Updated Checked by the Tax-Services.ca editorial team How we check
Record marketplace fees as a business expense, separate from your sales, and record the full sale price as revenue. The platform’s cut isn’t a reduction of what you sold for. It’s a cost of selling, and in the CRA’s self-employment guide it sits with other expenses like advertising, delivery and interest and bank charges.
That sounds obvious, but it’s the place many online sellers go wrong. They record the payout the platform sends, which is sales minus fees minus refunds, and lose sight of each piece. The books then show lower sales than your customers actually paid.
How should you record marketplace fees in your books?
Use three lines for each sale. Gross sales go in revenue at the price the customer paid. Fees go in an expense account, or several if the platform splits them (a selling fee, a payment fee, an ad charge). The payout is what hits the bank, and your bookkeeping should reconcile to it.
Most platforms publish a monthly statement that lists sales, fees, refunds and adjustments. Download it each month. I didn’t look at any specific platform’s fee schedule, and I make no claim about what any of them charges, so use the figures on your own statements.
A quick check each month: sales minus fees minus refunds should equal the deposit. If it doesn’t, find out why now. Finding a gap twelve months on is miserable.
Which fees can you deduct?
The CRA’s Guide T4002 lists deductible expenses by type. Advertising, delivery and freight, interest and bank charges, professional fees, and office expenses are all there. Platform fees for selling, payment processing, shipping labels and promoted listings fit those headings. I read the guide’s list of categories rather than a rule that names marketplaces, so file each fee under the heading that fits best. The CRA’s business expenses page adds that an expense should be a cost you incur for the sole purpose of earning business income, and that you need an invoice, receipt or similar voucher to back it up.
| Type of charge | Where it usually fits in T4002 |
|---|---|
| Promoted listings and ads | Advertising |
| Shipping labels and courier costs | Delivery and freight |
| Payment processing and bank charges | Interest and bank charges |
| Bookkeeper or accountant | Professional fees |
| Meals with a supplier | Meals and entertainment, at 50% |
Not everything is deductible. The guide says you can’t deduct the value of your own labour, personal expenses, or the purchase of capital property, which goes through capital cost allowance instead.
What happens with GST/HST on platform sales?
Your registration status decides who collects. The CRA says a distribution platform operator must collect GST/HST on qualifying goods sold by vendors who aren’t registered, based on the final sale price. If you’re registered under the normal regime, you charge and collect it yourself on your own sales, even when they go through a platform.
If you’re registered and pay GST/HST on a fee, you may be able to claim it back. Check the platform’s invoice and the CRA’s ITC rules. The T4002 guide adds one rule: reduce your expense amounts by any input tax credits you claim, so you don’t deduct the same tax twice.
Not sure what a sale total holds once tax is in it? The reverse HST calculator strips the tax out, and the GST/HST calculator adds it on.
How do ecommerce accounting and marketplace fees fit together?
An online marketplace usually pays you after taking its share, so the deposit in your bank is smaller than the sale. Good ecommerce accounting records the full selling price as income and each fee as its own expense. That way your sales figure matches what customers paid, and the cost of selling through the platform shows up where you can see it.
Ask the platform for its settlement or payout report. It lists every order, the fee on it and the net amount sent to you. Match each report to a deposit in your bank account, and keep the report as the source record behind your entries.
What kinds of selling fees do platforms charge?
Marketplace fees come in several forms, and each one should have its own expense account. The common ones are a referral or commission fee, a fee for listing or for a monthly seller subscription, a payment processing fee, a fulfillment or storage fee when the platform ships for you, and fees for advertising on the platform. Amazon fees and similar charges at other sites fall into the same groups, even where the names differ.
Keep these groups apart because they behave differently. A commission rises and falls with sales, a subscription stays the same each month, and a storage fee depends on how much stock you hold. When you can see them separately, you can tell which one is squeezing your margin and decide whether selling products on that platform still pays.
Which ecommerce platform and accounting software work together?
