Railway Rolling Stock, Railway Locomotives and Miscellaneous Railway Equipment Temporarily Imported for Use in International Service and/or Diverted to Domestic Use

Memorandum D3-6-0

Ottawa, January 11, 2013

This document is also available in PDF (1.0 Mb) [help with PDF files]

In Brief

This memorandum replaces the Memorandum D3-6-0 dated August 11, 2011. It has been revised to denote the following changes:

  1. Paragraph 80 was revised to reflect the Division and Branch name changes.
  2. The Reference page was revised to reflect the Division and Branch name changes.
  3. In accordance with the new subsection 6(5) of the Proof of Origin of Imported Goods Regulations paragraph 9 has been added.
  4. In accordance with the new subsection 6(5) of the Proof of Origin of Imported Goods Regulations, paragraphs 34, 35, 46, and 70 reference to the certificate of origin has been removed.
  5. Appendix J, Lists of Regional Trade Compliance Offices, the Name and contact information for Region of Quebec has changed.

  1. This memorandum incorporates the changes resulting from the implementation of the simplified Customs Tariff on January 1, 1998. The simplification of the Customs Tariff introduced two new tariff items 9801.10.10 and 9801.20.00 which provide for the customs duty free importation of locomotives, railway rolling stock and miscellaneous railway equipment regardless of the tariff treatment or the country of origin of the goods; in the former case for use in international commercial service and in the latter for temporary domestic use.
  2. This memorandum outlines the policy for the temporary importation of foreign railway rolling stock, locomotives and miscellaneous railway equipment under tariff item No. 9801.20.00.
  3. When reading this memorandum, it is important to note that cross-references in the Excise Tax Act (ETA) to tariff items were not amended at the time of Tariff Simplification in 1998. Instead, subsection 140(2) was added to the Customs Tariff, which states that any reference in the ETA to headings, subheadings, tariff items, tariff codes or chapter notes would continue to apply, for Goods and Services Tax (GST) purposes, as if the pre 1998 Tariff were still in effect.
  4. The Department of Finance announced, in a new release dated October 7, 1997, that changes to the ETA would be proposed as a result of the implementation of the simplified Customs Tariff in 1998. However, these proposed changes had not yet been made at the time of the publication of this memorandum.
  5. Consequently, the GST treatment of locomotives, railway rolling stock, and miscellaneous railway equipment temporarily imported for domestic use in Canada did not change with the introduction of tariff item 9801.20.00 in 1998. Therefore, one must continue to refer to the terms of the pre-1998 rolling stock remission orders (e.g., Order in Council (OIC) P.C. 1975-1975) and tariff codes (e.g. code 2338 of Schedule II to the pre-simplified Customs Tariff) to determine how the GST applies to these temporary importations.

Table of Contents

Legislation

Current wording of tariff heading 98.01:

Conveyances or containers of Chapters 86, 87, 88 or 89, engaged in international commercial transportation of goods or passengers, including any ancillary equipment necessary to ensure the safety, security, containment and preservation of the goods or passengers.

Tariff item 9801.10.10 reads:

  • Conveyances, (a) on condition that:
    • (i) in the case of vehicles, they are registered and licensed in a foreign country and operated in Canada with a vehicle licence issued by the appropriate provincial licensing authority;
    • (ii) in the case of aircraft, they comply with the requirements of the Aeronautics Act and any regulations made thereunder; and
    • (iii) in the case of vessels, they comply with the requirements of the Canada Shipping Act and Coasting Trade Act; and
  • (b) on condition that the conveyances:
    • (i) are owned or leased and imported by a person whose domicile is in a foreign country;
    • (ii) leave from and return to the foreign country in the normal course of operation;
    • (iii) are controlled from the foreign country; and
    • (iv) are exported within 30 days of the date of their importation or for an additional period not exceeding 24 months where a customs officer is satisfied that the exportation of the conveyances is delayed because:
      • (A) of adverse weather conditions;
      • (B) the conveyances are being equipped, reconditioned, reconstructed, refurbished or repaired;
      • (C) the conveyances have a major equipment breakdown;
      • (D) the conveyances are detained under an order of a Canadian court, or under an Act of Parliament or the legislature of a province or any regulation made thereunder; or
      • (E) the delivery of the goods to be loaded on or in the conveyances is delayed.

The conveyances provided for in this tariff item may engage in the transportation of goods from one point in Canada to another point in Canada where:

  • (a) that transportation is incidental to the international traffic of the goods;
  • (b) the transportation does not occur outside the territorial limits of Canada; and
  • (c) the conveyance has not entered Canada for the purpose of an in transit movement through Canada to a point outside of Canada.

Tariff item No. 9801.20.00 reads:

Locomotives or railway rolling stock or miscellaneous railway equipment, regardless of tariff treatment entitlement or country of origin, owned or under the control of a railway company in the United States, temporarily engaged in the transportation of goods or passengers from a place in Canada to another place in Canada or imported on a temporary basis for the repair, testing or maintenance of railways in Canada.

The wording of former tariff item 9801.00.00 (i.e. pre Customs Tariff simplification):

Foreign-based conveyances of heading No. 86.09 or of Chapters 87, 88 and 89, other than cargo containers less than 6.1 metres in length or having an internal capacity less than 14 cubic metres, engaged in the international commercial transportation of passengers or goods, under such regulations for each mode of conveyance provided for in this heading as the Governor in Council may prescribe.

Former tariff code 2338 provided for the customs duty free entry as follows:

Railway or tramway vehicles of heading No. 8601, 8602, 8603, 8605 or 8606, being the property or under the control of railway companies in the United States, running upon any line or road crossing the frontier, so long as Canadian locomotives and cars are imported free of customs duties under similar circumstances into the United States, under regulations made by the Minister.

The references to Customs Tariff headings 8601, 8602, 8603, 8605 or 8606 refer to the headings as worded on December 31, 1997.

The legislative references to the Excise Tax Act and its regulations follow.

Section 1 of Schedule VII to the Excise Tax Act

1. Goods that are classified under heading No. 98.01, 98.02, 98.03, 98.04, 98.05, 98.06, 98.07, 98.10, 98.11, 98.12, 98.15, 98.16 or 98.19 or subheading No. 9823.60, 9823.70, 9823.80 or 9823.90 of Schedule I to the Customs Tariff, to the extent that the goods are not subject to duty under that Act, but not including goods that are classified under tariff item 9804.30.00 of that Schedule. …

8. Prescribed goods imported in prescribed circumstances and under prescribed terms and conditions.

The prescribing regulations are the Non-taxable Imported Goods (GST/HST) Regulations and the Value of Imported Goods (GST/HST) Regulations.

