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Small and Medium Enterprise Centre

A Step-by-Step Guide to Importing

Features

This guide has been created to help small and medium-sized enterprises that import goods into Canada. It provides an overview of the commercial importing process and is intended to complement, not replace existing regulations, acts and references.

All regulations, programs, and references in this guide are detailed in Memoranda Series D1 to D22.

Before Importing

Before importing goods into Canada you must:

1. Obtain a Business Number from the Canada Revenue Agency (CRA) for an import-export account:

2. Identify the goods you plan to import. You must have an accurate description of the goods you plan to import before proceeding.

3. Determine which country the goods are coming from and in which country they are manufactured.

4. Make sure the goods are not prohibited from coming into Canada. For example the following prohibited goods can not be imported into Canada:

  • Material which is considered to be obscene, treasonable, seditious, hate propaganda, or child pornography;
  • Used or second-hand automobiles of all kinds (except from the United States);
  • Used or second-hand aircrafts of all kinds, barring exceptions;
  • Debased or counterfeit currency;
  • Certain birds;
  • Aigrettes, egret plumes and certain other feathers;
  • Used or second-hand mattresses;
  • Articles manufactured or produced by prisoners;
  • Reprints of Canadian works protected by copyright; or
  • Matches made with white phosphorus.

For more information on prohibited goods, see Memoranda Series D9, Prohibited Importations.

5. Determine whether or not the goods you want to import are subject to restrictions or other requirements. For example:

For additional information, please refer to BSF5073, Other Government Departments and Agencies: Reference List for Importers.

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Tariff Classification, Rate of Duties and Taxes, Value for Duty

Once you are sure that the goods can be imported into Canada, you must determine the:

  • Tariff classification;
  • Applicable tariff treatment;
  • Rate of duty; and
  • Taxes payable when importing goods.

6. You must determine the 10-digit tariff classification number for each item you are importing. These numbers are used to determine the rate of duty payable when importing and to provide statistical data to the Government of Canada.

Tariff classification numbers can be determined by:

For more information on the methodology for classifying goods in the Customs Tariff refer to Memorandum D10-13-1, Classification of Goods. As well, BSF5118, Harmonized System Compliance outlines the importance of properly classifying your goods.

7. Once you have a tariff classification number, you can determine the applicable tariff treatment and rate of duty, which is found in the Customs Tariff.

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 such as the:

  • North American Free Trade Agreement (NAFTA): United States Tariff (UST), Mexico Tariff (MT), Mexico-United States Tariff (MUST);
  • Chile Tariff (CT);
  • Canada-Israel Agreement Tariff (CIAT);
  • Canada-Costa Rica Tariff (CRT);
  • Canada-European Free Trade Association Free Trade Agreement: Iceland Tariff (IT), Norway Tariff (NT), Switzerland-Liechtenstein Tariff (SLT); and
  • Canada-Peru Free Trade Agreement: Peru Tariff (PT).

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

  • General Preferential Tariff (GPT);
  • Least Developed Country Tariff (LDCT);
  • Commonwealth Caribbean Countries Tariff (CCCT);
  • Australia Tariff (AUT); and
  • New Zealand Tariff (NZT).

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 North American Free Trade Agreement (NAFTA) certificate of origin. Various proof of origin requirements exist for all other preferential tariff treatments. These can include Form A, Certificate of Origin or the Exporter's Statement of Origin. In addition, the goods normally have to be shipped to Canada from a beneficiary country on a through bill of lading.

A complete list of countries eligible for the above tariff treatments can be found at the beginning of the Customs Tariff. Regulations on origin are in Memoranda Series D11, General Tariff Information.

8. Determine if your goods are subject to Goods and Services Tax (GST), Excise Tax or Excise Duty.

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 VII of the Excise Tax Act. The tax exemption codes to use on Form B3, Canada Customs Coding Form (PDF, 151 KB) 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).

Examples of goods subject to excise tax include:

  • Automobile air conditioners, whether separate or permanently installed ($100 per air conditioner);
  • Certain vehicles designed for use as passenger vehicles; and
  • Certain fuels.

