Step-by-Step Guide to Importing Commercial Goods into Canada

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This guide provides you with an overview of the commercial importing process for businesses importing goods into Canada. It is intended to complement and not replace existing regulations, acts and references detailed in Memoranda Series D1 to D22.

A Step-by-Step Guide to Exporting Goods from Canada is also available.

Preparing to Import

1. Obtain a Business Number.

Before importing commercial goods into Canada, as a business or an individual, you will need to obtain a Business Number (BN) issued by the Canada Revenue Agency (CRA) for an import/export account. This import/export account is free of charge and can usually be obtained in a matter of minutes.

To register for a BN or add an import/export RM account identifier to an existing BN:

2. Identify the goods you want to import.

You should gather as much information as possible about the goods you intend to import. Obtain descriptive literature, product composition information and, whenever possible, product samples. This information will be crucial when it comes time to determine the tariff classification of the goods you wish to import. The tariff clarification number will be used to determine the rate of duty that will be applied to your goods.

3. Determine if you will use the services of a licensed customs broker.

You may feel comfortable preparing your own release and accounting documentation and transacting business directly with the Canada Border Services Agency (CBSA) or you may authorize a Licensed Customs Broker to act as your agent to transact business. It is important to remember that you are ultimately responsible for the accounting documentation, payment of duties and taxes, and subsequent corrections such as re-determination of classification, origin and valuation even if you use the services of a broker.

The CBSA licenses customs brokers to carry out customs-related responsibilities on your behalf to clear goods across the Canadian border. A broker's service typically includes:

Consult the CBSA's licensed customs broker list should you wish to use the services of a broker.

Note:

You will have to pay a fee for these services, which the brokerage firm will establish with you. Brokers do not work for the federal government; they are private agents licensed by the CBSA.

4. Determine the country of origin for the goods you are importing.

Identify the country where your goods originate. It is important to remember that this does not simply mean the country from which the product was shipped to you. It may also include where individual parts of the product are from, as well as where it was assembled into the final product.

Requirements for proof of origin can be found in Memorandum D11-4-2, Proof of Origin.

5. Ensure the goods you wish to import are permitted into Canada.

Certain goods are not allowed to be imported into Canada. This includes the obvious such as child pornography and hate propaganda, as well as less obvious items such as used mattresses and some used automobiles. For more information on prohibited products, please consult Memoranda Series D9, Prohibited Importations.

6. Determine whether the goods you intend to import are subject to any permits, restrictions or regulations by the CBSA or other government departments.

Many goods are subject to the requirements of other government departments and agencies and may require permits, certificates, and/or inspection. The CBSA is responsible for administering the legislated import requirements on behalf of other government departments.

It should be noted that more than one government department may have a role to play in the requirements and regulations pertaining to the importation of certain goods; it is therefore beneficial to contact any that may play a role.

You will need to determine whether or not the goods you want to import are subject to regulations, restrictions, permits or other requirements. The CBSA's Other Government Departments and Agencies: Reference List for Importers provides a list of some of the most commonly imported commodities that may require permits and/or certificates. More comprehensive information can be found in Memoranda Series D19, Acts and Regulations of Other Government Departments.

Additionally, if you are importing alcohol or tobacco products it is recommended that you check with the applicable authority in your province or territory.

The CBSA requires certain goods to be clearly marked with the country of origin. More information on marking requirements is found in Memorandum D11-3-1, Marking of Imported Goods.

Certain goods are subject to measures under the Special Import Measures Act (SIMA). The special measures available under the SIMA include anti-dumping duties, countervailing duties and undertakings. Consult the monthly index of products subject to SIMA and refer to Memoranda Series D14, Special Imports Measures Act and D15, Special Import Measures Act – Investigations for more information.

Before you import certain goods into Canada, you must determine whether they are subject to domestic controls. Under the Defence Production Act (DPA) and the Controlled Goods Regulations, any person who examines, possesses or transfers controlled goods domestically is legally required to register with Public Works and Government Service's (PWGSC) Controlled Goods Program (CGP).

