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Understanding Duty on Commercial Products From the U.S. to Canada

Many people have a lack of understanding regarding duty on commercial products from the U.S. to Canada. There are many factors that affect the success of your shipment an

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Canada Cross Border Freight
October 8, 2019
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Many people have a lack of understanding regarding duty on commercial products from the U.S. to Canada. There are many factors that affect the success of your shipment and its arrival at the end destination. Some of the factors include infrastructure limitations, customs requirements, security mandates, and duties and taxes. Knowing how much duty you’re expected to pay when importing goods is an important aspect.

Understanding duty on commercial products from the U.S. to Canada is an important part of shipping goods across the border. Not paying the right amount of duty for your products can cause significant delays with the CBSA and possible fines. Since many products fall into different categories in terms of duty that’s required, mistakes can occur. Many businesses choose to work with a logistics company that specializes in cross border shipments to ensure hassle-free shipments from the U.S. to Canada. 

What Are the Duty Rates in Canada?

The U.S. and Canada have a very close trade relationship. Shipments between the two from the U.S. to Canadian customs and back are considered to be commercial transactions. This means that if you are importing goods, these will be subject to rates of duty. Goods imported into Canada from the U.S. have federal and regional customs tariffs attached. The rates of duty on commercial products from the U.S. to Canada are regulated strictly by the Canada Customs Act, which is then enforced by the government of Canada and the Canada Border Services Agency (CBSA).

Examples of duties and taxes for major imports include:

  • Auto parts 0-8%
  • Furniture 0-9.5%
  • Clothing 16-18%
  • Computers and related equipment 0% (and duty-free)
  • Bedding, linen, towels and other textile articles 16-18%

Duties and Fees

If you are unsure about which category your goods fall under, it’s important to get the right advice. It can be difficult to work out the duty on commercial products from the U.S. to Canada, so don’t hesitate to get some help.

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What is Duty-Free From U.S. to Canada?

It is important to know what is duty-free from U.S. to Canada when you are shipping commercial goods, as fines for export violations can reach up to $1 million per violation - especially in criminal cases. Administrative cases where fines are present can amount to penaltis as high as $250,000, or twice the value of the transaction. Prison is a possibility for those who have a criminal violation and the penalties can also include denial of export privileges. 

Nearly all tariffs were removed from industrial and agricultural products under the terms of NAFTA. There are tariffs in place for dairy and poultry lines, though. Baby clothing, athletic equipment was also made duty-free, too. If there is any confusion, the best thing to do is contact a transportation and logistics company that specializes in cross border transportation between the U.S. and Canada. Most of these companies will partner with or have customs brokers on staff that are able to assist with this step. R+L Global Logistics has customs brokers available to assist in determining duties and taxes.

Does Canada Tax U.S. Imports?Does Canada Tax U.S. Imports

Canada charges a goods and services tax (GST) on items from the U.S. These tax rates vary depending on the item, and even if the item is duty free. The rates of GST stand at 5% across various categories of goods, but r beer/wine/liquor/tobacco etc, the rates vary according to province and can be found on the Canada Border Services Agency Website. 

The majority of products imported into Canada are must be charged GST/HST. GST/HST registrants must file returns on a regular basis, collect the tax on taxable supplies they make in Canada, and remit any resulting net tax owing.

All businesses providing taxable goods need to register and collect GST or HST.

Unless specifically exempted, the 5% GST must be paid and the CBSA will calculate the duties owing based on the value of the goods imported. 

How to Pay Duty When Shipping Goods From the U.S. to Canada

You can pay your duty in one of two ways. The first is with a customs broker under a customs bond. This How to Pay Duty When Shipping Goods From the U.S. to Canadaautomatically posts payments of duties and taxes for you. A customs broker will do all the paperwork for you, and you don’t have to worry about any of it. The second way to pay duty is to pay it yourself for your commercial goods. 

When submitting payment on your own, there is a wealth of paperwork required. You must present some of these in person at the Canada Border Services Agency office, and these include:

  • Paper copies of import permits, licenses, certificates, documents from other government departments
  • Two copies of Form A8A-B, Cargo Control Document which was provided to you by your carrier
  • Two copies of Form CI1, Canada Customs Invoice - or this can also be the commercial invoice containing the data. 

There are some Canada Border Services offices that provide you with self-service systems of Commercial Cash Entry. These systems make it easier to complete the B3-3 coding form. A major reason for this is that the system automatically calculates duties and taxes for you. 

Looking to Ship Freight to or From Canada?

If you are struggling with working out the duty on commercial products from the U.S. to Canada, why not trust the professionals to help? With R+L Global Logistics, you can ship freight to and from Canada with a team of efficient and trusted experts. We care about your shipment, and we want you to have the best possible service in a timeframe that suits you. We handle everything from Canada's NAFTA Certificate of Origin to complying with CFIA transportation regulations. Our certifications on our website show our commitment to excellence and level of expertise in the industry, with domestic and international shipping our specialty.

Don’t wait around, we are ready to do business all over the border, in states like Idaho and in cities like International Falls. From supply chain management to warehousing, RL Global Logistics would be proud to work with you on your shipment needs. Give us a call today at 855-915-0573 or fill out a form below to get started.

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