What importers need to know about the CBSA and CRA

Importing goods into Canada can be a complex endeavor that requires an understanding of key regulations and procedures. Mandatory import processes and the collection of import duties and taxes are managed by the Canada Border Services Agency (CBSA) and the Canada Revenue Agency (CRA) – a pair of agencies among a number of others that importers should consistently keep tabs on.

Getting to know how the CBSA and CRA work, and how to interact with these agencies, is an essential part of efficient and profitable import operations.

What does the CBSA do in Canada?

The CBSA is responsible for the enforcement of border and immigration rules and regulations. This agency's mandate facilitates legitimate trade and travel while ensuring the security and prosperity Canada. Some key aspects of CBSA jurisdiction that importers should be aware of include:

Import permits and licenses

Import permits or licenses are required for some types of goods before they can enter Canada, such as agricultural products, textiles, and firearms. Importers can make sure that they have required permits by checking the latest updates on the CBSA’s list of controlled goods.

Import documentation

Importers must provide the necessary documentation to the CBSA when bringing goods into Canada. This includes commercial invoices, a bill of lading, a certificate of origin, and other documentation that can vary depending on the type and amount of goods you’re importing.

Tariff classification and duties

Imported goods are subject to CBSA duties and taxes based on their tariff classification. The CBSA uses the Harmonized System (HS) with codes that classify goods for tariffs, and importers must provide an accurate HS code to ensure the correct duties. Some goods have reduced duties due to trade agreements, so using the right HS code can help to prevent unnecessary tariffs. It’s worth checking to see if you also qualify for a CBSA tax exemption.

Canada border clearance

The CBSA applies various programs with processes that help to streamline the Canadian border clearance process for importers. The Customs Self-Assessment (CSA), Free and Secure Trade (FAST), and Advance Commercial Information (ACI) programs are examples of secure, streamlined border clearance processes.

What’s the role of the CRA for Canadian imports?

The Canada Revenue Agency administers and collects excise duties and taxes for most provinces and territories, and the Government of Canada. For imports, their primary objective is collecting the Goods and Services Tax (GST) and Harmonized Sales Tax (HST). Important aspects of the CRA’s mandate include:

GST/HST on imports

Imported goods are subject to GST at a rate of 5%. GST must be paid by the importer at the time of importation for commercial imports. For provinces where HST applies, commercial importers must self-assess the provincial portion of the HST for their respective provincial government. The full HST is only collected by the CBSA at the time of import for casual, non-commercial imports. The GST and HST are calculated on the total value of the goods, including costs, excise taxes, and duties.

In provinces with HST, the applicable tax rate will vary. These taxes must be paid by the importer at the time of importation. The GST and HST tax will be calculated on the total value of the goods, including shipping costs, excise taxes, and duties.

Input tax credits (ITCs)

Businesses registered for GST or HST can claim Input Tax Credits (ITCs) to recover the tax paid on imports they use for their commercial activities. Importers need to keep detailed records of their imports and the taxes paid to claim ITCs. Providing correct documentation is crucial to support ITC claims and avoid penalties when the CRA conducts and audit.

Taxes for non-resident importers

Foreign companies that import goods into Canada can register as non-resident importers for GST and HST. This enables foreign companies to charge and remit GST or HST on sales to Canadian customers. Non-resident importers can also claim ITCs for GST or HST on imported goods, provided they have registered for GST/HST with the CRA. NRIs who are registered for GST/HST must post security in the form of a bond with the CRA. Non-resident importers must comply with the same requirements as Canadian businesses, such as filing regular returns for GST or HST.

Excise taxes

Certain goods, such as fuel, tobacco, and alcohol products, will be subject to excise taxes when imported. The CRA oversees these taxes to ensure that importers comply with excise tax regulations when appropriate.