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Understanding Canada Import Tax For Canadian Shoppers (2024)

Published: May 31, 2024
Author: Aman Chopra

Canadian shoppers often face challenges with import taxes when buying goods from abroad. As they seek products from global markets to meet their varied needs and tastes, understanding the details of Canada import tax system becomes a key part of their shopping experience. Let’s explore the intricacies of Canada’s import tax system, offering valuable information to Canadian consumers about the elements that affect import duties, taxes, and regulations.

Key Takeaways

  • Importing from the USA to Canada incurs taxes assessed by CBSA based on the Harmonized System code. Goods in Canada may face GST and duty determined by CBSA.

  • Provincial Sales Tax rates vary across provinces, which is crucial for cross-border shoppers. The customs process demands meticulous adherence, ensuring accurate declarations for smooth clearance. Excise and Services Taxes impact informed decision-making.

  • The CBSA’s role in estimating import duties involves essential questions. From the description of goods to the nature of the transaction, each aspect influences the accuracy of duties.

  • Shippsy offers a seamless solution for ordering US products. Canadian shoppers can enjoy stress-free cross-border shopping as Shippsy handles shipping and customs clearance.

Do you have to pay the USA-to-Canada Import Tax?

Yes, individuals and businesses responsible for importing goods from the USA to Canada are generally required to pay import taxes.

In Canada, the Canada Border Services Agency (CBSA) determines the applicable import duties and taxes based on the classification of the goods according to the Harmonized System (HS) code.

How much are the import taxes to Canada?

Any package sent to Canada may be liable for the Goods Services Tax (GST) and/or duty. Unless explicitly exempt, individuals must remit the 5% GST for items imported into Canada through mail. The CBSA determines duty rates and any applicable duties by assessing the value of the goods in Canadian currency.

Is there a Canada Import Tax Exemption?

Yes, you have the option to bring in goods valued at up to CAD 200 without incurring any duties and taxes. It is necessary to have the items physically with you upon entering Canada.

However, please note that this exemption does not apply to tobacco products and alcoholic beverages. If the combined value of the goods exceeds CAD 200, you are ineligible to claim this exemption.

CUSMA and Item Exemptions

The Canada-United States-Mexico agreement increases the value threshold for certain item exemptions when shipping to Canada, but it doesn’t directly exempt specific items. Here’s the key takeaway:

  • Higher de minimis thresholds. CUSMA establishes higher thresholds for goods shipped by courier (commercial carriers) from the United States or Mexico. These thresholds are:
    • CAD$150. No customs duties for goods under this value.

    • CAD$40. No taxes for goods under this value (duties may still apply).

  • Threshold applies to origin of shipment, not good. It’s important to note that the increased thresholds apply regardless of the good’s origin country, as long as it’s shipped from the US or Mexico. So, even if the good was made in China, it can benefit from the higher thresholds if shipped by courier from the US or Mexico.

  • Regular de minimis still applies. The CAD$20 de minimis threshold remains in place for postal shipments or courier shipments from any other country besides the US or Mexico.

Settling fees and/or taxes for Imported Items

calculator with pen

For Canadian online cross-border shoppers, the excitement of exploring global markets comes hand in hand with the responsibility of settling fees and taxes for imported items. We delve into the nuances of paying fees and taxes, providing valuable insights to help you make informed decisions and embrace the convenience of cross-border shopping while staying compliant with Canada’s import regulations.

Provincial Sales Tax

The present rates of the Provincial Sales Taxes are as follows: 5% Goods and Services Tax (GST) in Alberta, British Columbia, Manitoba, Northwest Territories, Nunavut, Quebec, Saskatchewan, and Yukon. Ontario levies a 13% Harmonized Sales Tax (HST), while New Brunswick, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island apply a 15% HST.

Customs Duties and Taxes

Canadian online cross-border shoppers settle customs, duties, and taxes through a process that involves adherence to regulations and payment of applicable fees. Here’s an overview of how this typically works:

1. Customs Declaration. When goods cross an international border (in this case, Canada), the sender or importer must declare the shipment details to the destination country’s customs authorities. This declaration includes information about the nature, quantity, and value of the goods.

2. Shipping Carrier Handling. The US retailer arranges for the shipment of the goods to Canada. Along with the goods, essential shipping documents such as the commercial invoice and packing list are prepared.

3. Customs Assessment. When the shipment arrives in Canada, the CBSA assesses the customs declaration and the declared value. They verify the accuracy of the information provided, classify the goods under the appropriate tariff code, and determine the applicable duties and taxes.

4. Notification and Payment. The CBSA notifies the Canadian shopper of the assessed duties and taxes. This notification may be sent through mail or made available online. The Canadian shopper pays the assessed duties and taxes to the CBSA. Payment can be made online, and it is typically required before the goods are released for delivery.

