of the whole inventory or item by item at the lower of cost and fair market value (CRA: inventory and cost of goods sold). If the activity is an adventure or concern in the nature of trade rather than an ongoing business, the Act requires inventory to be valued at cost, with no write-down to fair market value (Income Tax Act, subsection 10(1.01)). The cost of goods sold starts from opening inventory, adds net purchases and subtracts closing inventory. Goods you take for yourself come out of purchases (CRA: T4002, chapter 2).
3. Expenses. You can deduct reasonable current expenses incurred to earn income, and only the business part of a mixed cost (CRA: T4002, chapter 3). The CRA's examples for online sellers include the cost of using the platform and marketing (CRA: peer-to-peer); delivery and supplies are separate lines on the form. If you register and claim GST/HST as an input tax credit, reduce the expense by the credit (CRA: T4002, chapter 3).

Keep records for six years from the end of the last tax year they relate to (CRA: T4002, chapter 1). For CPP, instalments and how much to set aside, see how self-employed income is taxed. If the business lost money, see business losses.

Do I need to register for GST/HST, and what is the small-supplier limit?

A business registers once its taxable sales pass the small-supplier limit of $30,000, either in a single calendar quarter or over four consecutive calendar quarters (CRA: when to register). The count is revenue before expenses from the worldwide taxable supplies of all your businesses and those of your associates, zero-rated supplies included, and it leaves out financial services, sales of capital property and goodwill (Excise Tax Act, section 148).

GST/HST applies to supplies made in the course of a commercial activity. For an individual, that leaves out a business carried on without a reasonable expectation of profit (Excise Tax Act, section 123). The Act's wording differs from the income tax wording, so ask about GST/HST separately from income tax.

See when to register for GST/HST for dates and steps after the limit, provincial sales tax for PST and QST, which are separate registrations, and when a platform already collected GST/HST if tax was charged on your sales.

Does eBay report my sales to the CRA?

Possibly. The CRA lists eBay among common platforms, and a platform covered by its reporting rules, including one outside Canada, reports sellers resident in Canada (CRA: guidance on the reporting rules). A covered platform reports your identity, the totals paid or credited by calendar quarter, the number of sales and its fees, and gives you a copy by January 31 (CRA: what information is shared). Check that summary against your own records. The first reportable period was the 2024 calendar year.

An individual seller is excluded when the platform facilitated fewer than 30 sales of goods for them and the total paid or credited did not exceed $2,800 in the year (CRA: who is affected). Both limits must hold.

Being excluded changes only what the platform sends; business income stays taxable, and being reported does not turn a personal sale into business income. Income left off a return can bring penalties and interest on top of the tax (CRA: understanding your tax obligations). See CRA digital platform reporting for what to check before the totals arrive.

My buyers are in the US and I get paid in US dollars: what changes?

The income stays taxable in Canada. The CRA says a Canadian resident reports income from business done outside Canada too, and tells sellers to record sales to buyers in Canada and other countries (CRA: peer-to-peer). Three things change:

• Currency. Canadian tax results are worked out in Canadian dollars, with a US-dollar amount converted at the Bank of Canada rate for the day the amount arose (Income Tax Act, section 261). See US-dollar sales and marketplace payouts for fees, payouts and average rates.
• GST/HST. Goods you send by mail or courier to an address outside Canada can be zero-rated, meaning tax is charged at a zero rate (CRA: GST/HST on imports and exports). Zero-rated sales still count toward the small-supplier limit. See charging GST/HST to US customers for the proof to keep.
• US forms. If a US platform sent you a US tax form, see US payment platform forms for Canadian sellers.

What if I never reported my past eBay sales?

If earlier sales were business income or a taxable gain and are missing from a return, you can change the return or apply to the CRA's Voluntary Disclosures Program (VDP). Eligibility has several conditions, including that the application comes before an audit or investigation has been initiated against you or a related taxpayer, and that the omission is at least one year past its filing due date (CRA: VDP eligibility). A recent year that is not yet that far past due does not meet the age condition, so years can sit on different routes.

Information the CRA has already received from a third party, such as platform totals, can make an application prompted rather than unprompted (CRA: VDP review and decision). See coming forward on unreported income for the steps.

Example

All amounts are illustrative and in Canadian dollars.

A collector sells one rare hockey card

An Ontario collector kept one rare hockey card for enjoyment since childhood. It cost about $200. The collector sells it to one buyer for $2,500. The cost is treated as $1,000, so the gain is $1,500 before selling costs ($2,500 less $1,000). On these facts this is a capital gain, not business income, and 50% of it, $750, is taxable. Selling costs such as fees and shipping reduce the gain. Had the card sold for $900, the sale would count as $1,000 against a $1,000 cost, so no gain would result.

A seller who buys games to resell

A British Columbia seller with no games on hand at the start of the year buys about $8,000 of used games during the year, in several batches, and sells them for $14,000. Platform fees are $1,400 and shipping is $900. At year end, $1,000 of games are unsold. The games were bought to resell, so this is business income on Form T2125.

Sales of $14,000 over four quarters are below the $30,000 limit, so these sales alone do not require GST/HST registration. The $4,700 is taxed as income, and self-employed earnings can also bring CPP contributions; see how self-employed income is taxed.

A seller passes the GST/HST limit

A seller of taxable goods has sales of $8,000, $9,000, $11,000 and $12,000 in four consecutive quarters, $40,000 in all. No single quarter passes $30,000, but the four-quarter total does, so registration follows; see when to register for GST/HST.

Different for you?

• You buy to resell, or a platform has reported your sales: whether each activity is a personal sale or a business, and what goes on the return, depends on facts. Gather item costs, sale records and platform summaries for individual tax help with each activity.
• You never reported earlier sales: whether to amend the return or apply under the Voluntary Disclosures Program depends on the years and on whether the CRA has made contact. See coming forward on unreported income and get individual tax help.
• Your records are missing or mix personal and business money: see catching up on overdue books, what a receipt must show and bookkeeping help.
• A return was never filed for a year you sold: see catching up on unfiled returns.
• Your sales are near the GST/HST limit, or you also owe provincial sales tax: see when to register for GST/HST and provincial sales tax.
• You are paid in US dollars or received a US form: see US-dollar sales and marketplace payouts and US payment platform forms for Canadian sellers.
• You are a US citizen or green card holder living in Canada: the same sales may also be reportable to the IRS; see Americans living in Canada.
• You import the goods you resell: GST/HST and duties can apply at the border and affect your cost of goods; see CRA: GST/HST on imports and exports.
• You are selling an inherited collection: your cost comes from the estate, not from what the deceased paid; see taxes when someone dies.
• You moved to Canada and sell things you owned before arriving: your cost for those items is set by your residency start, not by what you paid abroad; see your first year as a Canadian tax resident.
• The sales lost money: see business losses.
• You sell through a corporation: the corporation reports its sales on its own return; see corporate tax help.
• You live in Quebec: the federal rules above apply, but your Quebec return and sales tax are separate and not covered here.