Importing goods into Canada even temporarily? Why you still might have to pay customs duty and taxes
Generally speaking, goods imported temporarily into Canada for up to 18 months are subject to applicable duties and taxes. But cheer up, there is a bright spot: if certain conditions are met, you might be off the hook from having to pay them at the time of import. In some instances that includes complete exemptions.
The trick? To determine if there is any duty or tax relief on the goods you intend to temporarily import.
For example:
- Certain goods imported for display at a trade show or exhibition (and then re-exported) are not subject to customs duties at the time of import. As such, they are sometimes exempt from the Goods and Services Tax (GST).
- However, in other cases, the duties and taxes may be payable or partially relieved. What’s more, the importer may be able to post a security bond instead of paying the full amount to Customs.
Help your broker to help you
To properly determine if any duties and taxes are due, the Customs Broker must know:
- The nature, origin and value of the goods
- What they will be used for while in Canada
- Where they will be used
- How long will they remain in Canada
- Who will be the importer of record
To expedite the process and keep things moving along smoothly, make sure you provide your Customs Broker with this information up front.
How to navigate the GST and OGDs
Goods to be used in production in Canada are subject to the GST at a rate of 1/60 per month calculated on the time the goods will remain in the country.
Meanwhile, goods regulated by Other Government Departments (OGDs) are subject to the same requirements, regardless if they are imported temporarily or permanently. For instance:
- Health Canada will make you apply for a permanent import permit even if you are only importing your goods on a temporary basis.
In the event that temporarily imported goods get sold and remain in Canada, the amount of duties and taxes payable are then calculated on the full value of the goods at which you sold them.
Question: What happens to goods exported from Canada after the temporary period is over?
Answer: Any bonds that were posted are canceled. Moreover, any duty and tax deposits are refunded by Customs pending proof that the goods were exported from Canada.
Take note that the Customs Broker that handled the temporary import of your goods can also handle this aspect and have the necessary documents stamped by Customs.
The purpose of a security bond
For some temporary imports it is necessary to post a security bond, the purpose of which is to cover any applicable duties and taxes for the time the goods remain in Canada.
- In most cases, the Customs Broker may post security on behalf of the importer or can obtain a bond on behalf of the importer.
- The bond is then nullified once the goods have been exported from Canada.
Why it’s wise to give yourself enough time
Canada hosts many trade shows, exhibitions as well as sporting, entertainment and other public events. Fortunately, the Canada Border Services Agency (CBSA) is quite flexible when it comes to the paperwork required for these types of international events. Nonetheless, it’s vital to give yourself enough time to organize things.
- Waiting to the last minute will only increase the potential for delays at the border or even result in the refusal of duty and tax exemptions.
To avoid unwanted surprises and ensure your event goes off without a hitch, provide as much specific information to the CBSA as possible.
- Keep in mind that items such as giveaways and promotional goods may still be subject to duty and tax and should be declared in the usual manner. That’s because they are typically given to customers and potential customers and not re-exported.
Experienced event organizers all agree on one thing: they know that a Customs Broker is perfectly positioned to give you advice on the proper procedures for your temporary importation of goods. Now that’s advice well worth heeding!