5. Payment Methods. The CBSA provides various payment methods for paying the customs duties of imported goods. However, it’s essential to check the most recent information on the CBSA website or contact CBSA directly for the latest details. The standard payment methods for Canada customs duties include:

  • Online Payment

  • Bank or Wire Transfer

  • Credit or Debit Cards

  • Cheque or Money Order

  • In-Person Payments

  • Customs Broker Services

  • Pre-Authorized Debit (PAD)

6. Delivery Packages. With customs clearance, the shipments are released and delivered to the Canadian shopper’s address. This may involve the services of a local courier or postal service.

Excise Tax

In Canada, an excise tax is an indirect tax imposed on specific goods at the federal level. This tax is typically applied to goods that are deemed to be harmful to health or the environment, such as certain types of alcohol, tobacco, and cannabis products. Excise taxes are levied in addition to other taxes, such as the Goods and Services Tax (GST) or the Harmonized Sales Tax (HST).

For Canadian online shoppers, the application of excise tax means that when purchasing certain goods subject to this tax from online retailers, an additional amount will be added to the total cost. The excise tax is intended to discourage the consumption of specific products and generate revenue for the government.

Canadian online shoppers should review the product details and pricing information online retailers provide to understand if excise tax applies to their purchases. Awareness of these taxes helps consumers make informed decisions and ensures compliance with Canadian tax regulations.

Example Rates For Major Imports

Understanding the costs of importing goods is essential for effective budgeting and decision-making. Let’s explore typical rates for major imports across various industries, providing insights to help you learn the complicated process of international shipping and enhance your import strategies.

Note: Import rates can vary depending on the type of goods, shipping method, and other factors. Here are some example rates for major imports from the US to Canada.

ItemsPercentage Rate
Computers and Related Equipment0% and duty-free
Coffee Makers0-8%
Textile Items (towels, bedsheets, linen, curtains)16-18%

Questions Asked By CBSA When Estimating Import Duties and Taxes

a woman holding a customs declaration form

Navigating the import process with the Canada Border Services Agency (CBSA) involves answering essential questions to determine the accurate classification and valuation of goods. These inquiries are crucial in estimating import duties and ensuring adherence to customs regulations.

What are the common questions posed by the CBSA during this critical assessment?

What is the nature or description of the goods being imported?

The nature or description of imported goods refers to a concise and accurate representation of the type, characteristics, and composition of the items entering a country.

What is the country of origin for the imported goods?

The country of origin, mainly if the package is from the United States, can significantly affect the import process. It influences the application of trade agreements, tariff rates, and customs regulations, impacting the classification and valuation of goods.

Additionally, certain preferential trade agreements between Canada and the United States may influence the duties or exemptions applied to the imported items.

What is the intended use of the goods, and how does it impact their classification?

The intended use of goods, indicating their purpose or function, significantly influences their classification during customs assessment, impacting applicable duties and regulations.

How do the features and functionalities of the goods contribute to their classification?

The features and functionalities of goods play a crucial role in their classification, determining the applicable tariff code and influencing customs duties and regulatory requirements.

What valuation method is used to determine the customs value of the goods?

The customs value of goods is determined using a valuation method, the customs act is typically based on the transaction value – the actual price paid or payable for the imported items.

Are there any relationships between the buyer and seller that could impact the customs value?

Relationships between buyers and sellers can impact customs value. Related-party transactions may require adjustments to ensure the declared value reflects fair market value.

In what currency was the transaction conducted, and how does it affect the customs value?

The currency of the transaction impacts the customs value. Customs values are converted into the local currency using exchange rates, affecting the assessed duties and taxes.

Can the importer provide supporting documentation, such as invoices or certificates, to verify the information provided?

Importers can substantiate information during customs assessment by offering supporting documents like invoices or certificates, ensuring transparency, accuracy, and compliance with regulatory requirements.

Conveniently Order US Products with Shippsy

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Do you often browse US-based online retailers but get disappointed when you can’t find a way to get the products you want shipped to your location? The good news is that you can now conveniently order US products with Shippsy.

Conveniently order your favourite US products with Shippsy, streamlining your cross-border shopping experience. With Shippsy, you can enjoy a hassle-free process from purchase to delivery. Simply choose your desired items from US retailers, and Shippsy handles shipping and customs clearance on your behalf.

This service ensures a smooth and efficient journey for your goods, saving time and reducing stress associated with international shipping. Whether it’s fashion, electronics, or any other US product, Shippsy is your trusted partner, offering a reliable and affordable solution to bring your purchases directly to Canada.

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