Customs Taxes and Duties Applicable When Importing Freight to Canada

William Bender March 28, 2016 Comments Off on Customs Taxes and Duties Applicable When Importing Freight to Canada
Customs Taxes and Duties Applicable When Importing Freight to Canada

All shipments across global boundaries are subject to taxes and duties imposed by the government of the importing country to protect the local industries against external competition, generate revenue or both. Canada is no exception to this rule – whether you are importing goods on behalf of a commercial entity or as a private individual, import taxes and duties are due for the goods in transit. You can get information about the updated taxes and duties from the websites of customs brokers like customs brokerage. Canada has several import duties and taxes applicable on the goods being imported. Here’s a look into it.


Sales Tax

There are three different kinds of sales tax in Canada: a PST (provincial sales tax) at a variable rate based on province, a federal GST (Goods and Services Tax) at 5% rate, and a HST (Harmonized Sales Tax), a combination of both. Private importers have to pay PST, GST, or HST, while commercial importers need to pay only GST. Sales tax is evaluated depending on the goods’ value, the excise duty (in case it’s applicable), and the duty. The sales tax amount that’s due is based on the importer’s place of residence instead of the place where the goods come into Canada.

Duty and Preferential Duty Rates

In Canada, duty rates vary in the range of 0%-35%, where 8.56% is the average rate of duty. Few goods like antiques and electronic products aren’t subject to duty.

Under preferential duty tariff, Canada has entered into free trade contracts with several countries. To be eligible for this treatment, the product in transit should satisfy the ‘originating’ conditions set based on the Rules of Origin of individual FTAs. For preferential duty rates to be applicable, a certification of origin has to be provided for important if the value of the product is higher than CA$1600.

Minimum Thresholds

If the value of the shipped products (excluding insurance and shipping cost), or in other words Free on Board (FOB) value, is not greater than CA$20.00, GST/PST/HST and duty aren’t charged.

Custom Fees and Other Taxes

Excise charges are levied on tobacco and alcohol products. Though it depends on FOB, it’s also based on alcohol content and quantity measurements with respect to alcohol products.

Tax and Duty Refunds

If there’s an overpayment of taxes and duties of imported goods to the seller, the respective importer might get a tax and duty refund.

It’s crucial to take into consideration the effects of taxes, duties, port handling charges, and other customs fees when assessing the total shipping charges of your shipment.

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