- How can I become a non-resident importer to Canada?
For Delivered Duty Paid (DDP) shipments in which the shipper is responsible for clearing customs, duties and taxes, the shipper may choose to register as a non-resident importer to Canada, enabling it to maintain complete control over the customs process.
- I am a non-resident importer in Canada and would like to claim the GST paid at the time of import. What are my options and how should I proceed?
The Good and Services Tax (GST) is a consumption tax that is transferrable from one company to another, until it reaches the consumer who completes the transaction. The GST works much like the VAT in Europe. Some shippers budget for and absorb the GST in their costs while others recover the tax.
Note that in some cases the importer has only one option: register for the GST in Canada. Please make sure you take care of this prior to the billing process.
For example, here are two possible scenarios:
Scenario 1: A non-resident importer in Canada is not registered for the GST
This importer invoices its Canadian client the GST paid at the time of import. To do this, the importer must provide the B3 customs declaration form with its invoice so that the client can keep a copy.
Scenario 2: A non-resident importer in Canada is registered for the GST
The importer that registers for the GST must invoice the applicable GST on the product sales invoice of its client. During the transaction, the importer will receive the GST portion paid at the time of import from its client. The importer’s GST number must be included on every invoice. In addition, if applicable, the importer’s quarterly reports and payment calculations must be sent to the Canadian government within the required time frames.
- How do I get a GST number?
Simply fill out sections A, B and F of the RC1 form. You must also submit proof of registration or incorporation of your company (certificate). It takes approximately 15 business days to receive your GST number.
- As a non-resident importer in Canada, am I required to declare how much the merchandise cost me or how much I am selling it for?
There are several scenarios for assessing the declared value, but generally it is the transaction value that must be used, namely the value at which the goods are sold. This rule also applies in the event that stock is stored in a Canadian warehouse for future delivery as stated in the contract. The declared value must therefore correspond to the sales amount indicated in the contract.
- How can I avoid paying the Value-Added Tax (VAT) when shipping a product from Canada to Europe?
When you sell a product to a European company, the product may be subject to customs clearance as well as duties and taxes upon arrival. The European importer can claim the VAT on its inputs the same way we claim the GST here in Canada. It is the simplest way to avoid paying the VAT.
In more complex cases, for example if your company intends to expand its European market and wants to take over home delivery or maintain an inventory in Europe for future orders, there is another way to proceed. In Europe, specialized tax professionals can represent your company when dealing with the government. Known as “tax representatives,” these individuals allow you to recover the VAT paid to customs on a regular basis. They can even manage your account in a local bank in Europe for European sales and collect European credit card payments for the local market. In certain cases, once an agreement is reached with the tax representative, it is possible to retroactively claim the VAT paid a few months before.
Given that developing your European market share requires a bit of administrative planning, it is worthwhile to hire a tax representative in order to avoid unpleasant surprises. With our wide network, we have access to professionals who can help you secure tax representation in Europe.
- If I have to bring valuable items with me when traveling internationally, how can I be sure not to encounter undue complications and expense at customs when returning to Canada?
The safest way to avoid this situation is to declare and register the items with Canadian customs as you’re leaving the country. Doing so provides you with proof that the items were actually in your possession when you left.
This can be done at a Canadian customs office, either at the airport of departure or at a border crossing. This free service is intended to facilitate bringing items with serial numbers or other easily identifiable features out of the country. If the items in question aren’t serialized or are not easily identifiable, Canada customs can provide labels which will facilitate identification and legal re-entry at customs upon your return.
The customs agent will fill out a card called the « BSF407, Identification of Articles for Temporary Exportation ». When re-entering Canada and passing through customs, producing this card will serve as proof that the items were indeed in your possession before traveling and help you avoid potentially costly surprises.
- I would like to import my wood product, but have heard that it must first be fumigated. Is this something that can be done in Canada?
Generally speaking, fumigation regulations apply to unfinished wood packaging materials such as wood pallets or crates in which merchandise is shipped. These wooden containers must be fumigated in the country of export, as confirmed by the presence of a special stamp directly on the wood itself or by an accompanying official certificate. Under no circumstances may the fumigation be carried out in Canada.
Finished wood products that have been treated, painted or varnished are not subject to fumigation or to phytosanitary certification.