The relevant section of the Non-taxable Imported Goods (GST/HST) Regulations, subsection 3(h), reads as follows:

  • Locomotives, railway rolling stock and vessels imported in circumstances where customs duties have been remitted or removed under
    • (i) Railway Rolling Stock (International Service) Remission Order No. 3,
    • (ii) code 2338 of Schedule II to the Customs Tariff,
    • (iii) Railway Rolling Stock (International Service) Remission Order No. 4,
    • (iv) Railway Rolling Stock (Canadian Domestic Use) Remission Order No. 2, or
    • (v) section 5, 6, 7, 15, 16 or 17 of the Vessel Duties Reduction or Removal Regulations;

The relevant sections of the Value of Imported Goods (GST/HST) Regulations, Section 9, 10, and 11, read as follows:

9. For the purposes of subsection 215(2) of the Act, the value of a locomotive or miscellaneous railway equipment imported in circumstances where customs duties are partially remitted under Order in Council P.C. 1953-18/894 shall be determined by the formula

(1/120 x A x B) + C

where

A is the value for duty of the locomotive or railway equipment, as the case may be;

B is the number of months during which the locomotive or railway equipment, as the case may be, remains in Canada; and

C is the remaining duties payable in respect of the locomotive or railway equipment, as the case may be.

10. For the purposes of subsection 215(2) of the Act, the value of railway rolling stock imported for use in international service in circumstances where the Railway Rolling Stock (International Service) Remission Order No. 4 applies and the rolling stock is temporarily diverted (within the meaning of that Order) shall be determined by the formula

A + B

where

A  is the value of the monthly rental charge for the rolling stock; and

B  is the remaining duties payable in respect of the rolling stock.

11. For the purposes of subsection 215(2) of the Act, the value of railway rolling stock that is imported in circumstances where code 2338 of Schedule II to the Customs Tariff applies, and that becomes subject to customs duties by reason of the temporary use of the rolling stock in Canada, shall be determined by the formula

(A x B) + C

where

A is the average monthly rental charge for the rolling stock;

B is the number of months during which the temporary use in Canada continues; and

C is the remaining duties payable in respect of the rolling stock.


Guidelines and General Information

Definitions

1. For the purposes of this memorandum, the following definitions apply:

  • "available" means, in respect of any railway rolling stock, that it is available when needed from Canadian production or other Canadian sources in sufficient quantities at a reasonable cost;
  • "duties" means any duties or taxes levied or imposed on imported goods under the Customs Tariff, the Excise Tax Act, the Excise Act, the Special Import Measures Act or any other Act of Parliament, but, for the purposes of subsection 3(1), paragraphs 59(3)(b) and 65(1)(b), sections 69 and 73 and subsections 74(1), 75(2) and 76(1), does not include taxes imposed under Part IX of the Excise Tax Act (i.e. does not include the Goods and Services Tax (GST)).
  • "international commercial transportation" means any transportation resulting in, or intended to result in, the carriage of persons or goods for hire or reward, or any transportation of persons or goods by or on behalf of an enterprise engaged in an activity of financial return, where the persons or goods are conveyed:
    • (a) from outside Canada to a place inside Canada;
    • (b) from a place inside Canada to a place outside Canada; or
    • (c) from a place outside Canada in transit through Canada to another place outside Canada.
  • "international service" means the use while loaded or empty of railway rolling stock dispatched on a direct route from a place in Canada to a place in the United States or from a place in the United States to a place in Canada and includes loading and unloading in Canada while on the direct route;
  • "Minister" means the Minister of Public Safety and Emergency Preparedness.
  • "miscellaneous railway equipment" means railway track equipment, repair equipment, testing equipment, maintenance equipment and equipment used to maintain rail right of ways.
  • "month", for the purpose of calculating the customs duty, is interpreted to consist of the period between a certain date in one month to the corresponding day previous in the following month (in reference to the duties applicable). For example, if railway rolling stock is diverted to domestic service from January 25 to February 20, the period of the diversion would be calculated as one month. A diversion from January 25 to February 28, would be considered two months.
  • "month", for the purpose of calculating the GST, is a period beginning on a particular day in a calendar month and ending on (a) the day immediately before the day in the next calendar month that has the same calendar number as the particular day, or (b) where the next calendar month does not have a day that has the same calendar number as the particular day, the last day of that next calendar month.
  • "monthly rental charge" means, in respect of any railway rolling stock, the average monthly rental charge for the use in Canada of that railway rolling stock;
  • "railway rolling stock" means railway passenger, baggage and freight cars.
  • "temporarily diverted" means removed from international service and placed in Canadian domestic service for ninety days or less in any one calendar year.
  • "temporarily engaged" and "imported on a temporary basis" means the qualifying goods are imported into Canada for a period of 12 months or less from the date on the Train Report Inward (Form A1).
  • "Temporary use" is interpreted as being removed from international service and placed in Canadian domestic service for 90 days or less in any one calendar year.

General

2. This memorandum outlines the provisions that must be met for locomotives, railway rolling stock, and miscellaneous railway equipment to qualify for customs duty free importation under tariff items 9801.10.10 and 9801.20.00. Locomotives, railway rolling stock, and miscellaneous railway equipment that do not qualify under these tariff items may qualify for customs duty free entry under tariff item 9993.00.00. More information on tariff item 9993.00.00 can be found in Memorandum D8-1-1, Amendments to Temporary Importation (Tariff Item No. 9993.00.00) Regulations.

3. This memorandum also outlines the various provisions which enable foreign locomotives, railway rolling stock and miscellaneous railway equipment to be temporarily imported into Canada, fully or partially non-taxable for the purposes of the Goods and Services Tax (GST).

Tariff Classification

4. All locomotives, railway rolling stock, and miscellaneous railway equipment arriving in or departing from Canada are required to report to the Canada Border Services Agency (CBSA).

5. If they are being imported temporarily for the purpose of international commercial service they are classified under tariff item 9801.10.10 and are customs duty free. They are documented on a Form A1, Train Report Inward and when exported, they are reported on a Form A5, Train Report Outward. Formal customs accounting on a Form B3-3, Canada Customs Coding Form is not required. As per subsection 7(1)(a) of the Accounting for Imported Goods and Payment of Duties Regulations, goods classified under tariff item No. 9801.00.10 may be released without any requirement of accounting under section 32 of the Customs Act.

6. The determination of whether or not locomotives, railway rolling stock or miscellaneous railway equipment are engaged in international commercial transportation is based on the origin and destination of the goods carried and not the actual route of the locomotive, railway rolling stock or miscellaneous railway equipment.

7. If they are being imported temporarily for use domestically or imported on a temporary basis for the repair, testing or maintenance of Canadian railways, the locomotives, railway rolling stock, and miscellaneous railway equipment are classified under tariff item 9801.20.00 and in addition to being documented on a Form A1 must be accounted for on a Form B3-3 and any necessary supporting documentation supplied.

8. The foreign railway rolling stock imported into Canada to be temporarily engaged for domestic use under tariff item 9801.20.00 may do so with goods on board.

Exemption from the Requirement to Furnish the North American Free Trade Agreement (NAFTA) Certificate of Origin for Certain Locomotive and Railway Freight Cars

9. Effective July 1, 2012, in accordance with the provisions of Article 503(c) of NAFTA, the importer and owner is exempt from the requirement to furnish the proof of origin required under subsection 35.1(1) of the Customs Act for locomotives of headings 86.01 and 86.02 and railway freight cars of heading 86.06 of the List of Tariff Provisions set out in the schedule to the Customs Tariff, transported overland from the United States into Canada and for which preferential tariff treatment under NAFTA is claimed.

