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Reduce your duty via these Canadian trade incentive programs

Canada’s many trade incentive programs are designed to encourage Canadian companies and keep them competitive by offering relief from duties under certain circumstances. Let’s take a look at some of these opportunities.

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Everybody loves to save a buck, and saving money in duty is always extra exciting. In the past, we’ve explained Canada’s duty drawback opportunity, as well as duty relief programs, as well as shared information on the numerous Free Trade Agreements Canada enjoys. We’ve also shared about the opportunities for duty exemption and conditional relief.  

But did you know there are other trade incentive programs you could be getting in on?

Get to know these trade incentive programs

Temporary importations: As you know, goods entering Canada are subject to duty and/or taxes. But did you know there are legislative provisions providing relief from payment of applicable duties for goods entering Canada on a temporary basis? (Think: goods being repaired in Canada or being imported temporarily for training or demonstration purposes.)

There are also several provisions that allow for the full or partial payment of excise tax (including GST and HST) for goods temporarily imported under certain circumstances. Keep in mind, while temporary importations may qualify for relief from duties and taxes, they may still need to be documented on Form E29B, Temporary Admission Permit, and a refundable security deposit may be required.

A.T.A. Carnets: Canada is a signatory to the International Customs Convention on the A.T.A. Carnet for the Temporary Admission of Goods. This provides an alternative to Canada’s Temporary Admission Permit (Form E29B, mentioned above) and takes away the need to post a security deposit at the time of import. Importers can get an A.T.A. Carnet in the country of export. A.T.A. Carnets are not issued by Customs administrations.

In the countries participating in the Convention, A.T.A. Carnets are generally issued by the national Chamber of Commerce. Each country has only one guaranteeing association (although it may have more than one issuing association) and security is posted in the issuing country through this guaranteeing association. In Canada, the guaranteeing association is the Canadian Chamber of Commerce. For more information about A.T.A. Carnets, please visit the Chamber of Commerce's website.

Canadian Goods Abroad: Whenever Canadian goods are exported for repair, additions, alteration or further processing, the Customs Act generally requires they be subject to duties and taxes on the full value of the goods at the time of their return to Canada. The Canadian Goods Abroad program allows for the relief of duties on the Canadian part of the value of the goods. In this program, the duty is payable only on the value added to the Canadian goods (e.g. labour, additional material). Similarly, under the Value of Imported Goods (GST/HST) Regulations, GST/ HST is only payable on the value of the processing done outside of Canada.

Duty Deferral Program: As mentioned above, we have previously discussed the drawback and refund aspects of the Duty Deferral Program, so let’s take a look at the other elements of the Duty Deferral Program:

Through the Customs Bonded Warehouse Program, you can defer paying duties and taxes on goods until they are released for consumption into the Canadian economy or if the goods are exported, avoid paying duties and taxes altogether. A customs bonded warehouse is a licensed and regulated facility used to store imported goods before the Canada Border Services Agency (CBSA) releases them. It also stores imported and domestic goods destined for export.

The Duties Relief Program does as its name suggests: basically, it relieves you from having to pay duty on imported goods if you will be eventually re-exporting those goods that were imported for further processing.

We take a closer look at duty drawbacks here and here, but overall, the Drawback Program largely offers the same advantages as the Duties Relief Program. The main difference is that the Drawback Program is for people who have already paid duties and are asking for a drawback (or refund) of those duties (as authorized under the Customs Tariff.)

Minimize duty by partnering with experience

As we continue navigating these unpredictable times and deal with external uncertainties like inflation, being aware of programs like these and getting the right knowledge can make a world of difference.

Ready for a trusted trade consultant? Talk to Cole’s experienced professionals today to reduce exposure to duty, manage risk and improve your efficiency.  

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