- Can I import wine into Canada?
The short answer is “yes,” but the bigger question is: “What is required to import wine?” Small quantities for personal consumption are permitted for travelers and returning residents (i.e. up to two bottles per person may be declared upon your arrival). Settlers’ wine cellars or samples for trade shows are allowed under certain conditions with permits issued by provincial regulating authorities, which also oversee all commercial importations.
- I have restaurants in Quebec and want to import wine to distribute to them. What do I need to do?
Contact the SAQ (Société des alcools du Québec) to notify them of the wine you want to import and who the producer is. The SAQ will then import the wine on your behalf. You will have the option to either pick it up yourself or the SAQ can arrange delivery for you.
- What is required for commercial importations of wine, beer or spirits?
Depending on the Canadian province into which you will be importing, you will need to contact the appropriate provincial liquor authority. For example, in Quebec it is the SAQ (Société des alcools du Québec), in Ontario the Liquor Control Board of Ontario (LCBO), and in British Columbia the Liquor Control and Licensing Branch (LCLB). These authorities can help you import your products and in some cases import them for you or assist you in obtaining the required licenses or agency agreements to allow you to import.
- Do I need a customs broker to import alcohol-containing products?
In most cases you will deal directly with the provincial authority. Importing, transporting and distributing alcohol-containing products is highly regulated in Canada, which means that these provincial authorities are the only ones allowed to handle such products. In some cases (e.g. personal wine cellars of up to 45 bottles), it may be helpful to retain the services of a customs broker, but you will still need to contact the provincial liquor authority to obtain the necessary permits.
- I imported some goods from Europe into Canada and now want to sell them to someone in the United States so that can I get back the duty and tax I paid at the time of import. Can I do this?
If the goods are shipped and sold in the same condition that they were imported, you may claim back 100% of the duty within four years of the time of import. Any GST that was paid will usually be refunded by way of an input tax credit.
- I received some goods from my supplier in China that must be returned because they are defective. Can I recover the duty I paid on the imported goods and if so, what percentage can I claim back?
You may claim back 100% of the import duty as long as the goods are exported in the same condition.
- I import goods from India that are consumed in the production of my products and then exported to the US under NAFTA. Can I claim a duty drawback on the duty I paid at the time of import?
There are NAFTA regulations on the amount of duty that may be refunded. Under the Drawback Program you may be eligible for a percentage of refund depending on the circumstances. You will need to contact a broker in order to determine if any amount is refundable and find out the applicable time limits.
- I received my overseas order but some of the goods are damaged. Can I claim back the duty I paid on these goods?
You may claim back duty that was paid on goods that were damaged prior to release or that you noticed were damaged at the time of delivery. You must notify the Canada Border Services Agency (CBSA) in writing that you have received damaged goods and that you intend to file a claim. Moreover, you must provide it with the accounting document transaction number and describe the type of damage and the amount (value) of the damaged goods. This notice should be given to CBSA as soon as possible. CBSA will date stamp your notification letter upon receipt; this letter will be used to support your claim. However, you should not claim back duty if you intend to claim it on your insurance claim. Note that CBSA will only refund the duty portion of your claim. Any GST that was paid may be claimed in the usual way as an input tax credit.
- I received goods from my supplier and paid the duty and tax. It turns out these are not the goods I ordered. What should I do?
If you return the goods in the same condition, you may claim a refund of duty by way of a duty drawback. You will need proof of export to support your claim (e.g. a bill of transport or export declaration).
- I received an order from my supplier and paid the duty and tax. When I opened the boxes I noticed some of the goods were missing. How should I proceed?
First, you must notify CBSA of the shortage: provide the transaction number of the accounting document and detail the shortage value and quantity. CBSA will date stamp your written notice to acknowledge the shortage. Next, contact your supplier to find out what happened. It may turn out that your supplier forgot to pack those goods, in which case the supplier can simply ship you the missing goods (you do not have to pay any duty or tax on these goods as you have already paid – your stamped notice and copy of the original transaction will be used to support your duty and tax free customs entry). If, on the other hand, the missing goods will not be shipped at a later date, you may claim a duty refund on the B2 form.
- What is the GST?
The Goods and Services Tax (GST) is applicable on most goods at time of import into Canada. It is also imposed on any goods that are sold for consumption in Canada.