Examples of goods subject to excise duty include:

  • Tobacco and certain alcohol products.

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

9. Determine the value for duty on which you will calculate the rate of duty and tax.

Ensure that the vendor or exporter provides you with a receipt or a sales invoice. This document must include a complete description of the goods, the selling price and conditions and terms of sale. For more information, refer to Memorandum D1-4-1 CBSA Invoice Requirements.

The value for duty is essentially the price you paid for the goods (selling price) converted to Canadian funds. To this amount, you may need to make certain additions or deductions. In rare cases when you cannot use the transaction value method, you must use other methods to determine the value for duty of the goods.

For more details on how to determine the value for duty of your shipments, refer to BSF 5000, Importer's Valuation Guide – How to determine customs value for duty and Memoranda Series D13, Valuation.

10. Calculate duties and taxes:

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. To obtain the proper exchange rate, contact BIS.

Example:

The following is a sample calculation example of goods valued at USD$100, subject to 4% duty and 5% GST, using a sample exchange rate of 1.155:

US$100 x 1.155 = CAN $115.50 ($115.50 is the value for duty)

$115.50 (value for duty) x 4% (rate of duty) = $4.62 (customs duty)

$115.50 (value for duty) + $4.62 (customs duty) = $120.12 (the value for tax)

$120.12 x 5% (GST) = $6.01 (GST)

Total of duty and tax payable: $4.62 + $6.01 = $10.63

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Importing

11. Place your order with the vendor, shipper or exporter, identify the mode of shipping to be used (highway, marine, rail, air, postal or courier service) and determine the desired or expected CBSA office of entry:

Most shipments are released at the CBSA office of arrival; however, you may choose another inland service point that is closer to your residence if you use a CBSA bonded carrier.

You should be aware that eManifest, a major Government of Canada initiative, will require trade partners in all modes of transportation (air, marine, highway and rail) to submit cargo, crew/passenger, conveyance, secondary and importer data to the CBSA prior to arrival at the border. The CBSA will implement eManifest over a number of years, by client type, using an 18-month implementation timeline.

Additionally, the CBSA will offer a secure eManifest Portal option to facilitate compliance and ease the transition from paper reporting to pre-arrival electronic data transmission for small- to medium-sized enterprises.

12. Ensure your cargo is reported:

Unless you transport a shipment yourself, the carrier must declare all commercial goods on arrival. The carrier uses a bar-coded Cargo Control Document (CCD) (PDF, 33 KB) or the Electronic Data Interchange (EDI) system to report to the CBSA.

Shipments valued at CAN$1,600 or more

  • The carrier will notify you when the goods arrive.
  • The CBSA will inform you of the arrival of postal shipments that are valued at CAN$1,600 or more.
  • The courier service will inform you of the arrival of shipments valued at CAN$1,600 or more.

Shipments valued at less than CAN$1,600

  • A postal shipment valued at less than CAN$1,600 will be delivered to you by Canada Post. It will include Form E14, CBSA Postal Import Form, indicating the classification, value, and applicable rate of duty and taxes according to the information (invoice) accompanying your shipment. Canada Post will charge you a handling fee for this service.
  • For shipments that are valued at less than CAN$1,600 and forwarded by courier, the courier company may offer to complete the customs documentation on your behalf for a fee.

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

13. Be aware that your shipments may be examined:

  • Border services officers may examine your shipment to monitor compliance with CBSA requirements or other government department restrictions.
  • You are responsible for any costs incurred for the examination.

14. 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. The CBSA licenses customs brokers to carry out CBSA-related responsibilities on behalf of their clients. It is important to note that these companies or individuals are not government employees and importers must pay a fee for their services.