Most sellers use accounting software that imports data from the ecommerce platform and the payment processor. Before you choose one, check that it can split gross sales, fees, refunds and taxes instead of posting a single net deposit. Check as well that it records the GST/HST on each sale, because the tax rules for platform sales depend on who collects it.
If you do not use software, a monthly spreadsheet can do the job. Use one row per payout with columns for sales, each fee type, refunds and the net deposit. The total of the first three minus refunds should equal the deposit, and any difference is something to investigate that month and not at year end.
How do marketplace fees affect your financial reporting?
Fees reduce your profit, so they belong on the income statement as selling expenses. If you leave them inside net sales, your revenue looks lower than it is and your fee burden disappears from view. Reporting gross sales and fees separately also helps if you sell through social media or your own shop as well, because you can compare what each channel costs you.
At the end of the year, total each fee type and compare it with the annual summary from the platform. Then use the same totals for your tax return, so that the income and expenses on the return agree with the financial records you kept.
How much do the fees actually cost you?
Take a product that sells for $60. It cost you $24, shipping is $6, and suppose the platform takes 13% ($7.80). That 13% is an example, not any platform’s rate. Your all-in cost is $37.80. The profit margin calculator shows $22.20 of profit per item, a 37.0% margin and a 58.7% markup.
Push the fee to 20% ($12) and the same sale leaves $18 of profit, which is a 30% margin. Try your own numbers before you price a new listing, or work out the return on a paid ad with the ROI calculator.
And the tax side? Fees lower your net income. On $80,000 of net business income in Ontario, this site’s self-employed tax calculator shows $22,126 of income tax plus CPP. At $70,000 it’s $18,298, so $10,000 of extra deductible fees cuts that total by $3,828. That tool leaves out GST/HST and EI, so it’s an estimate of one part of the bill.
What happens to the fee when an order is refunded?
It depends on the platform, which is the annoying part. Say that $60 order is refunded in full. You give back $60, and if the platform keeps its $7.80 fee, you’re out the fee as well as the sale. If it returns the fee, your expense shrinks by the same amount. Either way, record the refund and the fee change as their own lines on the date they happen, and read the statement to see which one you got. A few refunds a month can quietly add up to a tank of gas or two, so don’t ignore them.
What mistakes cost sellers money?
Netting fees against sales is the big one, because it understates revenue. That can matter for GST/HST if you’re close to the registration limit. The small supplier limit is $30,000 of taxable sales in a single quarter or over four consecutive quarters, and the CRA’s page on when to register for and start charging the GST/HST explains what happens once you pass it.
Next, forgetting refunds, as above. Some platforms return part of the fee and some don’t, so read the statement line by line.
Last, don’t assume a fee rate stays put. Platforms change terms, and you’d only learn from your statements. I didn’t confirm any fee or fee change here, so this page stays neutral on purpose.
Where these figures come from
Deductible expense categories and the rule about input tax credits come from the CRA‘s Guide T4002, Chapter 3. The distribution platform rules come from the CRA’s GST/HST for digital-economy businesses pages. The $60 sale and 13% fee are examples I chose. No government body is behind this site.
Frequently asked questions
Are marketplace fees tax deductible in Canada?
Selling costs like advertising, delivery, and bank charges are on the CRA's list of deductible expenses in Guide T4002. File each fee under the heading that fits.
Should I record the payout or the full sale?
Record the full sale as revenue and the fees as expenses. The payout is just the bank deposit you reconcile to.
Who charges GST/HST on marketplace sales?
The CRA says a distribution platform operator collects it for unregistered vendors on qualifying goods. Registered vendors collect their own.
Can I claim GST/HST I paid on fees?
If you're registered, you may be able to claim input tax credits. Check the platform's invoice and the CRA's rules, and reduce the expense by any credit claimed.
What do platforms charge?
We didn't confirm any platform's fees. Use the figures on your own seller statements.
All family and benefits calculators
- How Canadian income tax works: brackets and credits
How federal and provincial Canadian income tax stack up, what marginal and average rates mean, and how credits and deductions change your bill