E-commerce imports tax Canadians
Question: I want to buy something on the Web, but am afraid that after delivery fees, taxes, duties, and currency conversion, any great deal will have become not so great. What are the rules about bringing in goods to Canada?
Answer: A little knowledge goes a long way when shopping on the Internet, because Canadian importation regulations can be complicated and confusing.
Here are the rules:
If the goods are made in the United States, there is no duty on them thanks to the North American Free Trade Agreement (NAFTA), but federal and provincial retail sales taxes do apply.
“That (duty-free status) applies to 99.9 per cent of anything made in the U.S.,” Michel Proulx, a spokesperson for Revenue Canada, told me. “Many of the goods made in Mexico also qualify for duty-free status under free trade.”
There is a loophole, though.
You can bring in any goods across the U.S. border if they are valued at or under $20 Canadian (or about $13.70 U.S.) and there are no duties or sales taxes applied. There are no maximums either, explained Proulx. You could bring in hundreds of items separately — tax and duty-free — as long as each is valued at or under $20 CDN.
What hurts your wallet in this case are the shipping fees that are assessed by the retailer. Many retailers will apply a flat fee for a purchase, plus a per-item levy. For example, Canada-based Chapters Indigo — which sells books online — charges $4 per order plus $1 per item for Canada Post delivery. Chapters’ U.S.-based competitor, [link removed].com, charges $4 U.S. plus $1.95 US per book for surface mail.
If a purchased item comes into Canada and it is manufactured outside of North America, even though it’s sold by an American vendor, the purchase becomes potentially expensive. Any item that arrives in Canada must come with a certificate of origin that states where it was manufactured. It’s used to determine duties. Customs Canada maintains a complex database that assesses duties on items made outside North America.
“There are tons of variations and regulations that apply,” said Proulx. “We have a database system that determines this.”
The rules are available from the government in a 5″-thick tome called the 1999 Customs Tariff. Call 416-860-1611 or 1-888-4FEDPUB. It costs $119.85 plus, you guessed it, GST.
Proulx recommends that the best way to determine duties on an item manufactured outside of North America is to call Canada Customs. “There are 1-800 numbers in the Blue Pages of the phone book that you can call,” he suggested.
The best place to get duty information is from regional Customs Trade Administration Offices. Their numbers are listed at www.nafta-customs.org/Canada/eca_frame-e.htm.
A listing of phone numbers for Customs Border Services is also available at http://www.cbsa-asfc.gc.ca/contact/menu-e.html#t.
In a quick test, it became clear that customs officers themselves aren’t always quite sure of the duties. According to an officer at the Customs Trade Administration Office in Toronto, a 21 per cent duty is assessed on any good manufactured outside North America.
She was given the example of a purchase for personal use of $80 worth of garments that were manufactured in Taiwan and bought from a U.S. retailer over the Internet. She said the same 21 per cent applied when buying a computer made outside of North America.
But there seems to be some confusion. A CTA customs officer based in Halifax — who asked some detailed questions about the goods that would be bought — said cotton woven garments would have a 19.5 per cent duty levied on them. Computer equipment, including scanners, printers, and central processing units (processor chips), would come into Canada duty-free “regardless of their origin”.
The Toronto officer also advised that a consumer may want to contact Foreign Affairs and International Trade to see if an importation permit is necessary. (Should you want to check importation permits, call 1-800-267-8376.)
If you do call for a quote on a duty, have on hand a description of the item, what it’s made of (if possible), where it’s manufactured, and the value of the item.
As far as sales taxes go, any purchase shipped from anywhere in the world faces the usual rules of retail. You’ll face the Goods and Services Tax at 7 per cent and the provincial tax depending on where you live. If you live in a province where the Harmonized Sales Tax applies, you’ll pay 14 per cent instead.
For items that are assessed duties, the taxes are applied to the total value of the purchase that includes the price tag amount and the assessed duties.
If the item being bought is downloadable from the Internet, like software or a horoscope reading, and Canadian sales taxes are not assessed, Proulx said it’s up to the customer to report the purchase to Revenue Canada. Of course this is not enforceable and Proulx admitted that tax payment relies on “the honor system.”
Since this article was originally written, most of the main distributors of computer-related items now have Canadian bases. Visit the links below and then click on the links that direct you to the Canadian pages.
Here are a few :