With increased online shipping to Canada, more questions are being raised about the import clearance costs in Canada. Especially from the US, shippers are often surprised to know that most parcel shipments to Canada are subject to duty and import fees.
Below is information to help shippers understand the Canadian Customs (CBSA) and carrier clearance costs when shipping internationally to Canada.
Jet Worldwide provides international shipping solutions to Canada from the USA, Europe and Asia.
All items shipped to Canada - including from the USA - may be subject to duty and taxes. Canadian customs/ CBSA calculates duty rates according to the type of goods you are importing and the country from which they came or were made. Additional taxes, such as excise duty or excise tax may apply to specific items such as alcohol and tobacco products.
Goods made in the USA, Europe and other countries with a Canadian free trade agreement are not automatically granted duty free status. To qualify for duty free status under NAFTA/ USMCA, CETA or other free trade agreement, the goods must meet certain criteria (most importantly related to having a qualifying certificate of origins). See note below on NAFTA/ USMCA, CETA and CPTPP country of origin requirements for duty free entry to Canada.
Basic rules for importing parcels to Canada
An item imported to Canada that is valued over $20 CAD is subject to duty and taxes. Shipments sent via the post or express carriers can be cleared via express process known as the Low Value Shipment or LVS System.
Canada’s LVS system allows for streamlined clearance processes but does not give preferential treatment with respect to import duty and taxes.
Main components of imports fees to Canada explained:
- Clearance entry fee
- Disbursement fee
Similar to all major economies that adhere to WTO rules, Canada bases their duty primarily on the declared value, commodity / H.S. Code, and country of origin. The duty rate for common imports such as clothing, can be as high as 20%.
As mentioned above: Goods made in the USA and Europe are not automatically granted duty free status to Canada. Items that qualify for duty free status under NAFTA/ USMCA, CETA or other free trade agreement must include qualifying certificate of origins.
Customs Preparation Fee
A customs entry must be made for every parcel imported to Canada. Most express and postal shipments include the “Customs Entry Preparation Fee.”
For shipments sent via FedEx and UPS Ground to Canada, the Customs Preparation fee is not included. For high volume shippers, this fee can be negotiated but most ground shippers to Canada pay a customs entry preparation that is based on the “value for duty” of the shipment. The entry preparation fee can be as low as $7 and progressively gets more expensive roughly averaging around 20% of the value of the shipment.
For example, a shipment valued at $300 CAD sent via FedEx or UPS ground to Canada could be charged a clearance entry preparation fee of around $45 CAD.
Even when entry preparation fee is included, carriers charge a fee to cover their cost of advancing the duty cost on behalf of the receiver. The costs are calculated as a percentage of the duty and taxes paid (usually around 2.5% of the value) with a minimum fee that averages around $15 CAD.
In addition to the disbursement fee, carriers charge a fee for having to get payment from importers who do not have an account with the carrier who paid the import fees on their behalf . The “processing fee” is around $5 to $6 and is applied regardless of whether the shipment was sent ground or air.
- Shipments above $20 CAD are subject to duty/ taxes
- For DHL Express "Entry preparation" included
- Import charges include Duty, taxes, plus a $16 (minimum . *see following two points) processing ($11) + transaction fee ($5)
- Processing fee: $11.00 or 2.5% of the Duties and Taxes (which ever is higher)
- Transaction Fee: $5.00
- Shipments above $2,500 or otherwise requiring additional processes or approvals (such as alcohol) are subject to additional fees
Many countries have a general consumption tax which is assessed on the value added to goods and services. In some countries such as Canada, Singapore, Australia, and New Zealand, this tax is known as the goods and services tax or GST.
The Canadian sales taxes are the Provincial Sales Tax (PST), the Quebec Sales Tax (QST), the Goods and Services Tax (GST), and the Harmonized Sales Tax (HST) which is a combination of the PST and the GST in some provinces.
Any item mailed to Canada may be subject to the Goods and Services Tax (GST) and/or duty. Unless specifically exempted, you must pay the 5% GST on items you import into Canada by mail. The CBSA calculates any duties owing based on the value of the goods in Canadian funds. The duty rates vary according to the type of goods you are importing and the country from which they came or were made in. Depending on the goods or their value, some other taxes may apply, such as excise duty or excise tax on luxury items.You do not have to pay the GST on the following goods that are imported into Canada by mail:
- goods worth CAN$20 or less; and
- gifts from family members or friends who live abroad when the worth is CAN$60 or less.