A full list of controlled items in Canada is available in the Schedule to the DPA and to further establish if the goods you will be importing are controlled in Canada, please see PWGSC's Guide to the New Schedule to the Defence Production Act.

For any other information on the Controlled Goods Program, click here.

Classifying your goods

7. Determine the 10-digit tariff classification number for each item you are importing.

Once you are sure that the goods may be imported, you will need to determine the correct tariff classification number. These numbers along with the goods country of origin are used to determine the rate of duty you must pay when importing.

Most trading countries, including Canada, the United States, China and India, use the Harmonized System (HS) as the basis of their classifications systems. The first six digits are a common identifier across all countries using the HS for that particular good. The following four are unique to Canada and used to establish the duty rates and for statistical purposes.

Example:

9506.11.10.90
Complete Tariff Classification Number
9506
Heading - International
9506.11
Sub-heading - International
9506.11.90
Tariff item - Canadian
9506.11.90.10
Statistical suffix - Canadian

Tariff classification numbers can be determined by:

For more information on the general rules and guidelines involved in classifying goods in the Customs Tariff refer to Memorandum D10-13-1, Classification of Goods. More information on the importance of properly classifying your goods can be found at, Harmonized System Compliance.

Determining duties and taxes

8. Determine the applicable tariff treatment and rate of duty.

Once you have determined the correct tariff classification number, you need to establish the applicable tariff treatment that applies to your goods before you can determine the rate of duty. When viewing any chapter of the Customs Tariff Schedule, you will notice two columns on the right hand side entitled "Most-Favoured-Nation (MFN) Tariff" and "Applicable Preferential Tariffs".

Most-Favoured-Nation (MFN) Tariff
Goods originating from all countries, except North Korea, are entitled to use the rate of duty specified under this column.

Applicable Preferential Tariffs
This column lists reduced rates of duty for goods based on trade agreements including:

or rates of duty based on special tariff provisions such as the:

The requirements of the particular trade agreement or tariff treatment must be satisfied in order to benefit from a preferential duty rate. You must possess proof of origin for the specific trade agreement at the time of importation. For example, to claim the UST you must have a valid NAFTA Certificate of Origin.

A complete list of countries eligible for the above tariff treatments can be found at the beginning of the Customs Tariff. General tariff information and guidelines can be found in Memorandum D11, General Tariff Information.

9. Determine if your goods are subject to the goods and services tax (GST), excise tax or excise duty.

The GST (5%) is payable on most goods at the time of importation under Part IX, Division III of the Excise Tax Act.

Some importations such as prescription drugs, medical and assistive devices, basic groceries, agriculture and fishing goods are non-taxable. They are listed under Schedule VI and Schedule VII of the Excise Tax Act.

Tax exemption codes to use on the Canada Customs Coding Form B3, are listed in Memorandum D17-1-10, Coding of Customs Accounting Documents, Appendix H, List 4 (GST Status Codes) and List 7 (Excise Tax Exemption Codes). If your goods are tax exempt, you must quote the tax exemption code on your import documentation.

Examples of goods subject to excise tax include:

Examples of goods subject to excise duty include:

Complete references are available in the Excise Tax Act or the Excise Act, 2001 or for more information on GST, excise tax or excise duty, contact the Canada Revenue Agency.

10. Determine the value of the goods you are importing.

Now that you have established the tariff classification number and the tariff treatment of your imported goods, you need to determine their value for duty.

In most cases, the value for duty is the amount paid to the vendor for the goods. Your declaration of value for duty should be supported by a receipt or sales invoice from your vendor. This document must include a complete description of the goods, the selling price and conditions and terms of the sale. Memorandum D1-4-1, CBSA Invoice Requirements provides additional information. The value for duty must be in Canadian funds.

The Customs Act identifies six legislated methods of valuation. The method applicable to your imported goods is the first method, considered in sequential order, for which all requirements of the method can be satisfied.

