Many Canadians earn money from hobbies — baking, photography, crafts, sewing, gaming, woodworking, gardening, or selling on Etsy or Marketplace.
The big question is:
“Do I need to report hobby income on my tax return?”
The answer depends on whether the CRA considers your hobby a true hobby or a business. Here’s how to tell the difference.
1. What Counts as a Hobby?
A hobby is something you do for personal enjoyment, not primarily to make a profit.
Examples of true hobbies:
- Selling a few handmade items a year
- Casual photography for friends
- Knitting gifts and selling leftovers
- Selling plants occasionally
If it’s occasional, unorganized, and not intended to make money, it’s usually a hobby.
2. What Counts as Business Income?
If the CRA sees that you are trying to earn money, the activity becomes a business — even if you don’t make a profit.
You may be running a business if:
- You regularly promote or advertise
- You have repeat customers
- You set prices intentionally
- You keep inventory or supplies
- You sell through Etsy, Shopify, Instagram, or markets
- You aim to make a profit
If this describes you, the CRA expects you to report business income, even if it’s small.
3. Do You Need to Report Hobby Income?
If it’s pure hobby income, occasional and unintentional, you generally do not need to report it.
But…
If the income becomes frequent, predictable, or intentional, the CRA classifies it as business income, not a hobby — meaning it must be reported on your personal tax return.
4. Why This Matters
If the CRA decides it was business income and you didn’t report it, they may issue:
- Reassessments
- Penalties
- Interest charges
It’s better to be safe and ask a CPA if you’re unsure.
Small, one-off hobby sales usually don’t need reporting.
But if there’s any intention to earn money — even a little — the CRA considers it business income.
Not sure if your hobby counts as a business?
Get clarity with Greg Cowan CPA in Waterloo:
https://www.gregcowancpa.ca