Better Value in Dollar

First of all I’d like to thank BoB for giving me this opportunity to write this guest post on betterdollar.com

His website has been very inspirational for me as a blogger on all things customs and made me realize how many people had questions.

So how many of you have not the slightest clue how to calculate how much duty or taxes you will owe Customs when you import something or buy something online and have it shipped to Canada?

Well, this post is for you.

I am going to show you how to step by step calculate Canada customs duty and taxes on personal importations to Canada.

1. The first question you need to ask is where are the goods manufactured and exported from directly? - This will determine the available tariff treatments – i.e. MFN 02 (most favoured nation), GPT 09 (General Preferential Treatment), or UST 10 (US Tariff) etc…
-in order to benefit from a free trade agreement (NAFTA, CRT, IT etc) the goods must be shipped directly from that country to Canada.

2. Find the correct Harmonized System code in the Customs Tariff. New update for 2012 is available now at http://www.cbsa-asfc.gc.ca/trade-commerce/tariff-tarif/2012/01-99/tblmod-eng.html

3. Next, determine which tariff treatments are available for the particular HS code.
-in order to use a free trade agreement tariff treatment you must have a Certificate of Origin or Statement from the Exporter in the CBSA prescribed format if your goods are over $1600 CAD. ( Soon to be raised to $2500 once the Canada US border Deal goes through)

4. Note the corresponding duty rate for the HS code based on available and applicable tariff treatment and the unit of measure.

-i.e. Imported from China, a wool blazer for a man would be under HS code 6103.31.00.00 and would not qualify for GPT 09 as its not available so it the default tariff treatment of MFN 02 would apply; with a duty rate of 18%. Unit of measure would be NMB for Number, so the number of pieces would have to declared and duty rate applied per piece.

5. Do the Math.

a. O.k., so lets say the blazer is $100 USD, this would have to converted to Canadian currency and called the value for duty (VFD). So lets say the exchange rate is 1.0327, then 100 USD = 101.03.

b. Then VFD is mulitiplied by the duty rate 18% to determine how much the duty is…so:

101.03 x 0.18 = $18.18 in duty.

c. Value for tax is the total of VFD and Duty. In this case it would be 101.03 + 18.18= $119.21
d. Now, HST or GST/PST is applied based on the province of residence of the importer. so for Ontario, HST of 13% is calculated on the VFT.

i.e. 119.21 x 0.13=$15.49

e. Then add the duty and the tax and total owing on the blazer for Customs would be $18.18 in duty and $15.49 in HST for a grand total of $33.67

Simple right? Feel free to ask any questions.

Thanks for reading.

CI

Other Provinces tax rates:

Alberta has no provincial sales tax so only GST of %5 is applied
BC has HST of 12%
Manitoba has GST 5% and 7% PST
New Brunswick has HST of 13%
Newfoundland and Labrador has HST of 13%
Nova Scotia has HST of 15%
Prince Edward Island has GST of 5% and PST of 10% (effectively 10.5% as PST is also applied to GST) so the effective rate is 15.5% for both.
Quebec has GST of 5% and QST of 8.5% currently (will rise to 9.5% january 1st 2012). LIke PEI, QST is applied to GST so the effective rate is 8.925% for a combined rate of 13.925%
Saskatchewan has GST of 5% and PST of 5% for a combined rate of 10%.

ABOUT THE AUTHOR:

C.I. is a Customs Officer or Border Services Officer with the Canada Border Services Agency. He has been running a blog/website www.canadacustomsinfo.com as an unofficial online resource for information on all things pertaining to Customs legislation, policy and procedure in order to help people navigate the complex world of Customs. Topics covered span a wide range from Canada Customs Limits to understanding how Canada Customs Duty. Recently, C.I. added a forum to facilitate more discussion and the information more searchable.

The motivation behind C.I.’s website is the belief that we are all on this planet to serve one another…

Connect with C.I on Twitter @customsinfo

Facebook Canada Customs Info

Email: customsinfo@canadacustomsinfo.com

• Unit of Measure
• Tools
• Tax Exemptions
• Preferential Tariffs
• Duty Rates

My old point-and-shot Canon camera was completely dead last month with an image sensor problem.  The death was a slow and painful one. First it produced a discolored image once in a while. Then it generated an artistically colorful picture no where close to what I shot.

