As a frequent or seldom online shopper, you probably must have coughed out few bucks of dollars in duties, taxes, and import-related charges. If you haven’t, lucky you! Whether for business or personal needs, venturing into international shopping and shipping has its highs and lows. Every country has its trade laws and rates associated with the movement of persons and goods.
When you move items from the United States to Canada, your package must go through customs vetting. This applies whether you’re coming to Canada with the goods or importing by mail or courier. There are certain taxes and customs duties associated with the importation of goods.
These fees can sometimes wipe off the excitement of seeing your goods at your doorstep, especially when you’re presented with fees that you must pay before receiving the products. Interestingly, there are proven and legitimate ways to avoid paying charges or tariffs on your imported goods.
Here’s an overview of some of these fees:
Import Taxes and Customs Duties
When you import goods from the United States (and any other country) to Canada, the government imposes import taxes on the shipped items. The Canada Border Services Agency (CBSA) calculates duties on imported items. The fees or tariffs associated with each item will vary, depending on the country it’s coming from and the product type.
The brokerage fee applies when your goods are delivered to your doorstep. Many courier services operate in Canada with varying fees, including private couriers (DHL, UPS, FedEx, etc.) and national carriers (Canada Post). These are channels through which your items are delivered from the point of sale through Customs clearance and final delivery at the shipping address.
Private couriers like DHL, UPS, etc., are part of a Canadian government strategy to speed up the delivery of items below $2500, known as low-value shipment goods. Their fees are usually higher than that of Canada Post.
The brokerage fees charged on importing goods cover the clearing process, such as the paperwork, tax, and customs duties. Unfortunately, the customer bears the brunt of these fees.
Depending on the value and nature of the shipped products, you may also have to pay for sales tax – Goods and Services Tax (GST). GST is usually 5% of the product’s value. It can be waived under two circumstances:
- If the value of the product is CAN$20 or less
- If the product is a gift from friends or family members and the gift value is $60 or less.
As a result, if the imported item is worth more than $20 and is not a gift under $60 worth, you’ll be charged the General Sales Tax plus the Provincial Sales Tax (PST). In agreement with certain provinces, the Canadian government collects only the Harmonized Sales Tax (HST).
HST is a federal and provincial tax on goods and services, applicable in five participating provinces. Except for Ontario, where it is 13%, other participating provinces like Nova Scotia, Prince Edward Island, Newfoundland and Labrador, and New Brunswick charge 15% HST. If you live in any of these provinces, you’ll pay only the HST and not the GST.
Residents of British Columbia, Québec, Manitoba, and Saskatchewan will have to pay the GST and the applicable PST. Residents of Alberta, Yukon, Nunavut, and Northwest Territories pay only GST.
Strategies to Avoid Custom Charges
Knowledge is power!
Our beloved country, Canada, is a signee to two important free trade treaties that are favourable to Canadian shoppers and importers. The USA, Mexico, and Canada signed the North American Free Trade Agreement (NAFTA). NAFTA eliminates all tariff and non-tariff barriers between the USA, Mexico, and Canada (USMCA).
Therefore, if you’re importing goods made in the USA (or Mexico) to Canada, you don’t need to pay any import duties on the imported products.
The second treaty is the Comprehensive Economic and Trade Agreement (CETA), a free trade agreement between Canada and the European Union (EU). This means that duties on 98% of products that the EU trades with Canada have been eliminated. However, this has only been provisionally applied because only 16 EU member states have formally approved the agreement.
After Brexit, the Canada-United Kingdom Trade Continuity Agreement (Canada-UK TCA) which replicates the Canada-European Union Comprehensive Economic and Trade Agreement (CETA) on a bilateral basis entered into force in April 1, 2021.
With these treaties, the strategy here is to shop for your favourite items at not just a USA-based store or merchant but to ensure that the goods are made in the USA. NAFTA is only favourable if the goods you’re buying are made in the United States and shipped directly to Canada from the US.
So, when you import a product from the USA to Canada, as long as the imported product is made in the USA, it will be treated as a United States Tariff (UST) with zero duty charges.
As earlier noted, the value of the product and where it’s coming from determines the customs duties. The Canada Border Services Agency (CBSA) puts the threshold of tax and duties on imported goods at CAN$20. Anything above $20 attracts custom assessment (except gifts under $60 value).
Therefore, if your shipment (product) is valued under $20, ensure that the sender includes all necessary documentation such as the commercial invoice (with a clear indication of the product’s value) and the USMCA certification.
As you bypass custom charges, you could save a few hundreds of dollars on brokerage fees by self-clearing your imported goods. According to a publication by CTV News, importers can self-clear shipped products by dealing directly with the CBSA using their:
- Shipment identification/Tracking number
- A commercial invoice (Receipt)
- Personal ID
For shipped products from the United States to Canada, you can avoid custom charges by following the strategies outlined in this piece. You should note that the cost of importing your products may also include GST/PST/HST charges and brokerage fees.