GST Treatment

Locomotives or Railway Rolling Stock or Miscellaneous Railway Equipment Engaged in International Commercial Transportation

10. Locomotives, railway rolling stock or miscellaneous railway equipment engaged in the international commercial transportation of goods or passengers that would have been classified under former tariff headings 86.01, 86.02, 86.03, 86.05, 86.06 or 86.09 (i.e. pre-Customs Tariff simplification) are prescribed as non-taxable for the purposes of the GST under the provisions of subparagraph 3(h)(ii) of the Non-taxable Imported Goods (GST/HST) Regulations which refers to former tariff code 2338 and section 1 of Schedule VII of the Excise Tax Act. Goods classified under the current tariff headings are still non-taxable for the purposes of the GST except for goods of tariff item 8609.00.10.

11. All locomotives, railway rolling stock and miscellaneous railway equipment arriving in or departing from Canada must be reported and are normally not accounted for but are documented on a Form A1, Train Report Inward and on a Form A5, Train Report Outward.

Note: If required to account for the goods on a Form B3-3, Canada Customs Coding Form, the appropriate GST/HST tax status code is 51.

Foreign Railway Rolling Stock Imported to be Temporarily Engaged for Domestic Use

12. Foreign railway rolling stock imported to be temporarily engaged for use in domestic service are prescribed as non-taxable for the purposes of the GST pursuant to subsection 3(h) of the Non-taxable Imported Goods (GST/HST) Regulations reference to the former Railway Rolling Stock (Canadian Domestic Service) Remission Order No. 2 (see Appendix K).

13. To qualify under the former Railway Rolling Stock (Canadian Domestic Service) Remission Order No. 2 , the foreign railway rolling stock imported for domestic use must be specialized (e.g. railway rolling stock that is manufactured to hold specific commodities or with specific dimensions) and not railway rolling stock that can be obtained from the normal stream of transportation.

14. Companies wishing to temporarily engage foreign railway rolling stock for domestic use do not require pre-authorization from the CBSA. However, the importation of the railway rolling stock must be under a lease or contract, for a period not exceeding 12 months, signed prior to the importation.

15. The foreign railway rolling stock so engaged cannot be removed from Canada for any reason, including being placed in international service. Foreign railway rolling stock that is being used for in-transit movements from one place in Canada to another place in Canada, through the United States, is not considered to have been placed in international service.

16. The maximum period of GST relief is one year. Foreign railway rolling stock that remains in Canada beyond the 12 month period without a lease or contract will be considered a permanent importation and duties and taxes will be applicable on the full duty paid value of each railcar at the time of importation. This should be the value for duty which must be determined in accordance with the valuation provisions found in sections 44 to 55 of the Customs Act.

Extending the period of importation

17. Extensions for an additional 12 months (to a maximum of 36 months) period must be approved by the Regional Trade Compliance Division (see Appendix J), of the office where the initial accounting was done. A renewed contract/lease has to have been signed prior to the application being submitted. Authorizations for extensions may be granted without the requirement to export the railway rolling stock, provided:

  • (a) the application for extension is received before the original period of importation exceeds 12 months;
  • (b) the railway rolling stock will not remain in Canada for more than 36 months in total (for example only two extensions of 12 months); and
  • (c) the applicant has received a renewal of the lease or contract under which the foreign railway rolling stock was imported initially or has signed a new lease or contract.
Documentation

18. As the foreign railway rolling stock is being imported under tariff item 9801.20.00, importers will have to account for the railway rolling stock on a Form B3-3. The importer must account for the railway rolling stock within 30 days of the importation of the last railcar. Although no previous authorization is required by the CBSA, the importer must include a copy of the signed lease or contract as well as a complete description of the railcar including:

  • (a) name of the owner of each railcar; and
  • (b) type, model, age, value for duty and railcar markings, and the number displayed on each railcar.

Note: The Form B3-3 should be completed as per the example found in Appendix A.

19. If the railcars are non-taxable for the purposes of the GST under the conditions noted above, special authorization code 98-22-222 must appear in field 26.

20. When requesting an extension of the period of importation, the importer must submit a Canada Customs - Adjustment Request Form B2, along with a copy of the signed lease or contract.

Note: The Form B2 should be completed as per the example found in Appendix B.

21. Importers are required to submit quarterly reports on January 1, April 1, July 1 and October 1 to provide particulars on the imported railway rolling stock used by the importer, within the proceeding quarter.

Foreign Railway Rolling Stock, Owned or Controlled by United States Railway Companies, for Use in International Service, Temporarily Diverted to Domestic Use in Canada

22. Importers of foreign railway rolling stock that is owned or controlled by United States railway companies must report the diversion of any railway rolling stock that is removed from international service and temporarily diverted into Canadian domestic service.

Temporary diversion of 90 days or less

23. The railway rolling stock has been diverted from tariff item 9801.10.10 to tariff item 9801.20.00 and remains customs duty free. The period of diversion cannot exceed 90 days in one calendar year. The 90 days does not have to occur consecutively.

24. Railway rolling stock owned or controlled by a United States railway company diverted temporarily to domestic use is partially relieved of the GST. Subsection 3(h) of the Non-taxable Imported Goods (GST/HST) Regulations and section 11 of the Value of Imported Goods (GST/HST) Regulations apply. Both these regulations refer to the former tariff code 2338 (Appendix L). GST is owed on the value of the monthly rental charge for the rolling stock; and any customs duties payable in respect of the rolling stock. While the railway rolling stock has become subject to customs duties, the rate under tariff item 9801.20.00 is free, so GST is only applicable on the value of the monthly rental charge.

25. For diversions under 90 days, there is a distinction to be made between value for duty and the amount upon which the GST is assessed. While the GST for railcars diverted for a period of less than 90 days is assessed based on the amount paid for the lease or rental contract as in the examples provided below, the value for duty of the railcar is to be established and declared according to sections 44 to 55 of the Customs Act at time of importation. If the diversion of the railcars exceeds the intended 90 days, then the GST will be assessed against the full value for duty that was determined and declared at time of importation.

26. The importer is required to monitor the length of time the railway rolling stock is diverted to Canadian domestic use.

27. The relevant section of the Value of Imported Goods (GST/HST) Regulations, Section 11, read as follows:

  • 11. For the purposes of subsection 215(2) of the Act, the value of railway rolling stock that is imported in circumstances where code 2338 of Schedule II to the Customs Tariff applies, and that becomes subject to customs duties by reason of the temporary use of the rolling stock in Canada, shall be determined by the formula

    (A x B) + C

    where

    A  is the average monthly rental charge for the rolling stock;

    B  is the number of months during which the temporary use in Canada continues; and

    C  is the remaining duties payable in respect of the rolling stock.

