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What Can I Write Off as a Canadian E-Commerce Business That I'm Probably Missing?

Canadian e-commerce businesses can write off far more than inventory and shipping — commonly missed deductions include payment processing fees, platform and marketplace commissions, software subscriptions, home-office costs, product photography, and the business-use portion of your phone and internet. If you're only claiming the obvious ones, you're likely leaving hundreds to thousands of dollars on the table every tax year.

The Deductions Most E-Commerce Owners Overlook

Most owners remember to deduct inventory and shipping. What gets missed are the dozens of smaller, recurring costs that quietly drain your margin — and that the CRA is perfectly happy to let you claim, as long as you're tracking them.

Here's where to look.

Platform Fees and Marketplace Commissions

Every platform takes a cut, and every cut is deductible.

If you're a hybrid seller running two or three platforms simultaneously, these fees compound fast. They belong in your books as a cost of doing business — not buried in a bank statement somewhere.

Payment Processing Fees

Stripe, PayPal, Square, Shopify Payments — every percentage point they skim off your revenue is a deductible expense. On $2M in sales, even a 2.5% processing rate means $50,000 in fees you should absolutely be claiming.

Software and Subscriptions

This is where most owners have a blind spot. The CRA allows deductions for software used to earn income. That includes:

If you're paying monthly for something that helps run your business, it likely qualifies.

Home Office Expenses

If you run your e-commerce business from home — even partially — you can deduct a reasonable portion of:

The key word is reasonable: the CRA looks for a calculation based on the square footage of your dedicated workspace versus your total home. Keep it defensible and document it.

The Business-Use Portion of Your Phone and Internet

Your cell phone bill, your home internet plan — if you use them for business (and you do), a proportional share is deductible. The typical approach is to estimate the percentage of business versus personal use and apply it consistently. Fifty percent is a common and defensible starting point for many owners; higher if your usage supports it.

Product Photography and Content Creation

Professional product photos, lifestyle shoots, video production for ads — all deductible as advertising or marketing expenses. If you paid a photographer, a videographer, or a UGC creator to produce content for your store or ads, that's a business expense.

Advertising and Influencer Spend

Meta ads, Google Shopping, TikTok ads, influencer fees, PR packages sent to creators — all deductible. If you're spending aggressively on paid acquisition (as many $1M–$10M e-commerce brands are), this is often one of your largest deductible line items.

Returns, Refunds, and Shrinkage

Refunds reduce your actual revenue; inventory that's lost, damaged, or written off can often be claimed as a business loss. These don't manage themselves — they need to be recorded properly to show up in your favour at tax time.

What This Means in Practice

The difference between a business that claims $40,000 in expenses and one that properly captures $90,000 isn't luck — it's systems. Every deductible dollar reduces your net income, which reduces your tax. At a 26% combined corporate tax rate, that $50,000 gap is worth roughly $13,000 in tax you either keep or hand over.

This is exactly the kind of work a fractional CFO lens brings to e-commerce accounting: not just recording what happened, but making sure you're not over-paying. SGML Accounting specialises in untangling multi-platform e-commerce finances for Canadian businesses — because the fees, payouts, and deductions across Shopify, Amazon, and Etsy don't sort themselves out.

Frequently asked questions

Can I deduct my Shopify subscription and transaction fees on my Canadian business taxes?

Yes. Shopify subscription fees, transaction fees, and Shopify Payments processing fees are all deductible business expenses for Canadian e-commerce owners. They reduce your net income and therefore your tax owing.

Can a Canadian e-commerce owner deduct home office expenses?

Yes, if you use a dedicated space in your home to run your business. You can deduct a proportional share of rent or mortgage interest, utilities, internet, and property taxes — calculated based on the workspace's square footage relative to your total home.

Are Amazon FBA fees tax-deductible in Canada?

Yes. Amazon referral fees, FBA fulfillment fees, storage fees, and any other Amazon seller fees are deductible as business expenses on your Canadian tax return, whether you file as a sole proprietor or corporation.

Can I write off software subscriptions like Klaviyo or Canva as a Canadian business?

Yes. Software subscriptions used to operate or grow your business — including email marketing platforms, design tools, inventory systems, and analytics software — are deductible as business expenses under CRA guidelines.

How do I handle deductions if I sell on multiple platforms like Shopify and Amazon?

Each platform's fees are separately deductible, but the challenge is reconciling payouts, fees, and refunds across platforms that all report differently. You need a bookkeeping system that tracks expenses per channel — otherwise deductions get missed and your profit picture is distorted.

Every business is different — deductibility depends on your specific situation, business structure, and how expenses are documented. Talk to your accountant about what applies to you.

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