How To Accurately Estimate Duties and Taxes On Your Canadian Imports

Shipping internationally can get expensive. Even though Canada and the United States share a border, moving goods between the two nations is still part of international trade. When trying to ship internationally, it's important to have an accurate estimate of costs, to avoid surprises. If your goods are coming into Canada, you'll need to pay duties and taxes on your shipment, which may also at times vary by province. To help you navigate costs that apply to your goods; it’s essential to understand how Canadian duties and taxes are calculated, so that you can get an accurate estimate.

Canadian Taxes and Duties 

Shipping or mailing items into Canada can lead to duties and taxes, with a few exceptions such as gifts.  Canada Border Services Agency (CBSA) will collect HST (Harmonized Sales Tax) and PST (Provincial Sales Tax) based on the province where the items are heading to. Most items valued over $20 CAD in value are taxable in Canada.

As per the CBSA, you are required to pay 5% GST, while duties and fees are calculated based on the value of the goods imported, in CAD currency.  Duty rates can vary, depending on where the goods came from and the type of goods they are. In some cases, you may also need to pay an excise tax on luxury items or high value items.

GST, PST or HST?

While the GST stands at 5%, fees are also dependent on the provinces. The Canadian government has agreements in place with certain provinces to collect HST, currently at a 13% rate in Ontario and 15% in other provinces which charge HST. The Harmonized Sales Tax is a combination of GST and the PST, meant to simplify taxation by combining the fee into one (HST), as opposed to both GST + PST being separate. Here is a current breakdown of where these different fees may also apply, per province, according to CBSA: 

How Do You Calculate Duties and Fees?

Duties are calculated based on the type of goods imported and their country of origin. The country of origin is where the goods were manufactured, not just shipped from. Duty fees are separate from additional PST or other taxes which may apply to a shipment. Your goods will need to be classified with the appropriate tariff or HS Code, which can be found on your customs invoice. Duty and tax are based on a number of factors including:

• HS Code: Classifying code, and helps customs determine what is being shipped, in order to apply fees.
• Goods Value: The total value of goods, including insurance or freight fees, is used to determine fees or taxes.
• Incoterms: Sometimes commercial invoices outline terms which are agreed to between seller and shipper, such as who pays for shipping costs, taxes and duties.
• International Trade Agreements: The country of origin is important in the process, because certain trade agreements in place can influence the duties or taxes owed. Nations which share agreements may be eligible for a lower rate, for instance.
• Description of Goods: The reason detail is so important on your customs invoice is because the data is used to ensure goods are classified correctly and helps determine taxes, duties and fees.

With all of these factors taken into account, officials will determine a number which will be owed before goods can safely clear customs. However, you do not need to worry about what the total amount will be, as you can get an accurate estimate before you even ship your goods, when you use the Zipments Tariff Duty and Tax Calculator. 

With the Zipments Tariff Duty and Tax calculator, you can find an accurate estimate of duties and taxes owed on your goods even if you do not know your HS code yet. You can search by HS code numbers or without an HS Code, by entering the description of your item. Through Zipments, simply input the value, country of origin, detail and product category, to receive an accurate estimate of your import fees, within seconds. 

Why Do You Have To Pay Duties and Tax? 

Taxes and duties protect Canadian industry, and help regulate imports which are entering the country. The duty rates vary based on a number of factors, to ensure a fair calculation based of the goods being imported. Duty rates are based on a percentage of the value of the goods which are being imported, while taxes are based on goods value as well as provincial or federal tax regulation. 

How Do You Pay Duties and Taxes?

In majority of cases, duties and taxes are taken care of by the customs broker, on your behalf. The shipper or importer will pay the broker, and the funds are forwarded to CBSA. The CBSA accepts Visa, Mastercard, American Express, Debit or Personal Cheque (for less than $2500 CAD owed) as a form of payment.

Customs duty and tax are calculated based on your imported goods, so it's important to get it right. When shipping to Canada, you should always factor in all costs; including the duties, taxes or any other fees, as well as the exchange rate.  It is beneficial to get your estimate ahead of time, using the Zipments Tariff Duty and Tax Calculator, in order to be able to anticipate your costs before even shipping your products.

If you do not have your HS Code yet, then you can input item description and still receive an accurate estimate of your import fees!

Whether you're importing a car, a piece of machinery, or any other item, our Canada Tariff Duty and Tax Calculator is an essential tool for any importer. It is your one-stop shop to get the most accurate price estimate for your import fees, regardless of the product category. Don't leave your import fees to chance.