Diverted for longer than 90 days

28. If the railway rolling stock is diverted to domestic use for periods exceeding 90 days in a calendar year, then the railcars are no longer imported under 9801.10.10 or 9801.20.00. They must be classified in Chapter 86 and fully duty and tax paid, including the GST. The value for duty would be the value for duty on the initial date of importation determined in accordance with the valuation provisions found in sections 44 to 55 of the Customs Act. For all intents and purposes the railcars must be accounted for as a permanent importation.

Documentation

29. As the railway rolling stock would have been initially imported under tariff item 9801.10.10 and not documented on a Form B3-3, when diverted temporarily to domestic use under tariff item 9801.20.00 the railway rolling stock must now be accounted for on a Form B3-3.

Note: The Form B3-3 should be completed as per the example found in Appendix C.

30. Special authority code 98-11-111 should appear in field 26 to enable the GST to be accounted for based on the monthly rental charge.

31. Importers are required to submit quarterly reports on January 1, April 1, July 1 and October 1 to provide particulars on the use of the foreign railway rolling stock engaged in domestic service, within the proceeding quarter.

32. If the railway rolling stock is diverted for longer than 90 days, they will have to be accounted for on a Form B2, Canada Customs - Adjustment Request in Chapter 86 of the Customs Tariff.

Note: The Form B2 should be completed as per the example found in Appendix D.

Examples of temporary diversion of 90 days or less

33. For example, if railway rolling stock is diverted to domestic service from January 25 to February 20, the diversion would be calculated using one month. If the diversion occurs from January 25 to February 28, that would require a two month reporting.

  • (a) A railcar is valued at $35,000.00 CAN (This value would appear in field 37 of the B3-3). It was rented for $1000.00 per month, and was diverted to Canadian domestic use for one month. No remaining customs duties are applicable.

    $1,000.00 X 1 = $1,000.00

    GST is applicable on the $1,000.00. Therefore, currently the GST is 5%, so the GST payable is $50.00.

    This example would be accounted for on April 1 for the preceding quarter.

  • (b) A railcar is valued at $35,000.00 CAN. (This value would appear in field 37 of the B3-3) It was rented for $1000.00 per month, and was diverted to Canadian domestic use for 90 consecutive days (commencing January 1 and ending March 31). No remaining customs duties are applicable.

    $1,000.00 X 3 = $3,000.00

    GST is applicable on the $3,000.00. Therefore, currently the GST is 5%, so the GST payable is $150.00.

    This example would be accounted for on April 1 for the preceding quarter.

34. The railway rolling stock can be diverted to domestic use in Canada for 90 days or less over a 12 month period. For example, the importer may divert the railcars for a few days each month and use the railcars in international service for the remainder of the month. In these situations, GST is applicable for each month or part month that the railway rolling stock is temporarily used in Canada. For example:

  • A railcar is valued at $35,000.00 CAN. (This value would appear in field 37 of the B3-3) It was rented for $1000.00 per month, and was diverted temporarily for domestic use as follows:
    • January 1 to January 5 (5 days)
    • February 3 to February 10 (8 days)
    • February 20 to February 24 (4 days)
    • April 2 to April 4 (3 days)
    • May 9 to May 12 (4 days)
    • July 7 to July 9 (3 days)
    • August 1 to August 10 (10 days)
    • September 22 to September 30 (9 days)
    • October 12 to October 15 (4 days)
    • November 23 to November 25 (3 days) and
    • December 1 to December 5 (5 days)
  • This example would be accounted for on four separate B3-3's. January to March would be accounted for on April 1 for the preceding quarter, April to June would be accounted for on July 1 for the preceding quarter, July to August would be accounted for on September 1 for the preceding quarter and September to December would be accounted for on January 1st for the preceding quarter.
Examples of diversions for longer than 90 days

35. Using the same example above, the value for duty of the railcar established according to the valuation provisions of the Customs Act, at the time of importation was $35,000.00 CAN. GST is applicable on the entire value for duty. 

$35,000.00 X 5% = $1,750.00 is the GST payable, when customs duties are not applicable.

36. Using the same example above, the value for duty of the railcar established according to the valuation provisions of the Customs Act, at the time of importation was $35,000.00 CAN when Customs duties are applicable. If the railway rolling stock was classified under 8603.90.00.00, the rate of duty under the Most-Favoured-Nation (MFN) tariff treatment is 8%.

$35,000.00 X 8 % = $2,800.00. GST is applicable on the entire value for tax (value for duty plus the customs duties). $35,000.00 (VFD) + $2,800.00 (Duty) = $37,800.00 (VFT) X 5% = $1,890.00 is the GST payable.

Foreign Railway Rolling Stock, Owned or Controlled by Other Than United States Railways, Entering Canada for Use in International Service

37. Importers of foreign railway rolling stock that is not the property of or under the control of a United States railway must report the diversion of any railway rolling stock that is removed from international service and temporarily diverted into Canadian domestic service. The railway rolling stock that has been diverted from tariff item 9801.10.10 must be classified under Chapter 86. Note: Goods of tariff item 9801.20.00 must be owned or under the control of a railway company in the United States. The period of diversion cannot exceed 90 days in one calendar year. The 90 days does not have to occur consecutively. The origin may attract customs duties which would be paid the first time only.

Temporary diversion of 90 days or less

38. The railway rolling stock diverted under these circumstances is subject to customs duties unless it is manufactured in the United States. In this latter case, it will be subject to GST on the monthly rental charge for the equipment. Subsection 3(h) of the Non-taxable Imported Goods (GST/HST) Regulations and section 10 of the Value of Imported Goods (GST/HST) Regulations apply. Both these regulations refer to the former Railway Rolling Stock (International Service) Remission Order No. 4 (Appendix M). GST is owed on the value of the monthly rental charge for the rolling stock; and any customs duties payable in respect of the rolling stock.

39. For diversions under 90 days, there is a distinction to be made between value for duty and the amount upon which the GST is assessed. While the GST for railcars diverted for a period of less than 90 days is assessed based on the amount paid for the lease or rental contract as in the examples provided below, the value for duty of the railcar is to be established and declared according to sections 44 to 55 of the Customs Act at time of importation. If the diversion of the railcars exceeds the intended 90 days, then the GST will be assessed against the full value for duty that was determined and declared at time of importation.

40. The importer is required to monitor the length of time the railway rolling stock is diverted to Canadian domestic use.

41. The relevant section of the Value of Imported Goods (GST/HST) Regulations, Section 10, read as follows:

  • 10. For the purposes of subsection 215(2) of the Act, the value of railway rolling stock imported for use in international service in circumstances where the Railway Rolling Stock (International Service) Remission Order No. 4 applies and the rolling stock is temporarily diverted (within the meaning of that Order) shall be determined by the formula

    A + B

    where

    A  is the value of the monthly rental charge for the rolling stock; and

    B  is the remaining duties payable in respect of the rolling stock.

Diverted for longer than 90 days

42. If the railway rolling stock is diverted to domestic use for periods exceeding 90 days in a calendar year, then the railcars must be fully duty and tax paid, including the GST. The value for duty would be the value for duty on the initial date of importation determined in accordance with the valuation provisions found in sections 44 to 55 of the Customs Act and the value for duty on the initial date of importation. For all intents and purposes the railcars must be accounted for as a permanent importation.