- How does the Government of Canada collect the GST on imported goods?
GST on taxable imported goods is payable at the time the goods are released for entry into Canada by the Canadian Border Services Agency (CBSA). You can pay by cash, credit card or certified cheque.
- Can my customs broker pay on my behalf?
Yes, but in order to do so your customs broker will need to obtain a surety bond to guarantee full payment of any duties or taxes to the Government of Canada. Due the huge financial risk that the broker must incur, these types of bonds are extremely costly. This cost is usually passed on to the importer either as a direct bond or disbursement fee – or built into the brokerage fees.
- Can I pay the GST on my imported goods at a later date, other than at the time my goods are released?
Yes. Your customs broker can arrange for you to be on the GST Direct payment system and pay the GST on your imported goods at the end of the month.
- What is the advantage of paying the GST on my imported goods directly to CBSA on the GST Direct system?
This will reduce the bond cost for your customs broker who will not have to provide CBSA a surety bond in order to clear your shipments. What’s more, this will put you in a better position when negotiating your customs clearance rates.
- How do I get on the GST Direct payment system?
First, you must sign an agreement letter advising your broker that you will be responsible for paying the GST on your imported goods directly to The Receiver General for Canada on the last working day of each calendar month. Next, your broker will notify CBSA, who in turn will set you up with an Importer ARL account linked to your Canadian Business Number (BN).
- What is an Importer ARL account?
Accounts Receivable Ledger (ARL) is an account administered by the Government of Canada’s CBSA Assessment and Revenue Management system (CARM) that keeps track of your import activities (duties and taxes) as well as other GST activities and issues a statement each month for accounting purposes. This statement, which was formerly known as a K84 statement, is now in the form of Daily Notices (DN) and a Statement of Account (SOA).
- Is this something new?
Yes. CARM has only been implemented since 2016. It is a project that the Government of Canada has been working on for several years now to put it in more direct contact with importers and allow it better access to your import and accounting practices. Once fully implemented, all importers will have a CARM account they will need to administer daily.
- Wow! Sounds complicated. How do I administer my account?
Yes, it is quite complicated if you wish to administer your own account. You will also need a service provider to be able to connect electronically with CBSA in order to receive your DN and SOA. It is far simpler if you ask your broker to administer your ARL account on your behalf.
- Are there any documents I will have to fill out in order to have my customs broker manage my ARL CARM account?
Yes. In addition to the customary power of attorney document that authorizes your broker to clear shipments on your behalf, you will need to complete an additional document authorizing your broker to administer your ARL. Currently, the Canadian Society of Customs Brokers (CSCB) is working on a new version of the power of attorney document that will incorporate both the authority to clear shipments and manage your ARL. This document will be available shortly.
- I have signed up for GST Direct Payment and my broker will manage my account for me. How will I pay the GST I owe to the government each month?
For GST on your day-to-day activities, you will continue as you do now by filing your periodic GST reports, input tax credits and so forth with Revenue Canada. For the GST on imported goods, you will receive a copy of the SOA from your broker on or around the 25th of the month indicating the amount you will need to pay before 2:00 p.m. on the last working day of the month.
- What is the accounting period?
The accounting period is for any shipments imported between the 25th of the previous month and the 24th of the current month.
- How do I make my payment?
You must make a cheque payable to the Receiver General of Canada for the full amount indicated on the SOA and deliver that cheque to your customs broker no later than 2:00 p.m. on the last working day of the calendar month as instructed by your broker or you may pay electronically through your bank. The Receiver General of Canada is a registered payee with most banks, which means you can pay your duty and GST the same way as your telephone bill. Most banks also accept Electronic Data Interchange (EDI) payments – if you prefer this option, please contact W2C for details.
- What happens if I don’t make my payment on time?
CBSA will assign penalties for late payment of $100.00 in addition to daily interest on the unpaid amount.
- What is the CETA?
The Comprehensive Economic and Trade Agreement Is a free trade agreement between Canada and the European Union. Among other things, its purpose is reducing tariffs between Canada and the EU and gradually eliminating them entirely. It is the largest-scale agreement ever negotiated by Canada.
- Is this new agreement already in force?
