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Dropshipping taxes in Canada come in two layers. Your profit is taxed as business income, and once your taxable sales pass $30,000 you have to register for GST/HST and charge it. The $30,000 test is over four calendar quarters, or in a single quarter, and it counts your sales before expenses.
When does a dropshipper have to register for GST/HST?
You’re a small supplier while you stay at or under $30,000 in taxable sales. Go over it in one calendar quarter and you must register at once, and you start charging tax on the sale that pushed you over. Go over it across several quarters and you stop being a small supplier at the end of the month after that quarter.
Once you must register, you have 29 days from your effective date to do it. You can also register earlier by choice. Some new sellers do, because registered businesses can claim back the GST/HST they pay on business costs. The CRA’s page on when to register for and start charging the GST/HST covers both routes.
Dropshipping trips people up because the numbers move fast. A store that looks like a side project can pass $30,000 in a busy autumn. Add up your quarters every month, not once a year.
A quick picture of how it creeps up: say a store sells $4,000, $7,000, $9,000 and $11,000 in four quarters in a row. Nothing alarming in any one of them, yet the total is $31,000. That’s over the line, and the store has to register even though no single quarter was big.
Which rate do you charge?
The rate follows the destination. When you ship goods to a customer in Canada, the place of supply is the province the goods go to, so an Ontario buyer pays 13% HST even if you live in Alberta. The GST/HST calculator does the sum for you.
| Customer’s province | Tax on a sale |
|---|---|
| Ontario | 13% HST |
| New Brunswick, Newfoundland and Labrador, Prince Edward Island | 15% HST |
| Nova Scotia | 14% HST |
| Alberta, Yukon, Northwest Territories, Nunavut | 5% GST |
| British Columbia, Saskatchewan, Manitoba | 5% GST, plus provincial sales tax rules |
| Quebec | 5% GST, plus Quebec sales tax (QST) |
An $80 item sent to Ontario carries $10.40 of HST, so the customer pays $90.40. A $40 item sent to Alberta carries $2.00 of GST. Provincial sales tax and QST are separate systems, and a seller outside Quebec with no physical presence there may need to register for QST once sales to Quebec consumers pass $30,000. Check that province’s own tax site before you sell there.
How is dropshipping profit taxed?
If you run the shop yourself, it’s business income. You report it on form T2125, and your net profit, not your sales, goes on your return. The filing deadline for a self-employed person is June 15, but any tax owing is still due April 30.
Say a product costs you $18 and sells for $30. The profit margin calculator shows $12.00 of profit, a 40% margin. That’s before platform fees, ads and shipping, which come off your profit as expenses.
Now suppose the year ends with $40,000 of net profit in Ontario. The self-employed tax calculator gives $2,688.63 of federal tax, $1,532.50 of Ontario tax and $4,343.50 of CPP, because you pay both halves. Total $8,564.63, or 21.4% of profit. It leaves out GST/HST, EI and your expenses, so treat it as a floor.
Set money aside as you go. Nobody withholds tax from you, and a few bucks from every order into a separate savings account makes April a lot less scary. To see how it looks on a full return, try the income tax calculator.
Do you pay tax when goods are imported?
Often, yes. The importer of record pays GST/HST on imported goods, calculated on the Canadian dollar value including duty, and the Canada Border Services Agency collects it at the border. The CRA’s page on GST/HST on imports and exports says the GST or federal part of HST is collected at the time of importation, together with duty and excise tax. A registrant can claim an input tax credit for that tax if the usual conditions are met. Who counts as the importer in your setup depends on how the supplier ships, so read your supplier’s terms.
That matters for pricing. If a parcel arrives and the customer is asked to pay tax at the door, they may be paying twice, once to you at checkout and once at the border. Sort out who’s the importer before you promise anything about “tax included” on your product pages.
What records should a dropshipper keep?
Orders, supplier invoices, platform payout reports, ad invoices and proof of what tax you charged to each province. It’s the same pile any online seller keeps, and the CRA generally expects business records for six years from the end of the last tax year they relate to. Since your supplier holds the stock and ships it, keep the supplier’s invoice for each order together with your sale. That pair is what proves your cost of goods when you file.
Mistakes and limits
Watch for these:
- Counting profit instead of sales toward the $30,000 limit. The test uses revenue before expenses.
- Charging one flat rate to every province.
- Claiming input tax credits without being registered. Only registrants can claim them.
- Spending the sales tax you collected. It isn’t yours.
I haven’t covered duty rates, marketplace rules or non-resident sellers here, because the rules change with how you sell. If your supplier sits outside Canada and you sell through a big platform, read the CRA’s digital economy pages first.
Our sources
The $30,000 rule, the 29 day window, place of supply and import treatment come from Canada Revenue Agency pages on GST/HST. Provincial rates come from the CRA rate table as of September 2026, and income tax figures from 2026 federal and Ontario data. The quarterly sales in the example are invented. This is an independent site, and no government body is behind it.
Frequently asked questions
Do dropshippers have to charge GST/HST in Canada?
Once taxable sales pass $30,000 in a single quarter or over four quarters, you must register and charge it. Under that limit you're a small supplier, though you can register by choice.
Which province's rate applies to a dropshipped order?
The rate follows the province the goods are shipped to. An Ontario buyer pays 13% HST wherever you live.
Is dropshipping income taxed?
Yes. Profit after expenses is business income and goes on form T2125 with your return.
When is the tax due for a self-employed dropshipper?
The return is due June 15, and any balance owing is due April 30.
Can I claim GST/HST I paid on business costs?
Only if you're registered, and the tax must relate to your commercial activities. Registered importers can also claim tax paid on imports.
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