Documentation

43. As the railway rolling stock would have been initially imported under tariff item 9801.10.10 and not documented on a Form B3-3, when diverted temporarily to domestic use must be accounted for on a Form B3-3 under chapter 86.

Note: The Form B3-3 should be completed as per the example found in Appendix E.

44. Special authority code 98-11-111 should now appear in field 26 to enable the GST to be accounted for based on the monthly rental charge.

45. Importers are required to submit quarterly reports on January 1, April 1, July 1 and October 1 to provide particulars on the use of the foreign railway rolling stock engaged in domestic service, within the proceeding quarter.

46. If the railway rolling stock is diverted for longer than 90 days, the railway rolling stock will have to be accounted for on a Form B2, Canada Customs - Adjustment Request.

Note: The Form B2 should be completed as per the example found in Appendix F.

Examples of temporary diversion of 90 days or less

47. For example, if railway rolling stock is diverted to domestic service from January 25 to February 20, the diversion would be calculated using one month. If the diversion occurs from January 25 to February 28, that would require a two month reporting. Depending on the origin of the railcars customs duties may be applicable.

  • (a) A railcar is valued at $35,000.00 CAN. (This value would appear in field 37 of the B3-3) It was rented for $1000.00 per month, and was diverted to domestic use for one month. No remaining duties are applicable.

    $1,000.00 X 1 = $1,000.00

    GST is applicable on the $1,000.00. Therefore, currently the GST is 5%, so the GST payable is $50.00.

    This example would be accounted for on April 1 for the preceding quarter.

  • (b) A railcar is valued at $35,000.00 CAN. (This value would appear in field 37 of the B3-3) It was rented for $1000.00 per month, and was diverted to Canadian domestic use for 90 consecutive days (commencing January 1 and ending March 31). No remaining duties are applicable.

    $1,000.00 X 3 = $3,000.00

    GST is applicable on the $3,000.00. Therefore, currently the GST is 5%, so the GST payable is $150.00.

    This example would be accounted for on April 1 for the preceding quarter.

  • (c) A railcar is valued at $35,000.00 CAN. (This value would appear in field 37 of the B3-3) It was rented for $1000.00 per month, and was diverted to domestic use for one month. When customs duties are applicable the duties are based on the value of the railcar, not the rental charge. If the railway rolling stock was classified under 8603.90.00.00, the rate of duty under the Most-Favoured-Nation (MFN) tariff treatment is 8%.

    $35,000.00 X 8 % = $2,800.00

    $1,000.00 X 1 = $1,000.00

    GST is applicable on the $1,000.00. Therefore, currently the GST is 5%, so the GST payable is $50.00. Total amount owing is $2,800.00 customs duties plus $50.00 GST.

    This example would be accounted for on April 1 for the preceding quarter. Since the customs duties have been paid on this railcar, if the railcar is diverted for longer than 90 days, the customs duties will not have to be paid again.

  • The railway rolling stock can be diverted to domestic use in Canada for 90 days or less in a calendar year. For example, the importer may divert the railcars for only a few days each month and then use the railcars in international service for the remainder of the month. In these situations, GST is applicable for each month or part month that the railway rolling stock is temporarily used in Canada. For example:
  • (d) A railcar is valued at $35,000.00 CAN. (This value would appear in field 37 of the B3-3) It was rented for $1000.00 per month, and was diverted temporarily for domestic use as follows:
    • January 1 to January 5 (5 days)
    • February 3 to February 10 (8 days)
    • March 20 to March 23 (4 days)
    • April 2 to April 4 (3 days)
    • May 9 to May 12 (4 days)
    • July 7 to July 9 (3 days)
    • August 1 to August 10 (10 days)
    • September 22 to September 30 (9 days)
    • October 12 to October 15 (4 days)
    • November 23 to November 25 (3 days) and
    • December 1 to December 5 (5 days)
  • This example would be accounted for on four separate B3-3's. January to March would be accounted for on April 1 for the preceding quarter, April to June would be accounted for on July 1 for the preceding quarter, July to August would be accounted for on September 1 for the preceding quarter and September to December would be accounted for on January 1 for the preceding quarter.
Examples of Diversions for longer than 90 days

48. Using the same example above, the value for duty of the railcar established according to the valuation provisions of the Customs Act, at the time of importation was $35,000.00 CAN. GST is applicable on the entire value for duty:

$35,000.00 X 5% = $1,750.00 is the GST payable. Customs duties were paid at the time of the first diversion; therefore the importer is not required to pay the customs duties again.

Foreign Railway Locomotives and Miscellaneous Railway Equipment

49. Importers of locomotives and miscellaneous railway equipment must report the temporary importation.

50. Locomotives and miscellaneous railway equipment imported temporarily into Canada under tariff item 801.20.00 or classified under chapter 86 are only partially taxable for the purposes of the GST.

51. Examples of miscellaneous railway equipment include:

  • (a) railway track equipment;
  • (b) repair equipment;
  • (c) testing equipment;
  • (d) maintenance equipment; and
  • (e) miscellaneous equipment used in maintaining rail right of ways.

52. The locomotives and miscellaneous railway equipment are subject to the GST on 1/120 of their value for duty for each month they remain in Canada. Because the minimum amount of duties and taxes payable under the remission order is $25, the importer is required to pay $25 in respect of the temporary importation. Section 9 of the Value of Imported Goods (GST/HST) Regulations, applies. This section refers to former Order in Council P.C. 1953-18/894, June 9, 1953 (see Appendix N).

53. The relevant section of the Value of Imported Goods (GST/HST) Regulations, Section 9, read as follows:

  • 9. For the purposes of subsection 215(2) of the Act, the value of a locomotive or miscellaneous railway equipment imported in circumstances where customs duties are partially remitted under Order in Council P.C. 1953-18/894 shall be determined by the formula

    (1/120 x A x B) + C

    where

    A  is the value for duty of the locomotive or railway equipment, as the case may be;

    B  is the number of months during which the locomotive or railway equipment, as the case may be, remains in Canada; and

    C  is the remaining duties payable in respect of the locomotive or railway equipment, as the case may be.

Documentation

54. The locomotive or miscellaneous railway equipment must be documented on a Form B3-3. The form must be submitted to the CBSA office identified in the importer's application within 30 days of the date of importation of the last authorized locomotive and/or piece of equipment. A copy of the authorization letter must accompany the Form B3-3. Special authorization code 98-00-000 appears in field 26.

Note: The Form B3-3 should be completed as per the example found in Appendix G.

Examples
  • (a) A locomotive is valued at $9,000.00 CAN at the time of importation. Authorization has been granted for it to be used temporarily in Canada for six months. No remaining duties are applicable.

    $9,000.00 X 1/120 X 6 = $450.00

    GST is applicable on the $450.00. Therefore, currently the GST is 5%, so the GST payable is $22.50. Because the minimum amount of duties and taxes payable under the remission order is $25, the importer is required to pay $25 in respect of the temporary importation.

