Dec 09 2011
5 Easy Steps to Calculate Canada Customs Duty and Taxes
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.
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…
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