When you're running a business and you have plans for importing into Canada, it's important to understand the process. Whether you're a U.S. business looking to sell your goods in Canada or your business is located in another country, our step-by-step process will make importing into Canada much easier.
Step #1 - Can your Goods Be Imported into Canada?
Not all goods will be eligible for Canadian importing. Before you go any further, it's important to figure out if your goods can even be imported into Canada. Checking the eligibility is the first step in the process.
You'll need an accurate description of the goods you will be importing, along with the country of origin and manufacturer. Next, you'll want to check the Import Control List from the Export and Import Permits Act to ensure you're goods are eligible for Canadian importing.
Finally, you will need to figure out if the goods are controlled, prohibited, or regulated by any Participating Government Agencies or PGAs. These PGAs may include the Canadian Food Inspection Agency (CFIA), Health Canada (HC), Environment and Climate Change Canada (ECCC), Natural Resources Canada (NRCAN), Global Affairs Canada (GAC), or another PGA.
Step #2 - Rate of Duties, Tariff Classification, Value for Duty, and Taxes
After ensuring you'll be able to import your goods into Canada, you will need to figure out the following:
- Rate of Duty
- Tariff Classification
- Value for Duty
You will need to have a tariff classification for every commodity clearing customs. This is known as the Harmonized System Classification and it comes in the form of a code used to identify the item and the rate of duty to the Canada Border Service Agency (CBSA).
The goal with classifying your goods is to avoid over or under paying the duties. This will also help to reduce your risk when it comes to an Administrative Monetary Penalty System (AMPS) penalty. Of course, getting the classification correct will also help to ensure your goods don't get seized or delayed.
Step #3 - Decide to Hire a Licensed Customs Broker
The right customs broker in Canada will help to ensure the entire process of importing into Canada goes smoothly. From preparing documentation to working directly with the CBSA, you have the option to authorize a licensed Canadian Customs Broker to act as your agent during the process.
While you will remain ultimately responsible for the documentation, paying the duties and taxes, and any corrections needed, including re-determination of classification, your broker will make the process less stressful for you.
Hiring the right broker will take quite a bit off your plate. Your broker will likely take care of the following:
- Getting the release of imported goods
- Paying duties on your behalf
- Handling the preparation and presenting of documents and data
- Maintaining necessary records
- Working with the CBSA with any concerns after payment
At Cole International, we are a full service logistics company, including a customs broker ready to help you with importing goods into Canada.
Step #4 - Register for an Import/Export Account
While this step may be the first thing you do, it's #4 on our list because your customs broker may be able to help you with the process. If you decide to hire a customs broker, they may take care of this for you or at least provide advice to make the process much easier.
You cannot import goods into Canada without first obtaining an import/export account. This requires multiple registration and licensing forms and requirements you must meet within provincial, and federal governments.
After completing the necessary steps, you will be given a Business Number and a GST/HST account. The Business Number will be the number you use when dealing with the federal government for payroll, taxes, importing/export, and other activities.
You will be working with the Canada Revenue Agency's Business Registration to get your import/export account They can be reached at 1-800-959-5525 or you can handle the entire registration online here.
Step #5 - Figure Out How you Plan to Submit Your Entry Declaration to Customs
You have several options when it comes to how you will communicate your import declarations to the CBSA. Some of the most common options include:
- Creating your own In-house team to handle everything through the Electronic Data Interchange (EDI)
- Handling it yourself by arriving at the port of entry and making the declaration
- Hiring a Customs Broker in Canada
Handling this process yourself can be rather time consuming and you could make a mistake. Any mistake may lead to delays getting your goods through customs.
The best way to deal with submitting your entry declaration to customs when importing goods into Canada is through a customs broker. Your broker will be able to help you with the following:
- Getting all the necessary contract and shipment documentation
- Making sure all documents have been completed and comply with the customs regulations
- Preparing and submitting the declaration to customs
- Reducing costs, improving efficiency, and mitigating risks when it comes to your cross-border trade
Traveling all the way to the port of entry whenever you need to import goods can be rather time consuming and it's not very cost effective. With the right customs broker, you won't need to worry about arriving at the port of entry.