  • (b) A locomotive is valued at $9,000.00 CAN at the time of importation. Authorization has been granted for it to be used temporarily in Canada for six months. Customs duties are applicable. If the locomotive was classified under 8602.90.00.00, the rate of duty under the Most-Favoured-Nation (MFN) tariff treatment is 9.5%.

    $9,000.00 X 1/120 X 6 = $450.00

    GST is applicable on the $450.00. Therefore, currently the GST is 5%, so the GST payable is $22.50. Because the minimum amount of duties and taxes payable under the remission order is $25, the importer is required to pay $25 in respect of the temporary importation.

    $9,000.00 X 9.5 % = $855.00

    Total owing is $25.00 (GST) + $855.00 (customs duties) = $880.00

  • (c) Testing equipment is valued at $108,000.00 CAN. Authorization has been granted for one month. No remaining duties are applicable.

    $108,000.00 X 1/120 X 1 = $900.00

    GST is applicable on the $900.00. Therefore, currently the GST is 5%, so the GST payable is $45.00.

55. A railway company that wishes to import railway locomotive(s) or miscellaneous railway equipment temporarily for domestic use under tariff item 9801.20.00.00 or classified under chapter 86 and partially relieved of the GST must submit an application in writing, seven (7) calendar days prior to the anticipated date of importation to the CBSA Trade Compliance Division, Client Service Section, in the region where the importation will be made.

56. An application should include the following information:

  • (a) a detailed description of the locomotive(s) or miscellaneous railway equipment including quantity, owner, type, identification number, model, age, value,
  • (b) the dates required in Canada; and
  • (c) the CBSA office where the accounting documentation will be presented and the point of importation.

57. The regional Trade Compliance Division, Client Service Section will review the application and issue a letter of authorization to the client. A list of regional officers can be found in Appendix J.

58. The locomotives or miscellaneous railway equipment must be imported within 90 days of the date indicated on the CBSA letter of authorization.

59. Authorized foreign locomotive(s) or foreign railway equipment may remain in Canada for a period of 12 months from the date authorized by the regional Trade Compliance Division, Client Service Section. For example, if the date of importation identified in the authorization letter is June 1, 2007, then the one-year period will expire on May 31, 2008.

60. The importer must advise the regional Trade Compliance Division, in writing, if all or part of the locomotives or miscellaneous railway equipment included on the application were not imported.

61. A request for an extension of the period of importation must be submitted in writing, to the regional Trade Compliance Division, seven days prior to the expiry of the original authorization. No extensions will be granted to allow the equipment to remain in Canada for more than 12 months. For example, if the original authorization was for six months the applicant can apply for an additional three months. If the original authorization was for 12 months, no additional extensions will be considered.

Failure to respect conditions

62. If the locomotives and/or miscellaneous railway equipment fails to meet the conditions of importation, then they must be fully duty and tax paid, including the GST. The value for duty must be determined in accordance with the valuation provisions found in sections 44 to 55 of the Customs Act and the value for duty on the initial date of importation. For all intents and purposes the railcars must be accounted for as a permanent importation.

Canadian Railway Rolling Stock Imported for Use in International Commercial Service Temporarily Diverted to Domestic Use in Canada

63. Importers of railway rolling stock that has been manufactured in Canada that is diverted temporarily from international service and placed into Canadian domestic service must report the diversion. In this case, the Canadian railway rolling stock would have been manufactured in Canada for export and never entered into domestic service. If the Canadian railway rolling stock is owned or under the control of a railway company in the United States it is being diverted from tariff item 9801.10.10 to tariff item 9801.20.00. The railcars are being diverted to Chapter 86, if they are owned or under the control of a foreign railway other than a United States railway. The period of diversion cannot exceed 90 days in one calendar year. The 90 days does not have to occur consecutively.

64. The railway rolling stock is non-taxable for the purposes of the GST pursuant to subsection 3(h) of the Non-taxable Imported Goods (GST/HST) Regulations, which refers to the Railway Rolling Stock (International Service) Remission Order No. 3 (Appendix O).

Temporary diversion of 90 days or less

65. If the railway rolling stock, manufactured in Canada, is diverted to domestic use for periods of less than 90 days in a calendar year, then the goods are relieved of the Goods and Services Tax (GST).

Note: Reference should be made to Order in Council 98-22-222, in field 26 of the B3-3.

Diverted for longer than 90 days

66. If the railway rolling stock, manufactured in Canada, is diverted to domestic use for periods exceeding 90 days in a calendar year, then the Goods and Services Tax (GST) is applicable on the full duty paid value of the railway rolling stock at the time of importation. This should be the value for duty which must be determined in accordance with the valuation provisions found in sections 44 to 55 of the Customs Act.

Documentation

67. As the Canadian manufactured railway rolling stock would have been initially imported under tariff item 9801.10.10 and not documented on a Form B3-3, when diverted temporarily to domestic use under tariff item 9801.20.00 or to a tariff item in Chapter 86 the railway rolling stock must now be accounted for on a Form B3-3. Special authorization code 98-22-222 should appear in field 26.

Note: The Form B3-3 should be completed as per the example found in Appendix H.

68. Importers are required to submit quarterly reports on January 1, April 1, July 1 and October 1 to provide particulars on the use of the Canadian manufactured railway rolling stock, for export, engaged in domestic service, within the proceeding quarter.

Note: The Form B2 should be completed as per the example found in Appendix I.

Examples of temporary diversion of 90 days or less

69. For example, if Canadian manufactured railway rolling stock is diverted to domestic service from April 1 to June 29 (90 days) and the railway rolling stock is owned or controlled by a United States railway the railway rolling stock would be classified under tariff item 9801.20.00. No remaining customs duties are applicable.

A railcar is valued at $35,000.00 CAN. It was diverted temporarily from international service and placed into Canadian domestic service for 90 days or less.

No customs duties or GST is applicable.

This example would be accounted for on July 1 for the preceding quarter.

70. For example, if Canadian manufactured railway rolling stock is diverted to domestic service from April 1 to June 29 (90 days) and the railway rolling stock is owned or controlled by a foreign railway other than a United States railway, the railway rolling stock would be classified under Chapter 86. Customs duties would be applicable. If the railway rolling stock was classified under 8603.90.00.00, the rate of duty under the Most-Favoured-Nation (MFN) tariff treatment is 8%.

A railcar is valued at $35,000.00 CAN. It was diverted temporarily from international service and placed into Canadian domestic service for 90 days or less.

No GST is applicable.

$35,000.00 X 8 % = $2,800.00.

This example would be accounted for on July 1 for the preceding quarter.

Examples of diversions for longer than 90 days

71. Using the same example above,

  • (a) the value of the railcar at the time of importation was $35,000.00 CAN. GST is applicable on the entire value.

    $35,000.00 X 5% = $1,750.00 is the GST payable, when Customs duties are not applicable.