For example, most goods are imported to Canada as a result of a sale for export to a purchaser in Canada. The value for duty would be based on the price paid or payable for the goods in that sale, if all the requirements of the transaction value method are met.

For more details on how to determine the value for duty of your shipments, refer to the Memoranda Series D13, Valuation.

11. Estimate in advance how much duty and taxes you will be required to pay.

Take the value in the currency indicated on the invoice. Convert the value into Canadian dollars using the exchange rate from the date of direct shipment (the date the goods began their direct and continuous journey to a specific destination in Canada). To obtain the proper exchange rate, call the Border Information Service (BIS).

The following is an example of a calculation of customs duty and GST on imported goods with a value for currency conversion of US$100. The example exchange rate is US$1 = CAN$1.15. The goods are subject to 4% customs duty and 5% GST:

Example:

US$100 x 1.15 = CAN$115 (value for duty)

$115.00 (value for duty) x 4% (customs duty rate) = $4.60 (customs duty)

$115.00 (value for duty) + $4.60 (customs duty) = $119.60 (value for tax)

$119.60 x 5% (GST) = $5.98 (GST)

Total of customs duty and GST payable (in Canadian dollars) is $4.60 + $5.98 = $10.58

Shipping, examining and reporting your goods

12. Place your order and select a method of shipping.

Place your order with the vendor, shipper or exporter and identify the mode of shipping that will be used (highway, marine, rail, air, postal or courier service).

Determine the desired or expected CBSA office where your goods will be released. Most shipments are released at the CBSA office where they arrive in Canada; however, if you use a CBSA bonded carrier, you may choose another inland service point that is closer to you.

13. Report your goods.

All commercial goods must be reported to the CBSA whether you transport it yourself or have a carrier transport it for you. If you are transporting the goods yourself please consult the Commercial Hand-Carried Goods (HCG) Release Process.

A carrier uses a bar-coded Cargo Control Document (CCD) or the Electronic Data Interchange (EDI) system to report to the CBSA.

Shipments valued at more than CAN$2,500

Shipments valued at CAN$2,500 or less

For information on importing through the postal system or by courier please refer to the postal and courier programs.

Your shipment may be examined by government officials to monitor compliance with CBSA requirements or other government department regulations. This is done without charge; however, if there is a need to hire a transport company to move or handle your goods, you may receive an invoice from that company for their services.

Non-compliance with CBSA requirements may result in being assessed a monetary penalty under the Administrative Monetary Penalty System.

Getting your goods released

14. Obtain release of your goods.

There are two options for getting your goods released. With both options, you may prepare the release and accounting documents yourself or you may hire a licensed customs broker to do so on your behalf. Regardless of which method you use, the CBSA will assign each shipment a 14-digit transaction number to identify your goods throughout the clearance process.

Method 1: Full accounting and payment of duties for release of goods

Complete and present your B3-3, Canada Customs Coding Form accounting document in person at a CBSA office. Additional information about coding of CBSA accounting documents can be found in Memorandum D17-1-10, Coding of Customs Accounting Documents.

You will need the following documents:

Some CBSA offices provide a self-service computer based system, Commercial Cash Entry Processing System (CCEPS), that assists you in completing the B3-3 coding form and automatically calculates the duties and taxes owing. For a list of offices where CCEPS is available, refer to Memorandum D17-1-5, Registration, Accounting and Payment for Commercial Goods, Appendix B.

Pay your duties and taxes by:

  • Cash;
  • Debit card (available at most CBSA offices);
  • Certified cheque or money order (payable to the Receiver General for Canada);
  • Travellers cheques;
  • Credit card for amounts up to $500; or
  • Uncertified cheque for amounts under $2,500 if certain conditions are met (payable to the Receiver General for Canada).

More information on accounting documents is available in Memorandum D17-1-5, Registration, Accounting and Payment for Commercial Goods.