Creating an in-house team is another very expensive way to get your goods across the border. For most importers, it's worth it to at least consult with a Canadian customs broker to gain a full understanding of the tariff classifications and the risks.
Step #6 - How Will You Pay the Taxes and Duties When Importing into Canada?
The taxes and duties will need to be paid whenever you import goods into Canada. You can pay these fees by handing the accounting documents yourself or by hiring a licensed customs broker to handle it on your behalf.
The three payment methods available when importing into Canada include:
- Direct Security - If you're a newer company, this may not be the option for you. A direct security means you will have your bond and security posted with Customs and you will pay on the last business day of the month for the amount due on your statement. Penalties will apply if the payment is late.
- Goods and Services Tax Direct - You will need to be a GST Direct Registrant to use this open. If you are a registrant, you can pay Customs on the final day of the month without posting a bond or obtaining a security. However, this won't cover the duty and some conditions will apply if you pay late.
- Customs Broker's Bond - When you hire a customs broker, they already have bonds in place you will be able to use for a fee. You will likely need to post a deposit and meet other requirements.
Any of these three options will work to pay the taxes and duties. If you would like to know more about using a customs broker's bond, contact us today.
Step #7 - Place an Order with Your Exporter
It's time to place your order and get your goods on the way to the border. Choose an exporter (also known as a vendor or shipper) and make sure you have the following ready to go:
- Packing List
- Bill of Lading
- Commercial Invoice
- Canada Customs Invoice
- Certificate of Origin (If Necessary)
In addition, make sure your exporter will comply with the requirements of importing goods into Canada, the labeling requirements set forth by the Canada Competition Bureau, all additional requirements from any of the 16 PGAs, and any general customs regulatory requirements.
Step #8 - Choose the Right Carrier for Importing into Canada
The carrier matters during the importing process and choosing the right carrier will make a difference. According to thebalancesmb.com, the carrier is responsible for preparing a Cargo Control Document. This document (also known as a manifest or waybill) is prepared from the exporter’s Bill of Lading and is used to report the shipment to the Canada Border Services Agency (CBSA).
When choosing a carrier, it's best to be very careful with your selection. The carrier should be able to meet your needs based on the size and cost of the shipment, along with the nature of the shipment and how quickly you need it to arrive.
It's important to note: your shipment could be chosen by CBSA for inspection.
Step #9 - Obtain Release of Your Goods
While it may seem like the final step in the Canadian importing process, obtaining release of your goods may not be the end of the road. However, this is a very important step.
There are two ways you can obtain a release of your goods, which include preparing the documents yourself or hiring a licensed customs broker to do it for you. Regardless, the CBSA website states, each shipment will be assigned a 14-digit transaction number to identify your goods through the clearance process.
Handling the documentation yourself means you will need several forms to ensure you obtain release of your goods. Hiring a customs broker will ensure all of this, including payment, is handled for you and your goods are released.
Additional Steps in the Process of Importing into Canada
Not every shipment will require all of the following additional steps:
- Step #10 - Make Adjustments for Accounting Errors
- Step #11 - Maintain your Records for 6 years + the current year
- Step #12 - Be Aware of the Possibility of Adjustments and Verification by the CBSA
- Step #13 - Build a Customs Compliance Program
The process of importing into Canada isn't exactly easy. If you're a new importer or you're just new to importing goods into Canada, the help of a customs broker in Canada will lighten your burden.
If you're ready to step into Canadian importing, but you're not sure how to do it, consulting with a skilled customs broker will help you better understand the process. There are many steps, forms, and documents that must be handled properly.
One wrong move and you could end up with a huge headache as your goods are seized or you end up paying penalties for errors. Hiring the right Canadian customs broker will ensure you don't have to worry about your goods. Find out how we can make the importing process much easier for your business.
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