  • (b) the value of the railcar at the time of importation was $35,000.00 CAN. Customs duties are applicable since goods manufactured in Canada are not entitled to the benefits of tariff treatment 10. If the railway rolling stock was classified under 8603.90.00.00, the rate of duty under the Most-Favoured-Nation (MFN) tariff treatment is 8%.

    $35,000.00 X 8 % = $2,800.00

    GST is applicable on the entire value of the railcar plus the customs duties. $35,000.00 + $2,800.00 = $37,800.00 X 5% = $1,890.00 is the GST payable. If the customs duties have previously been paid on this railcar, the customs duties will not have to be paid again.

Exportation Process

72. It is the importer's responsibility to advise the regional CBSA office, Trade Compliance Division, at the place where the goods were accounted for, that the railway rolling stock has been exported. Proof of export must be provided within 30 days of the exportation of the last railcar or when the lease or contract expires, whichever is earlier.

73. Proof of export can be provided by any of the following, on condition that it clearly demonstrates that the diverted railcar has left Canada and the date of departure is evident:

  • (a) a validated A5 Train Report Outward
  • (b) a certified E15 (identification of goods exported or destroyed)
  • (c) a U.S. customs report
  • (d) an internal off-line report
  • (e) an interline report with a U.S. railway company

Voluntary Disclosure

74. Once an importer decides not to export the railway rolling stock, railway locomotives and miscellaneous railway equipment that was temporarily imported for use in international service and/or diverted to domestic use, the importer must present a Form B2 amending the entry and accounting for the duties and taxes owing. Failure to do so may result in the application of an Administrative Monetary Penalty (AMP).

Record Keeping

75. The importer must keep on file for compliance verification purposes a copy of all the accounting documentation (Form B3-3s and Form B2s), the CBSA authorization letter (where applicable) and proof of exportation for all the goods that were exported. These records must be kept for a period of six years as outlined in Memorandum D17-1-21, Maintenance of Records in Canada by Importers.

Penalty Information

76. For more information on administrative monetary penalties, please refer to Memorandum D22-1-1. Information on AMPS penalties is also available on the CBSA Web site.

77. Other administrative sanctions, such as revocation of program privileges and penalties of other government departments, may also be applicable.

78. In some situations, failure to comply with the CBSA requirements outlined in the Customs Act may result in the seizure and forfeiture of the goods and/or conveyance, and in serious cases, criminal charges may be applicable.

Ordering Publications and Forms

79. You can order CBSA publications and forms in several ways:

Online
An online order form will allow you to choose which forms and publications you want to order for delivery to your address. Ordering online is available on the CBSA Web site under "Publications and Forms".

By telephone
To order by phone from anywhere in Canada and the United States, call 1-800-959-2221. If you‘re calling from outside Canada and the United States, call 204-983-3500 or 506-636-5064 (long distance charges apply). For TTY (Teletypewriter) service, call 1-800-665-0354 (Canada only).

Additional information

80. For any questions regarding GST/HST treatment, please contact:

Manager
Border Issues Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
Canada Revenue Agency
Place de Ville, Tower "A", 15th floor
320 Queen Street
Ottawa ON K1A 0L5

Telephone: 613-952-8810
Facsimile: 613-992-1233

81. Any other questions regarding this memorandum should be directed to:

Manager
Import Programs
Commercial Border Programs Division
Programs Branch
Canada Border Services Agency
150 Isabella, 4th floor
Ottawa ON K1A 0L8

Facsimile: 613-946-1520

82. The CBSA's Border Information Service (BIS) line responds to public inquiries related to import requirements of other government departments, including Industry Canada. You can access BIS toll-free throughout Canada by calling 1-800-461-9999. If you are calling from outside Canada, you can access BIS by calling 204-983-3500 or 506-636-5064 (long-distance charges will apply). To speak directly to an agent, please call during regular business hours from Monday to Friday (except holidays), 8 a.m. to 4 p.m. local time. More BIS information can be found on the CBSA's Web site.



Appendix A - Sample form B3-3 - Example for foreign railway rolling stock imported to be temporarily engaged for domestic use

Appendix B - Sample form B2 - Example for foreign railway rolling stock imported to be temporarily engaged for domestic use

Appendix C - Sample form B3-3 - Example for foreign railway rolling stock, owned or controlled by United States railway companies, for use in international service, temporarily diverted to domestic use in Canada - Temporarily diverted for 90 days or less

Appendix D - Sample form B2 - Example for foreign railway rolling stock, owned or controlled by United States railway companies, for use in international service, temporarily diverted to domestic use in Canada - Diversions for longer than 90 days

Appendix E - Sample form B3-3 - Example for foreign railway rolling stock, owned or controlled by other than United States railways, entering Canada for use in international service - temporary diversion of 90 days or less

Appendix F - Sample form B2 - Example for foreign railway rolling stock, owned or controlled by other than United States railways, entering Canada for use in international service - diversions for longer than 90 days

Appendix G - Sample form B3-3 - Example for foreign railway locomotives and miscellaneous railway equipment

Appendix H - Sample form B3-3 - Example for Canadian railway rolling stock imported for use in international commercial service temporarily diverted to domestic use in Canada - Temporary diversion of 90 days or less

Appendix I - Sample form B2 - Example for Canadian railway rolling stock imported for use in international commercial service temporarily diverted to domestic use in Canada - Diversions for longer than 90 days

Appendix J - List of regional trade compliance division offices

The regional Trade Compliance Division, Client Service Section will review the application and issue a letter of authorization to the client.

Region Phone Number Facsimile Number
Compliance Verification and Services
P.O. Box 7850
London, ON N5Y 0A7
519-645-5843 519-675-3309
Client Services
Atlantic Region
1969 Upper Water Street
Halifax, N.S. B3J 3R7
902-426-7982 902-426-8825
Trade Compliance Division
Quebec Region
400, Place d'Youville, 5th Floor
Montréal, QC H2Y 2C2
514-286-7879
ext 5258
514-283-2396
Trade Compliance Division
Northern Ontario Region
22 Bay Street
Sault Ste. Marie, ON P6A 5S2
705-941-2007 705-941-5460
Client Services
Greater Toronto Area Region
55 Bay Street North, P.O. Box 2220
Hamilton, ON L8N 3E1
905-308-8589 905-308-8615
Client Services
Prairie Region
100, 269 Main Street
Winnipeg, MB R3C 1B3
204-983-6000 204-984-7083
Trade Compliance Division
Pacific Region
503 –333 Dunsmuir Street
Vancouver, BC V6B 5R4
604-666-6753 604-666-2212
Client Services
Prairie Region
2588 – 27 St. NE
Calgary, AB T1Y 7G1
403-292-4124 403-292-4200

Appendix K - Order respecting the remission of customs duties paid or payable on railway rolling stock imported for use in Canadian domestic service

