Tax reminders if you ship retail salon or spa products to your clients

ByGreg Robins
Two women in the back room of a hair salon, packing boxes of retail products to be shipped to customers

Getting your taxes sorted when it comes to online sales is something you want to get right

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Are you selling items like shampoo, conditioner, or other retail products through online sales? The Canada Revenue Agency has asked us to send a reminder to all members of the rules around disclosing sales made online.

TL;DR

  • Peer-to-peer (P2P) selling involves selling goods directly to buyers without intermediaries.
  • Canadian residents must report all income, including P2P sales, on their tax return, regardless of where it’s earned.
  • Proper record-keeping of earnings, sales details, and business expenses is essential for P2P sellers.
  • If a P2P seller’s total taxable supplies exceed $30,000 over four quarters, they must register for and pay GST/HST to the Canada Revenue Agency.
  • Correcting tax affairs voluntarily can help P2P sellers avoid or reduce penalties, interest, and additional tax.

The details

If you are a Canadian resident, you must report all your income, including P2P sales, on your tax return, regardless of whether it’s earned within or outside of Canada. If you paid foreign income tax, you could be eligible for a tax credit. Non-resident P2P sellers may also be subject to Canadian income tax on most Canadian-sourced income paid to them during the year, unless exempt under a tax treaty.

Records required

It’s essential to maintain proper records of all your earnings, sales details, and business expenses, including invoices, receipts, or vouchers, to support your tax return. If your online activities are not for personal use and your total taxable supplies exceed $30,000 over four calendar quarters, you must register for and pay the goods and services tax/harmonized sales tax (GST/HST) to the Canada Revenue Agency.

A good reason to stick to the rules

Failure to report income from P2P sales may result in penalties, interest, and additional tax. Correcting your tax affairs voluntarily can help you avoid or reduce these consequences.

You can change your income tax and benefit return or GST/HST return, or submit an application through the Voluntary Disclosures Program.

For more information, visit the taxes and the platform economy page. Also, note that new rules on e-commerce services provided by non-residents in Canada have been in effect since July 1, 2021. For more details, see the GST/HST for digital economy businesses page.