Starting , certain goods originating from the U.S. are subject to a surtax that will apply to commercial shipments as well as goods being imported by travellers above their personal exemptions. The list of goods is available on the Department of Finance website. For more information, please refer to Customs Notice 18-08, Memorandum D16-1-1 and Frequently Asked Questions.
What is a surtax?
A surtax is a duty, separate and distinct from regular customs duties, imposed by an Order in Council under the Customs Tariff.
The surtax applies only to certain goods originating from the U.S. whether they are imported directly from the United States or not. These goods are subject to a surtax of 25 per cent or 10 per cent on the value for duty in accordance with the United States Surtax Order (Steel and Aluminum) and United States Surtax Order (Other Goods).
A complete list of goods subject to the surtax (i.e., qualifying goods) is available on the Department of Finance’s website.
The surtax applies in all streams (traveller, commercial, postal and courier).
How does this affect me?
All travellers are expected to pay customs duties, taxes and surtaxes when applicable. Surtaxes will apply to travellers on the qualifying goods when they exceed their personal exemption limits.
Residents of Canada
Personal exemptions allow returning residents of Canada to bring back goods up to a specified dollar limit on a duty- and tax-free basis when returning to Canada:
- Returning between 24 and 48 hours: you can claim goods worth up to CAN$200 without paying any duty or taxes;
- Returning after 48 hours or more: you can claim goods worth up to CAN$800 without paying duties or taxes.
- Returning after less than 24 hours (“day-trip”): There are no duty- and tax-exemptions for travellers taking trips of less than 24 hours.
Exemption limits vary according to the time spent out of the country, with quantitative limits set for tobacco and alcohol products.
Visitors to Canada
Visitors are also required to pay the surtax on U.S. – origin importations, unless their goods qualify for a duty and tax exemption (including the surtax) under Tariff Item No. 9803.00.00.00.
The surtax does not apply to most goods being temporarily imported (generally your vehicle, luggage and personal items), but does apply to goods being imported that will stay in Canada, including gifts that are otherwise duty and tax exempt up to CAN$60.
Does the surtax apply if my item says ‘Made in the USA’?
Surtaxes will apply to travellers on the qualifying goods when they exceed their personal exemption limits.
Goods for personal use are deemed to originate in the U.S. where:
- the goods are acquired in the U.S.; and
- marked as made in / produced in / originating in, the U.S. or, the goods have no ountry of origin marking, but there is no evidence that the goods are the product of a country other than the U.S. (e.g. “Made in the USA”)
- Note: Goods acquired outside the U.S. but which are clearly marked as made in /produced in /originating in the U.S., are also deemed to originate in the U.S.
Goods sent for repair in the U.S.
The surtax applies to goods originating from the U.S., including new or used goods, temporary importations (e.g., commercial samples, cinematographic equipment, rentals); and goods sent for repair or alteration in the U.S. On goods sent for repair or alteration, the surtax will be applied on the basis of the value of the repair work.
Do I have to pay GST/HST, customs duties and the surtax?
The surtax does not replace the GST / HST or any applicable customs duties and is added to the value for tax. Taxes remain applicable on any goods that exceed a traveller’s personal exemptions (i.e. absence of 24 hours or more).
How are these surtaxes being collected and calculated
For traveller’s goods, the surtax is assessed and collected by the Canada Border Services Agency at the port of entry.
The amount of surtax payable is calculated as a percentage based on the value for duty of the imported good before taxes (i.e. HST and GST). The surtax is calculated by multiplying the value for duty by the appropriate surtax percentage, i.e., 25 per cent or 10 per cent.
For example, the amount of surtax payable on an imported good originating in the U.S. with a value for duty of 50.00 CDN, which is subject to the 10 per cent surtax, would be 5.00 CDN. GST and HST are also applicable on any goods that exceed the traveller’s exemption (i.e. absences of 24 hours or more).
What boaters need to know
U.S. origin vessels imported temporarily into Canada for repair or storage, as well as U.S. origin vessels put into repair or storage after using the vessel in Canada during the boating season, are subject to a 10% surtax on their full value. For more information, please refer to United States Surtax Order (Other Goods), Customs Notice 18-08 and Memorandum D8-1-1.
How is “originating in the U.S.” defined?
Both surtax orders define “originating in the United States” as goods eligible to be marked as a good of the United States in accordance with the Determination of Country of Origin for the Purposes of Marking Goods (NAFTA Countries) Regulations (the Regulations). For commercial goods, certain marking rules apply in determining the country of origin. These technical rules are set out in Sections 4 through 7 of the Regulations. Further information is available in Memorandum D11-3-3 NAFTA Countries of Origin Marking Rules on determining the country of origin.
How are these surtaxes being collected?
The importer self-assess surtax on goods subject to a surtax order in the same way and within the same prescribed time that customs duties and taxes are paid.
What code do I use in Form B3-3 for the surtax
For goods subject to surtax, importers must insert code “51” in field 32 of Form B3-3. When a surtax amount is covered by a remission order, code “50” should instead be used.
The amount of surtax owing must be entered in field 39 of Form B3-3. Refer to Memorandum D17-1-10, Coding of Customs Accounting Documents, for additional information on completing these mandatory fields on Form B3-3.
What if I incorrectly self-assess the surtax?
Section 32.2 of the Customs Act places the responsibility on the importer to make a correction to an accounting declaration of origin, tariff classification, and value for duty when the importer has reason to believe that the declaration was incorrect.
At any time after the importation, the CBSA may validate that the correct amount of surtax has been paid and re-assess the importation for the unpaid amount. The resulting duty, taxes or surtax owing could be assessed retroactively for a period of up to four years. In addition, penalties may be assessed where applicable.
Goods eligible for Chapter 98 or 99 of the Schedule to the Customs Tariff
Goods that are classifiable under a tariff item listed in either surtax order remain subject to the surtax even if classifiable in Chapter 98 of the Schedule to Canada’s Customs Tariff; however, goods classifiable under a tariff item of headings 98.01 through 98.05 (other than tariff item 9804.30.00) are in all cases exempt from the surtax.
Goods that are classifiable under a tariff item listed in either surtax order and are also classifiable under a tariff item of Chapter 99 of the Schedule to Canada’s Customs Tariff are subject to the surtax as Chapter 99 only provides conditional relief of customs duties (i.e., not surtaxes).
Goods sent for repair in the U.S
Goods that are classifiable under a tariff item listed in either surtax order that are returned to Canada after having been repaired in the U.S. are subject to the surtax on the cost of repairs only, if eligible to be marked as a good of the United States in accordance with the Determination of Country of Origin for the Purposes of Marking Goods (NAFTA Countries) Regulations. Refer to Memorandum D8-2-10, Goods Returning to Canada Having Been Repaired Outside of Canada for additional information.
Goods released from a Customs Bonded Warehouse or Sufferance Warehouse
The surtax applies to goods released from a Customs Bonded Warehouse or Sufferance Warehouse on or after July 1, 2018 regardless of the date of importation.
Goods entering Canada via Postal Services or Couriers
Goods imported by postal or couriers are subject to customs duties, taxes and surtaxes where applicable in accordance with the United States Surtax Order (Steel and Aluminum) and United States Surtax Order (Other Goods). Surtaxes apply to goods listed in the surtax orders regardless of value when imported in the Postal or Courier stream.
More questions? Please contact the Border Information Service (BIS).
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