Full accounting and payment of duties prior to release

You will need the following documents:

  • Two copies of the form A8A-B, Cargo Control Document (CCD), which will be provided by your carrier.
  • Two copies of form CI1, Canada Customs Invoice (or the commercial invoice that contains the data). For information on Canada Customs Invoice requirements, refer to Memorandum D1-4-1, CBSA Invoice Requirements.
  • A paper copy of all import permits, certificates, licences, or required documents from other government departments and agencies (OGD) or an electronic copy for EDI participants (OGD Interface).

You may use the Commercial Cash Entry Processing System (CCEPS) that is available in certain CBSA offices. CCEPS is a self-service system that allows importers to complete the B3-3, Canada Customs Coding Form (PDF, 154 KB). For a list of offices where CCEPS is available, refer to Memorandum D17-1-5, Registration, Accounting and Payment for Commercial Goods, Appendix B. You may also refer to BSF5021, Commercial Cash Entry Processing System (CCEPS).

The CBSA will assign a unique 14-digit transaction number to your B3-3 accounting documents for each shipment.

Ensure that duties and taxes are paid. You may use:

  • 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.

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. The RMD accounting option requires the electronic transmission of RMD release requests using the Electric Data Interchange (EDI) system. Certain exceptions apply to this requirement. For additional details on this accounting option, refer to Memorandum D17-1-4, Release of Commercial Goods.

15. The CBSA offers other service options to expedite the processing and release of goods. Many of these processes involve electronic data interchange (EDI) technology and have replaced some paper release options.

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Self-adjustments

16. Self-adjustments may result in duties and taxes owing, they may be revenue neutral, or they may result in a refund due to you.

If you make an error in the accounting information, and we have not made a re-determination, you are required to correct the information within 90 days after you discover the error where the change is revenue neutral or you owe us 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 rebate will be made.

Self-adjustments must be submitted on Form B2, Canada Customs – Adjustment Request (PDF, 103 KB).

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, Self-Adjustment to Declarations of Origin, Tariff Classification, Value for Duty, and Diversion of Goods, and Memorandum D6-2-3, Refund of Duties.

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Records

17. 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.

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Verification by the CBSA

18. Adjustments by the CBSA:

All commercial importations may be verified and adjusted for origin, value for duty, or tariff classification for up to four years after importation.

If we adjust 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.

19. Dispute resolution process and right to appeal:

As the importer, you (or your representative) have the right to ask for an impartial review of most decisions we make on the tariff classification, origin, or value for duty of imported goods. By law, you must make your request no later than 90 days after the date we made the initial decision. Generally, you must use Form B2, Canada Customs - Adjustment Request (PDF, 103 KB).

For more 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.

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Administrative Monetary Penalty System (AMPS)

20. AMPS is a civil penalty regime that secures compliance with CBSA legislation through the application of monetary penalties. For more information, refer to Memoranda Series D22, Administrative Monetary Penalty System.

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Trade Incentive Programs

21. You can reduce or eliminate customs duty on qualifying goods through duties relief incentives. The duty deferral program enables companies to defer or be relieved of the payment of duties. The following are its three components:

  • Duties relief program:
    The duty relief program enables eligible companies to import goods without having to pay duties and taxes (with the exception of the GST), when the goods are to be exported or incorporated into the production of goods to be exported.
  • Drawback program:
    With the drawback program, duties are refunded on imported goods when these goods have been exported.
  • Customs bonded warehouse program:
    A bonded warehouse is a facility operated by the private sector and regulated by the CBSA. In this warehouse, you may store imported goods without having to pay duties and taxes as long as the goods are not released in Canada.

For more information, refer to Memoranda Series D7, Drawbacks.

22. Remissions and temporary importations:

Some goods can enter Canada duty free. For more information, refer to Memoranda Series D8, Remissions and Temporary Importation.

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Additional information

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

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

25. For information on other federal departments and agencies involved in the commercial importing process, visit the Canada Site or call 1-800-O-Canada (1-800-622-6232).

26. For more information related to CBSA requirements, contact BIS.

To access the Portable Document Format (PDF) version you must have a PDF reader installed. If you do not already have such a reader, there are numerous PDF readers available for free download or for purchase such as:

Date Modified: 2013-05-08

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