Short Title

  • 1. This Order may be cited as the Railway Rolling Stock (Canadian Domestic Service) Remission Order, No. 2.
  • Interpretation
  • 2. In this Order,
    • "available" means, in respect of any railway rolling stock, that it is available when needed from Canadian production or other Canadian sources in sufficient quantities at a reasonable cost;
    • "Minister" means the Minister of National Revenue;
    • "railway rolling stock" means railway passenger, baggage and freight cars.
  • Remission
  • 3. Subject to the conditions set out in sections 4 and 5, remission is hereby granted of the customs duties paid or payable by the importer of any railway rolling stock that enters Canada on or after November 19, 1974 for use in Canadian domestic service.
  • Conditions
  • 4. No remission of customs duties shall be granted, pursuant to section 3, in respect of any kind of railway rolling stock imported into Canada unless it is established to the satisfaction of the Minister, that at the time of importation, railway rolling stock of that kind was not available in Canada.
  • 5. Where, pursuant to section 3, remission is granted to the importer of any railway rolling stock and the railway rolling stock remains in Canadian domestic service,
    • (a) after railway rolling stock of that kind becomes available in Canada, or
    • (b) after the expiration of one year from the date it was imported,
    • whichever is the first to occur, the importer shall pay customs duties at the current rate, on a value determined in accordance with the valuation provisions of the Customs Act, at the time railway rolling stock of that kind became available in Canada or after the expiration of one year from the date it was imported, as the case may be.

Appendix L - Customs Tariff – Schedule II

Tariff Code 2338 provided as follows:

Railway or tramway vehicles of heading No. 8601, 8602, 8603, 8605 or 8606, being the property or under the control of railway companies in the United States, running upon any line or road crossing the frontier, so long as Canadian locomotives and cars are imported free of customs duties under similar circumstances into the United States, under regulations made by the Minister................................... .

Most-Favoured-Nation Tariff: Free

General Preferential Tariff: Free

Railway rolling stock and locomotives temporarily imported into Canada free of customs duties under tariff code 2338 of Schedule II to the Customs Tariff is prescribed as a non-taxable import under section 8 of Schedule VII of the Excise Tax Act.

Appendix M - Order respecting the remission of customs duty paid or payable on foreign railway rolling stock entering Canada for use in international service

Short Title

  • 1. This Order may be cited as the Railway Rolling Stock (International Service) Remission Order, No. 4.
  • Interpretation
  • 2. In this Order,
    • "international service" means the use while loaded or empty of railway rolling stock dispatched on a direct route from a place in Canada to a place in the United States or from a place in the United States to a place in Canada and includes loading and unloading in Canada while on the direct route;
    • "Minister" means the Minister of National Revenue;
    • "monthly rental charge" means, in respect of any railway rolling stock, the average monthly rental charge for the use in Canada of that railway rolling stock;
    • "railway rolling stock" means railway passenger, baggage and freight cars that are manufactured in the United States but are not the property of or under the control of a United States railway;
    • "temporarily diverted" means removed from international service and placed in Canadian domestic service for ninety days or less in any one calendar year.
  • Remission
  • 3. Subject to the conditions set out in sections 4 and 5, remission is hereby granted of customs duty paid or payable on or after November 19, 1974 by an importer of any railway rolling stock that enters Canada for use in international service.
  • Conditions
  • 4. Where, pursuant to section 3, remission is granted of the customs duty paid or payable by an importer of any railway rolling stock and the railway rolling stock is temporarily diverted, the importer shall,
    • (a) for each month or portion thereof that the temporary diversion continues, pay customs duty at the rate of seventeen and one-half per cent, calculated on the monthly rental charge for the railway rolling stock; and
    • (b) report the temporary diversion, as required by the Minister.
  • 5. Where, pursuant to section 3, remission is granted of the customs duty paid or payable by an importer of any railway rolling stock and the railway rolling stock is then transferred to Canadian domestic service otherwise than by being temporarily diverted, the importer shall pay customs duty at the current rate, on a value determined in accordance with the valuation provisions of the Customs Act, of the railway rolling stock at the time of transfer.

Appendix N - Former Order-In-Council 1953-18/894

National Revenue
(Customs and Excise Divisions)

The board recommend that authority be granted, under the provisions of Section 22 of the Financial Administration Act, for the refund or remission of customs duty and taxes paid or ordinarily payable on locomotives and miscellaneous railway equipment imported for temporary use in Canada by railroad companies and when authorized by the Minister, and refund or remission to be subject to a deduction equivalent to duty and taxes on 1/120th of the value of the equipment in its condition as imported for each month or portion thereof it remains in Canada, but not less then $25 in each case, and conditional on exportation under customs supervision within such period of time as may be determined by the Minister, but not longer than twelve months from the date of original importation.

Appendix O - Order respecting the remission of customs duty paid or payable on railway rolling stock manufactured in Canada imported for use in international service

Short Title

  • 1. This Order may be cited as the Railway Rolling Stock (International Service) Remission Order, No. 3.
  • Interpretation
  • 2. In this Order,
    • "international service" means the use while loaded or empty of railway rolling stock dispatched on a direct route from a place in Canada to a place in the United States or from a place in the United States to a place in Canada and includes loading and unloading in Canada while on the direct route;
    • "Minister" means the Minister of National Revenue;
    • "railway rolling stock" means railway passenger, baggage and freight cars that are manufactured in Canada;
    • "temporarily diverted" means removed from international service and placed in Canadian domestic service for ninety days or less in any one calendar year.
  • Remission
  • 3. Subject to the conditions set out in sections 4 and 5, remission is hereby granted of the customs duty paid or payable on or after November 19, 1974 by an importer of any railway rolling stock that enters Canada for use in international service.
  • Conditions
  • 4. Where, pursuant to section 3, remission is granted of the customs duty paid or payable by an importer of any railway rolling stock and the railway rolling stock is temporarily diverted, the importer shall report the temporary diversion, as required by the Minister.
  • 5. Where, pursuant to section 3, remission is granted of customs duty paid or payable by an importer of any railway rolling stock and the railway rolling stock is then transferred to Canadian domestic service otherwise than by being temporarily diverted, the importer shall pay customs duty at the current rate on a value determined in accordance with the valuation provisions of the Customs Act, of the railway rolling stock at the time of transfer.

References

Issuing office:
Import Programs
Commercial Border Programs Division
Border Programs Directorate
Programs Branch
Headquarters file:
7696-0
7697-0
7698-0
Legislative references:
Customs Tariff, Schedule II, Tariff code 2338
Customs Tariff, Sub-section 140(2)
Excise Tax Act, Schedule VII, Item 8
Excise Tax Act, Sub-section 215(2)
Non-Taxable Imported Goods (GST/HST) Regulations
Value of imported Goods (GST/HST) Regulations,
Sections 9, 10 & 11
Order in Council 98-00-000
Order in Council 98-11-111
Order in Council 98-22-222
Order in Council P.C. 1975-1975
Order in Council P.C. 1975-1974
Order in Council P.C. 1975-1973
Order in Council P.C. 1953-18/894
C.R.C., c.781 Financial Administration Act
C.R.C., c.782 Financial Administration Act
Financial Administration Act, section 17
Proof of Origin of Imported Goods Regulations
Other references:
Superseded memorandum D:
D3-6-0 dated August 11, 2011
Date modified: