Understanding Canadian import duties and taxes

The cost of importing goods into Canada goes far beyond the purchase price and freight charges. You will also need to account for import duties and taxes.

These two charges are part of what’s known as the landed cost—the total expense of getting your goods from a supplier abroad to your warehouse in Canada.

While duties and taxes are often mentioned together, they are not the same thing.

Duties are tariffs that depend on the type of product and where it was made, and taxes are broader charges, applied under Canada’s federal and provincial tax systems.

Understanding how import duties and taxes work is essential for accurate cost planning and smooth customs clearance. 

What are import duties?

Import duties are tariffs charged by the Canada Border Services Agency (CBSA) when goods enter Canada.

The amount of duty owed depends on two main factors:

• HS code (tariff classification)
• Country of origin

Once goods arrive at the Canadian border, CBSA calculates the duty owing based on the declared value for duty and the applicable rate.

Types of import duties

Most-Favoured-Nation (MFN) is the standard duty rate that Canada applies to imports from most World Trade Organization (WTO) member countries.

These rates serve as the default unless another program or trade agreement provides a lower rate.

Canada has signed agreements such as CUSMA, CPTPP, and CETA, which can reduce or even eliminate duties, provided that the goods meet the rules of origin.

Additional import duties include:

Anti-dumping or countervailing duties

Sometimes goods are sold in Canada at unfairly low prices or benefit from foreign subsidies.

In this case, and to protect Canadian industries, CBSA may impose anti-dumping or countervailing (AD/CV) duties under the Special Import Measures Act (SIMA).  

These duties are charged in addition to regular import duties and apply only to specific goods and countries that are identified through official investigations.  

Excise duties

Excise duties are separate from customs duties and apply to specific products—regardless of their origin.

Alcohol, tobacco, cannabis, and fuel are the most common goods subject to these duties.

Preferential duty rates may lower or remove the standard MFN duty, but AD/CV and excise duties, if applicable, are added on top of regular customs duties. 

What are import taxes?

Import taxes are charges applied to most goods brought into Canada, regardless of the product type or country of origin.

They are part of Canada’s federal and provincial tax systems and ensure that imported goods are treated the same as goods sold within Canada. 

Types of import taxes

Goods and Services Tax (GST)

The GST is a federal 5% tax that applies to almost all goods imported into Canada. It is calculated based on the value for tax, which includes the price of the goods, duties, and other applicable charges.

GST is collected nationwide, including in provinces and territories that do not charge their own sales tax, such as Alberta, the Northwest Territories, Nunavut, and Yukon.

Provincial Sales Tax (PST/QST)

Some provinces have their own sales tax system instead of harmonizing with the federal GST.

British Columbia (7%), Saskatchewan (6%), and Manitoba (7%) all apply a Provincial Sales Tax (PST), while Quebec applies its own Quebec Sales Tax (QST) at 9.975%.

These rates are charged in addition to the 5% federal GST.

Harmonized Sales Tax (HST)

In provinces that have combined their federal and provincial sales taxes, GST and PST are replaced by the Harmonized Sales Tax (HST).

HST applies in Ontario (13%), New Brunswick (15%), Newfoundland and Labrador (15%), Nova Scotia (14%), and Prince Edward Island (15%).

Excise tax

Excise tax is applied to certain regulated or luxury products, such as fuel-inefficient vehicles, air conditioners for vehicles, and other specific goods.

Unlike GST or HST, it only applies to certain items listed in Canada’s Excise Tax Act.

Import taxes can stack. GST always applies, and depending on the province, PST/QST may be added on top, or HST may apply as a single combined tax.  

Excise tax, if applicable, is charged in addition to these. 

Common challenges for Canadian importers

As an importer, you can often encounter challenges with Canadian import duties and taxes. The main issues include:

Incorrect classification

Duties are based on HS codes, and taxes are calculated on values that include those duties. When goods are assigned the wrong HS code, the duty rate applied is inaccurate.

Since taxes like GST/HST are calculated on values that include duties, a single classification error can lead to overpayment, underpayment, or even penalties. 

Missing or incorrect origin documents

Preferential duty rates under free trade agreements only apply when proof of origin is correct and complete.  

If the documents are missing or inaccurate, CBSA will charge the standard MFN duty, which will increase the cost of importing your goods.

Unexpected extra charges

Imports may be subject to anti-dumping duties, countervailing duties, excise duties, or excise taxes.

These charges are added on top of your regular duties and taxes, which can raise the landed cost beyond what is budgeted for. 

Provincial tax differences

Taxes vary across provinces. HST applies in some provinces, while others charge separate PST or QST in addition to GST.

Failing to plan for these differences can affect overall cost calculations and lead to unexpected expenses after your goods arrive.

How Cole International can help

Import duties and taxes have a direct impact on the cost of bringing your goods into Canada. They also carry strict compliance requirements that you must meet at the border. 

At Cole International, we offer trade consulting and customs brokerage services to help importers calculate, document, and pay Canadian import duties and taxes correctly.

Our customs experts work with importers every day to:

• Classify goods correctly under their respective HS codes
• Confirm applicable duty and tax rates
• Identify opportunities for reduced or duty-free treatment under trade agreements
• Stay compliant with CBSA to avoid penalties and delays

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

Please reach out to one of our trade professionals to determine the duties and taxes on your imports into Canada.