Duty drawback in Canada: Can you claim a refund on duties paid?

Duty drawback allows Canadian businesses to recover duties on goods that aren’t consumed in Canada, provided that claims are submitted on time and supported with the right documentation.

Duty drawback is an overlooked opportunity available to Canadian businesses, yet it can mean thousands of dollars in refunds on duties already paid.

Through the Duty Drawback Program, you may be eligible to recover part or all of the duties you paid at the border under certain conditions, such as when imported raw materials are used in a final product you export, or when defective inventory is destroyed.

Understanding how duty drawback works can make the difference between leaving money on the table and unlocking valuable savings.

This article explains what duty drawback is, who can qualify for the program, and the key conditions under which Canadian businesses can claim duty refunds.

What is duty drawback?

Duty drawback is a trade incentive program that allows Canadian businesses to recover duties they have already paid when goods are not ultimately consumed in Canada.

Administered by the Canada Border Services Agency (CBSA), the program is designed to ensure that duties aren’t permanently collected on goods that either leave the country or are written off instead of being used within Canada.

Under the Duty Drawback Program, importers may be eligible for a refund if the goods are:

• Exported in the same condition as they were imported (or used only for display/demonstration)
• Used in the production or manufacture of new items that are subsequently exported
• Obsolete, surplus, or defective and are destroyed under CBSA supervision

Duty drawback is available for customs duties, anti-dumping and countervailing (AD/CV) duties, and applicable excise taxes originally paid on imported commercial goods. However, Goods and Services Tax/Harmonized Sales Tax (GST/HST) cannot be refunded through drawback. 

Eligibility and scope

To qualify for duty drawback, two conditions must be met.

First, the duties must have been paid at the time of importation. Second, the goods must fall into one of the following scenarios:

1. Exported in the same condition

The goods are re-exported from Canada exactly as they were imported, without being used or consumed in Canada for any purpose other than temporary storage, testing, display, or demonstration.

2. Used in manufacturing or production

The imported goods are:

1. Used as materials or components in the manufacture of finished goods that are subsequently exported, or
2. Directly consumed or expended in that manufacturing process (other than fuel or plant equipment).

3. Destroyed under CBSA supervision

The imported goods—whether obsolete, defective, or in surplus—are destroyed rather than being placed on the Canadian market. The destruction must be officially witnessed by a CBSA officer or certified by an arms-length qualified third party.

Who can claim a duty drawback?

Duty drawback can be claimed by an eligible person or entity that can provide supporting documentation.

Drawback claims may be filed by any of the following parties:

• The importer
• The exporter
• The processor
• The owner
• The producer

Only one claim may be made on the same goods, so if multiple claimants are involved, waivers from all other eligible claimants must be provided.

Applications and supporting documentation

The duty drawback application process is now centralized through the CARM Client Portal (CCP).

To apply, you will need to complete Form K32, Drawback Claim, and submit it online, along with supporting documentation proving both the payment of duty at import and the legal disposal (export or destruction) of the goods.

Supporting documentation includes, but is not limited to:

• A copy of the export sales invoice
• A bill of lading or other shipping document
• Other proof of export, as requested by the CBSA

If you are not the importer, you will need to submit a waiver from the importer. Similarly, if you are not the exporter, you will need a waiver from the exporter.

Time limits and conditions for duty refunds

There are deadlines and conditions for submitting duty drawback claims.

To qualify for a refund, you must submit your claim within four years from the date the goods were accounted for at import (five years for destroyed goods). 

You are also required to maintain accurate records, along with supporting documentation, to validate your claim.

Every claim is subject to CBSA review, and incomplete or inaccurate submissions may be rejected.

How Cole International can help

At Cole International, we provide trade consulting and customs brokerage services to help Canadian businesses identify opportunities for duty drawback and recover costs that might otherwise be overlooked.

Our team works with businesses every day to:

• Review past imports and exports to confirm eligibility for duty drawback
• Prepare and submit accurate claims within CBSA timelines
• Ensure all required documentation is completed and filed correctly

We don’t believe in guesswork. We get it right the first time. 

Reach out to one of our trade professionals to find out if your goods qualify for duty drawback.