Partially. The CETA came into force as a provisory agreement on September 21st, 2017. From that day onward, 98% of tariff barriers between Canada and the EU were abolished. Once the agreement is concluded in earnest, 99% of tariff barriers will be eliminated.
- Are all products imported from the European Union starting from September 21st, 2017 free of customs duties?
Not quite. Starting from September 21st, most products (98 % of tariff lines) have indeed become free of duties thanks to the CETA, but some products are still subject to regulations.
To name just a few, clothing and textile products do require an import license and are subject to tariff quotas as per the rules of origin. The exporter must certify that the goods meet the origin requirements, which means that sufficient processing of the product must have taken place in the European country of manufacture. The Protocol on rules of origin states that “all exports under the origin quotas must make reference to Annex 5-A. The Parties shall not count any products against the annual origin quota without such reference.”
The importer also needs to obtain an import permit. This can be done by a broker on behalf of the importer. Import permits are issued per-shipment and on a “first come first served” basis. Permits are only issued if there is sufficient quota remaining, otherwise, the importer will pay the full tariff duty rate of 18%. The amount of quota remaining is published on the Government of Canada’s website and updated weekly.
The cost for an import permit is about $100 CAD. Note that there are only three lines on each permit and each article type requires a line. For example, 250 men’s woven cotton shirts, 150 ladies’ woven cotton shirts and 135 ladies’ woven polyester shirts would take up one permit. Additional types of articles would require additional permits, so for example twelve different articles would require four import permits, costing approximately $400. Note that it takes approximately 24 hours to obtain an import permit and all the shipment details are required in order to apply. The importer must have an importer file number issued by the Government of Canada.
Concerning cheese, the CETA also allocates an import quota that allows some quantity to be imported free of customs duties. This quota should increase progressively in the coming years.
Be aware that negotiations are still ongoing on the topic of automobile importation. Therefore, some cars may still be subject to import restrictions. You may contact Transport Canada for more information on this subject.
Some other products are not fully free of customs duties as of now, but their tariffs will gradually decrease over the years. To check up the tariff duties on imports into Canada by product type, consult Canada Border Services Agency’s website. If you intend to export goods into a EU country, you may use the Government of Canada’s website to find your tariff rate.
- What’s the procedure for importing or exporting goods from or into EU countries?
The most crucial step is to obtain a declaration of origin. If you are importing goods, they must be certified as being produced, at least in part, in EU countries and must meet the standards of the Protocol on rules of origin and origin procedures. The European exporter should provide you the declaration of origin.
Consequently, as a Canadian exporter into the European Union, you must in turn provide a declaration of origin and meet the standards of the same Protocol so that the European importer can be granted exemption from customs duties.
It is crucial to keep in mind that the exemption applies to most products, but not to all of them.
- I want to find out more about the regulations and procedures to follow. Where can I find this information?
You can visit the Canadian Border Services Agency’s website for more information. If you have any remaining questions about importing goods into the EU or exporting out of it, the W2C team will be happy to guide you through your international transactions by clearing your goods and providing consulting services.
- What is SIMA?
The Special Import Measures Act (SIMA) sets out the rules and procedures for the imposition of anti-dumping and countervailing duties. The purpose of this act is to protect Canadian producers from dumping by foreign companies that sell merchandise at a price below that of the original market, in order to sell production abroad at low prices without degrading the price level on the domestic market. It also protects Canadian producers from unfair government subsidies to certain foreign companies. For more details, we invite you to read the following article: “Anti-dumping duties.”
- What is my obligation as an importer?
It is important as an importer to inquire about imported products that are subject to anti-dumping or countervailing duties. As an importer, if you purchase goods subject to these types of duties, you will likely have to pay SIMA duties, otherwise you may have to pay additional duties, interest, etc. You can deal with a customs broker, who will verify whether your products are subject to anti-dumping or countervailing duties and guide you through the refund of these duties under SIMA.
- How do I know if the product I am importing is governed by SIMA?
On the Canada Border Services Agency website, you will find a list of goods currently subject to anti-dumping or countervailing measures. Remember to check this list frequently enough to stay up-to-date and avoid financial contingencies. For more information, do not hesitate to contact our consultation service by sending your questions by e-mail to email@example.com, or by calling 514-268-2637, option 2.