Method 2: Release of goods prior to the payment of duties

Release on Minimum Documentation (RMD) allows the release of goods prior to the payment of duties and taxes. To take advantage of this privilege, you must follow an application process, which includes posting an approved amount of security with the CBSA. This option is generally used by established importers with high import volumes. The RMD accounting option requires the electronic transmission of RMD release requests using the Electric Data Interchange (EDI) system with certain exceptions. For additional details on this accounting option, refer to Memorandum D17-1-4, Release of Commercial Goods.

For more information on release and accounting procedures, see Memorandum D17-1-5, Registration, Accounting and Release of Commercial Goods.

After your goods are released

15. Adjusting errors in the accounting information you submitted.

If you make an error in the accounting information, and the CBSA has not already made the corrections, you are required to correct the information within 90 days after you discover the error where the change is revenue neutral or you owe money. If a change in the accounting information results in a refund of duties or taxes paid to us, an application for a refund can be filed in most cases up to four years from the date the goods were accounted for.

When the self-adjustment results in additional duties owing, you must pay this amount and the applicable interest. For self-adjustments which reduce the amount of duties payable, we will refund the customs duties and the applicable goods and services tax credit or a rebate will be made.

Self-adjustments must be submitted on Form B2, Canada Customs – Adjustment Request.

For more information on the coding and processing of adjustment request forms, refer to Memorandum D17-2-1, Coding of Adjustment Request Forms and Memorandum D17-2-2, Processing of Adjustment Request Forms.

For more information on self-adjustment, refer to Memorandum D11-6-6, “Reason to Believe” and Self-Adjustments to Declarations of Origin, Tariff Classification, and Value for Duty and Memorandum D6-2-3, Refund of Duties.

16. Keep all records pertaining to the import for six years.

You must keep all records pertaining to your importations for six years following the importation of good(s) in either electronic or paper format. This includes information relating to the quantities received, price paid, the country of origin, vendor, product, and all other related information.

For more information on maintenance of records and books in Canada by importers, refer to Memorandum D17-1-21, Maintenance of Records in Canada by Importers.

17. Be aware that your importations may be verified and adjusted by the CBSA.

Commercial importations may be verified and adjusted by the CBSA for origin, value for duty, or tariff classification up to four years after importation.

If the CBSA adjusts your accounting document, we will issue a Detailed Adjustment Statement (DAS) that outlines the adjustment, and you will have 30 days to pay any duties and taxes owing.

As the importer, you (or your representative) have the right to ask for an impartial review of most decisions made on tariff classification, origin, or value for duty of imported goods. You must make your request no later than 90 days after the date of the initial decision. Generally, you must use Form B2, Canada Customs - Adjustment Request.

For information on the dispute resolution process, refer to Memorandum D11-6-7, Importers' Dispute Resolution Process for Origin, Tariff Classification, and Value for Duty of Imported Goods.

The CBSA uses the Administrative Monetary Penalty System (AMPS) to assess monetary penalties against businesses that do not comply with customs legislation.

Additional information

18. Become familiar with trade incentive programs.

The CBSA aims to improve the competitiveness of Canadian businesses by offering relief from the payment of most duties and taxes on imported goods that are ultimately exported, whether or not the goods are further manufactured in Canada. Further information on the CBSA's Duty Deferral Program is available in Memoranda Series D7 Series, Drawbacks.

19. Consult the following for additional information.

Designated commercial offices provide 24-hour service, seven days a week, for the reporting and clearing of commercial goods.

To obtain CBSA publications, refer to CBSA Forms and Publications. You may also order publications by visiting the Government of Canada Publications Web site.

For information on other federal departments and agencies involved in the commercial importing process, visit the CBSA's Other Government Departments and Agencies: Reference List for Importers, visit the Canada site or call 1-800-O-Canada (1-800-622-6232).

An overview of this guide is available in a .pdf checklist format: Checklist for Importing Commercial Goods.

If you have any questions related to the CBSA's requirements for importation feel free to contact Border Information Service (BIS).

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