The Government of Canada has entered into agreements with certain provinces to collect the HST at a rate of 13 percent. If you live in a participating province, you will have to pay the HST instead of the GST.
It depends on the contents, value and origin of the shipment. You may be charged the following:
- Duties and taxes
- FedEx Reimbursement on Delivery Fee or Advancement Fee
- Ancillary charges, if applicable. For more details, please visit fedex.ca/ancillary.
Low-Value Entry Exceptions for shipments imported to Canada via FedEx, UPS or DHL
Low-value shipments are valued under CAD$2,500. Under CBSA regulations, low-value shipments can be “provisionally released” for delivery pending payment of duty/ taxes and - if required - a formal entry.
Canadian customs / CBSA assess duties and taxes based on criteria that includes:
- Product value
- Trade agreements
- Country of manufacture
- Description and end use of the product
- The product's Harmonized System (HS) code
Gifts sent to Canada
For eligible gifts imported into Canada valued less than CAD$60 or less per shipment can be imported duty/ tax free. Shipments of gifts over CAD$60 is subject to duties and taxes on the amount over $60 (for example, a qualifying gift of $200 would be subject to duty/ taxes based on a value of $200-$60 or $140).
Jet Worldwide helps online merchants ship to Canada.
Canada Post: Less likely to collect import duty and taxes
Due to the sheer volume and less developed electronic processes, many shipments sent via Canada Post are delivered without duty or taxes being charged to the importer. While this is a windfall for the buyer, the inconsistency creates issues when they are charged.
Shippers who receive goods without charge via Canada Post are often shocked when they are forced to pay duty and taxes on goods. The inconsistency creates mistrust and dissatisfied buyers who ended up paying much more than what they expected. Even if the duty and taxes are properly calculated as required by law, online forums are ripe with comments wondering if the fees are actually legitimate.
Duty Free Clearance under NAFTA/ USMCA, CETA, CPTPP and others
A certificate of origin is the exporter's certification that the good being exported meets a free trade agreement's rules of origin and therefore qualifies for preferential tariff treatment afforded under the relevant agreement. Information concerning the rules of origin for each free trade agreement can be obtained online via CBSA websites.
Canada numerous free trade agreements include:
- CCFTA: Canada Chile Free Trade Agreement
- CCOFTA: Canada-Colombia Free Trade Agreement
- CCRFTA: Canada-Costa Rica Free Trade Agreement
- CEFTA: Canada-European Free Trade Agreement
- CHFTA: Canada-Honduras Free Trade Agreement:
- CIFTA: Canada-Israel Free Trade Agreement
- CJFTA: Canada-Jordan Free Trade Agreement
- CPAFTA: Canada-Panama Free Trade Agreement
- CPFTA: Canada-Peru Free Trade Agreement
- CPTPP: Trans pacific trade agreement
- NAFTA . North America Free Trade (new USMCA pending)
Note on NAFTA duty free clearance for online orders to Canada
Online orders containing US or Mexico origin goods can qualify for for duty free entry entry to Canada.
NAFTA: Duty free clearance of goods grown, raised or produced in Mexico, Canada and the US. The country of origin rules can get very complicated under NAFTA but he principle concepts are simple to understand.
US online orders to not automatically qualify for NAFTA USMCA duty free
Just because the origin of the goods being shipped are from the USA or Mexico does not mean the goods qualify for duty free entry. To qualify, the goods must be actually made in Canada or Mexico.
Qualifying for duty free NAFTA status without a certificate of origin
A NAFTA Certificate of Origin is not required for the commercial importation of a good valued at less than US$1,000. However, for goods to qualify for NAFTA preferential duties, the invoice accompanying the commercial importation must include a statement certifying that they qualify as originating goods under the NAFTA rules of origin. The statement should be handwritten, stamped, typed on or attached to the commercial invoice.
Disclaimer: We provide this information as a courtesy to our customers and shippers around the world. It is offered only a general information only. Shippers should verify with their legal department, shipper, importer and local customs to ensure compliance.