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Q: Tax shipping products to Canada ( Answered,   0 Comments )
Subject: Tax shipping products to Canada
Category: Business and Money > Economics
Asked by: jude1-ga
List Price: $15.00
Posted: 18 Sep 2006 20:14 PDT
Expires: 18 Oct 2006 20:14 PDT
Question ID: 766452
If something is produced in the US from US materials and then shipped
to Canada, do they have to pay duty/taxes? How does NAFTA fit into
this? (Looking for a layman answer.)
Subject: Re: Tax shipping products to Canada
Answered By: hummer-ga on 19 Sep 2006 06:15 PDT
Hi jude1,

Assuming you use the USPS to mail the item (couriers charge more for
customs clearance), if it is valued under CAD$20.00, it should pass
through customs nonstop and no additional fees will be added (see
exemptions below).  For items valued above $20.00, GST/PST and a $5.00
or $8.00 (+ tax) customs fee *may* be billed to the recipient (not all
parcels are stopped at the border).

Canadian Taxes and Customs Brokers Fees
Canadian Taxes
"Just about everything individuals import into Canada is subject to
the Goods and Services Tax (GST) of seven percent. The GST is
calculated after customs duties have been applied.
You will also have to pay the applicable Canadian Provincial Sales Tax
(PST) or Quebec Sales Tax (QST).
In Canadian provinces with a Harmonized Sales Tax (New Brunswick, Nova
Scotia, and Newfoundland and Labrador), you'll be charged a flat 15
percent, rather than separate GST and PST."
Customs Brokers Fees
"Fees for customs brokers services are the charges that can really
catch you by surprise. Courier companies and postal services use
customs brokers to get packages processed through Canada Customs at
the Canadian border. Fees for that service will be passed along to
Canada Post automatically applies a $5.00 processing fee ($8.00 for
Priority Post) for each package to clear Canada Customs.
Customs brokers fees for courier companies vary, but are usually a
good deal higher than the Canada Post fee."

Canada Border Services Agency
This Web module explains the basic rules that apply to different types
of mailed items: click on the categories listed at the left of the
- Duty-free and tax-exempt
   If someone mails you an item worth $20 CAN or less, you don't have
to pay duty or tax on the item (see D8-2-2 for details).
   If the item is worth more than $20 CAN, you must pay the applicable
duty, the GST or HST, and any PST on the item's full value (see D8-2-2
for details) .
   Some items do not qualify for the $20 CAN exemption:
    * tobacco
    * books
    * periodicals
    * magazines
    * alcoholic beverages
    * goods ordered through a Canadian post office box or intermediary
   Items that qualify as a "gift"
   For an item to qualify as a "gift", another person must send it to
you personally and must include a card or other notice indicating that
it's a gift.
    * If you receive an imported gift by mail and it's worth $60 CAN
or less, you don't have to pay duty or tax.
    * If the gift is worth more than $60, you must pay duty and tax on
the amount over $60 CAN.
          o For example, if a relative sends you a gift worth $200
CAN, you must pay the applicable duty, the GST or HST, and any PST on
$140 CAN.
- Dutiable and taxable
    *  All mail items are subject to a $5 CAN handling fee payable to Canada Post.
    * All amounts must be paid at the time of delivery (cash,
certified cheque, VISAŽ, MasterCardŽ, or your Canada Post commercial
- Reassess duty and taxes

In regards to NAFTA, if the item was entirely produced in the U.S.
with U.S. material, there will be no duties added.  The important
thing to confirm is that there are no foreign parts used in the

NAFTA Rules of Origin
"The NAFTA eliminates tariffs on most goods originating in Canada,
Mexico and the United States that all Canada-United States trade
is duty-free in 1998."
"The NAFTA grants benefits to a variety of goods from the region.
Maximum benefits are reserved for those goods that "originate" in the
region. "Originating" is a term of art used to describe those goods
that meet the requirements of Article 401 of the Agreement. Article
401 of the Agreement establishes which goods originate and precludes
goods from other countries from obtaining those benefits by merely
passing through Canada, Mexico or the United States. Thus, not all
goods made in Canada, Mexico and the United States qualify for NAFTA
benefits. Traders must carefully research the terms of the Agreement
to determine whether their goods are entitled to NAFTA benefits--they
should not assume that they are entitled to NAFTA benefits merely
because they were made in a NAFTA country. It is possible, for
instance, for goods not to originate in Canada, Mexico or the United
States as that term is defined in the NAFTA, but still be an article
of Canada, Mexico or the United States for country of origin marking,
statistical or other purposes.
Article 401 of the Agreement defines "originating" in four ways: goods
wholly obtained or produced in the NAFTA region; goods meeting the
Annex 401 origin rule; goods produced in the NAFTA region wholly from
originating materials; and unassembled goods and goods classified with
their parts which do not met the Annex 401 rule of origin but contain
60 percent regional value content using the transaction method (50
percent using the net cost method)."

In summary, "if something is produced in the US from US materials and
then shipped to Canada", the recipient may have to pay GST and PST
plus $5.00 or $8.00 administration to Canada Customs if the value is
over $20.00.  If the value is under $20.00, it should pass through
customs without being taxed (there are exceptions, such as books).

I was glad to work on this for you. If you have any questions, please
post a clarification request and wait for me to respond before
closing/rating my answer.

Thank you,

Search strategy: 
I searched the Canada Post, Canada Border Services Agency, and U.S.
Customs and Border Protection websites.
There are no comments at this time.

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