Value Added Taxes on Goods Imported Into Canada

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Value Added Taxes (VAT) are an unavoidable fact of life no matter where you live. Canada is no exception to that rule. Always remember that almost everything that is imported into Canada will be subject to the Goods and Services Tax (GST) and in some cases the Harmonized Sales Tax/Provincial Sales Tax (HST/PST). As a general rule, if a product is taxable when purchased in Canada, the same product will be taxable when imported.

NO TAXES: Some products are exempt (zero-rated) from the GST/HST in Canada or at the border, they include: basic groceries, some agricultural goods, prescription drugs, medical devices and tourist literature imported by governments or other approved organizations for public distribution.

Dilas International Customs Brokers would like to offer a quick reminder on how to accurately account for taxes on your import shipments. The GST will attribute an additional 5% on the final cost of a good:

NOTE THAT THE HARMONIZED SALES TAX or THE PROVINCIAL SALES TAX are not applicable on imported “commercial” goods.

Here are a few things to remember when importing goods:

Commercial Importations

Canada’s Goods and Services Tax (GST) is often overlooked when import businesses are evaluating their supply chain costs. A failure to plan for import taxes will result in reduced margins and decreased profits. It can also result in shipment delays if the taxes have not been properly calculated or accounted for on the customs declaration form B3-3.

The importer of record or owner is responsible for paying the GST on imported goods. For commercial importers, the GST is however recoverable in many circumstances. If you are the importer and you have a GST/HST account with the Canada Revenue Agency (CRA), you can claim an input tax credit (ITC) for the GST that was paid on the imported goods, as long as you meet the requirement for claiming ITCs. Dilas can advise you whether or not your situation meets the requirements. If an ITC is not available to the importer, a flow-through method of recovery or drop shipment rules can be used to avoid adverse tax consequences.

Personal Importations

Goods that are imported for personal use, are subject to the GST as well as to the HST or PST depending on the province or territory of residence of the importer. The provincial/territorial retail sales tax rates vary from one province/territory to another. Some Canadian provinces use the Harmonized Sales Tax (HST) while others have their own Provincial Sales Tax (PST). In the three (3) territories as well as in one province, only the GST is collected on retail sales.

Import Tax Rates for Personal Importations

Alberta (Only 5% GST)
British Columbia (5% GST & 7% PST)
Manitoba (5% GST & 8% PST)
New Brunswick (13% HST)
Newfoundland & Labrador (13% HST)
Northwest Territories (Only 5% GST)
Nova Scotia (15% HST)
Nunavut (Only 5% GST)
Ontario (13% HST)
Prince Edward Island (14% HST)
Quebec (5% GST & 9.975% QST)
Saskatchewan (5% GST & 5% PST)
Yukon (Only 5% GST)

Calculating the taxes for your customs declaration

The GST/HST and PST for imported goods is calculated on the total value of the goods.

Value of the goods = Price paid in foreign currency, multiplied by the applicable Canadian currency rate of exchange + customs duties (if applicable) + anti-dumping duties or surtax (if applicable) + excise taxes (if applicable).

IMPORTANT: Calculating the GST/HST prior to accounting for the duties, anti-dumping or surtax and excise taxes on your customs declaration, will result in miscalculations regarding the amounts owing for both duties and taxes. This can possibly lead to reassessments, non-compliance penalties, and interest charges from the Canada Border Services Agency.

So, why not let Dilas International Customs Brokers prepare your customs declarations on your behalf. Dilas staff has received extensive training on ensuring that the proper duty & taxes and GST/HST calculations for all of our clients’ import shipments have been done. Thanks to our internal full compliance review process for each shipment, we will make sure that all duties and taxes are accounted for and accurate on your customs declarations before submitting them to the CBSA.

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