Have you ever found a great deal online… only to see the savings whittled away by weighty customs fees and taxes when the item is delivered to your door? Here’s what’s happening.
All countries have a threshold value over which imported goods will be subject to customs processes, duties and taxes. It’s called the de minimis value and Canada’s is one of the lowest in the world, at $20. In the U.S. for example, government agencies won't add fees to any cross-border shipment worth less than $800 U.S.
Interestingly, Canadians who physically cross into the U.S. to shop in person already enjoy a much higher de minimis exemption from taxes and duty. They can bring back $200 worth of goods after a 24-hour stay and $800 after two days.
There are arguments for and against raising Canada’s de minimis limit – with consumers generally favouring a higher limit and most Canadian retailers (as well as provincial and federal governments) preferring to keep it low to encourage domestic shopping and generate tax revenue.
And what about returns?
The good news is that if you end up returning a cross-border purchase, you can get a refund on any taxes and duty paid (for non-commercial imports) – through CBSA’s Casual Refund Program.
To request your money back under the Casual Refund Program, shoppers need to submit a B2G Form along with the requested supporting documentation. CBSA’s Casual Refund Centres are tasked with receiving, reviewing and processing such requests and are located throughout Canada. More information on the program is available on the CBSA website.
Will the de minimis threshold change?
There is talk of raising Canada’s de minimis threshold, most recently in the context of NAFTA renegotiation talks. Consumer groups have been pushing for an increase for years. There are rumblings of an impending increase but at this point it’s stay-the-course.
For now, expect to continue paying duty and taxes on any goods purchased outside Canada worth more than $20. In reality, Canada Customs doesn’t check every single shipment, so you may be pleasantly surprised when the occasional purchase sails through duty-free.
And if you have any questions about cross-border shipping, the de minimis value or any other customs or logistics matters, our customs and logistics specialists are here to help.
Information provided by: Canadian Customs Consulting Dept. - Cole International