After extensive research, I set my mind on Panasonic DMC-ZS7, with 12X optical zoom, GPS and 780p video and a Leica lens.  To my dismay, our major Canadian camera stores (such as FutureShop and Henry’s) asked for a sky high price of $$410.  On-line stores, such as Amazon.ca also marked it at $ 410.45.   But, Amazon.com’s price was at US$249.95.  Given the parity of US and Canadian dollars, Canadian stores have a markup over 60%.  Isn’t this price gouging!

If I continue to encourage those Canadian stores, God knows how much they would mark up my daily essentials!  I decided not to give-in as a principle.

So I ordered the Panasonic DMC-ZS7 from Amazon.com and shipped it to the UPS store at Ogdensburg.  Shipping from Amazon.com was free but there’s a 7% New York state sales tax,  totaling US$267.45.

UPS Store at Ogdensburg, few hundred yards away from the US-Canada border near Ottawa, Kingston, Cornwall

I called the UPS store and was told that I only need to put my name on the address and bring photo ID of the same name to collect it.  The cost is US$5/item every week. Here’s the address:

2981 FORD ST EXTENSION
OGDENSBURG, NY  13669-3474

In three days, the Amazon shipping tracking shows that the camera was delivered.   In a nice afternoon, I drove down south with my passport.  The drive was only 50min from Ottawa, ~90Km.  The bridge toll was CA$3/US$2.75 each way.  The store owner Michael was very friendly and efficient.  There was another Canadian there picking up tires and other stuff he ordered from eBay.  There is also a Walmart across the road.

US-Canada border bridge at Ogdensburg. Sparse traffic, fun driving through.

At my return, I declare the camera and paid the HST.  Mind you, the HST is on top of the full invoice price, which means that you pay HST on the US state tax too.

Including the bridge toll, UPS store fee, HST, the out of pocket total CA$316.97.  Comparing with cost of $410+HST=$463.3, I saved quite some dollars (~$120) even throwing in some $30 gas cost.  This is about 25% saving.

Most importantly, I stood up to pricing gouging of some shameless Canadian retailers.

Lessons learned;

• Ordering from US and picking up at the border can save significantly.  No extra shipping cost, brokerage fee, etc.  But you’ll have to spend time and cost on gas.
• Without much exception, Amazom.com has the best deals on HDTV, Camera, Computer, Health & Personal Care, Cosmetics, and Handbag & Accessory.
• Combine many items to make the trip worthwhile
• Do open all the items to make sure that you’re not bringing back something unwanted and could cause you trouble at the customs.

• Shopping US Online, Picking up at the Border
• Will Canadian dollar appreciate to par with US$ again?
• What’s the duty/tax on Plasma/LCD HD TV?
• US State by State Sales Taxes
• Pick up at US border

Designer cloth and apparels are most common among what we Canadian bring back home from abroad. Duty for clothing, apparels and accessories are most complex depending on materials, country of origin and type and style. Hopefully, the following cover some most common items.

• Leather or composition leather cloth made in MFN countries have a duty rate of 13%.  If they are made in Australia or New Zealand, the duty rate is half of theTariff. http://betterdollar.com/duty-rate-for-articles-of-apparel-and-clothing-accessories-of-leather-or-of-composition-leather/
• Sports leather gloves: 15.5%
• Belts: 9.5%
• Other leather accessories: 8%
• Children’s garments and clothing accessories: 17 ~18%
• Women’s and men’s clothing in general: 17 ~18%
• Jerseys, pullovers, cardigans, waistcoats and similar, knitted or crocheted: 18%

• Duty rate for Other made up clothing accessories, knitted or crocheted; knitted or crocheted parts of garments or of clothing accessories.
• Duty rate for Other articles of plastics and articles of other materials of headings 39.01 to 39.14.
• Preferential Tariffs
• Duty rate for Woven fabrics of artificial filament yarn, including woven fabrics obtained from materials of heading 54.05.
• Duty rate for Weighing not more than 25 g/m^2