Importing electronics and home appliances to Canada. Full guide about customs and taxes

Importation is complicated and requires knowledge in several spheres. It is risky to buy goods in another country and bring it to your home country, especially, if you are a beginner in this field. In this article, we are going to figure out all aspects of the customs of Canada, while importing electronics and home appliances from China.

This article covers:

• Tasks to do before importation
• Choosing the tariff classification number
• Calculating duties and taxes
• Reporting goods
• Releasing goods
• Post-importation

1.    Before the importation

• Getting BN

BN (Business Number) is a 9-digit number that is used by the government to identify your business. Organizations and Individuals need to have BN, it is given by CRA (Canada Revenue Agency) for an import account. The import account is free of charge and can be taken easily.

To register, you can call the CRA’s business window at 1-800-959-5525 to get BN or visit the official web page of Business Register Online 

• Proof of origin

There is a Memorandum 11-4-2 which is created because of the Canada-Panama Free Trade Agreement.

1.    Section 35.1 of the Customs Act: the proof of origin must be furnished for all imported goods.

2.    Proof of the origin may be in the form of a commercial invoice, Certificate of Origin, or other types of certificates.

3.    Appendix A: Each tariff treatment requires proof of origin (except general tariff).

• Prohibited goods

Particular goods are not allowed to be imported to Canada. It is important to check the list of prohibited goods to import. The list includes coins, bases, counterfeit, second-hand motor vehicles, and others.

Here you can see the full list of prohibited products to import.

In this list, we can’t see electronics and home appliances, so we are permitted to conduct the importation.

• Restricted or regulated products

Before the importation, it is crucial to check the list of products that may require certifications, permits, or inspections.

The list includes:

• Foods, Plants, Animals, and related product
• Cultural properties
• Energy-using products
• Rough diamonds
• Vehicles, engines, and machines
• And other products

Here you can read the full list.

It is recommended to consult with applicable authorities in your territory if you are importing alcohol or tobacco products.

Particular goods should be marked with the country of origin. Here you can read more about that.

Certain goods are subject to anti-dumping regulations. Special Importing Measures Act includes antidumping, undertakings, and countervailing duties.

Anti-dumping and countervailing duties.

• in the case of dumped goods, an anti-dumping duty in an amount equal to the margin of dumping of the imported goods; and
• (b) in the case of subsidized goods, a countervailing duty in an amount equal to the amount of subsidy on the imported goods.

Here you can read more about anti-dumping and countervailing duties.

Before the importation, it is important to check whether the importing good is subject to domestic controls or not. If you are importing that type of product, then you must get registered with Public Works and Government Service’s Controlled Goods Program.

Here is the list of controlled goods by the Defence Production Act.

2.    Choosing the tariff classification number

After that, you will need to determine the correct tariff classification number. A classification number is used to determine the amount of duty that should be paid.

Harmonized System is used as the basis of the classification system. The first six digits are common numbers that are used all around the world, the next four are used only in Canada.

In our case, the heading of the HS code is 8470 for electronics, and the rest depends on the exact product. 7321 is the heading of most home appliances, for example, stoves, ranges, grates, cookers (including those with subsidiary boilers for central heating), barbecues, braziers, gas rings, plate warmers, and similar non-electric domestic appliances, and parts thereof, of iron or steel.

Here you can find the documentation with the Canadian Custom Tariffs;

If you need more general information and guidelines you can visit this official web page.

3.    Calculating duties and taxes

When you have determined the correct tariff classification number, you can choose the right tariff treatment that applies to your products. In the Canadian Customs Tariff Schedule, you can see two columns. Entitled with “Most-Favored-Nation (MFN). All countries’ products except North Korea, can use the percentage of duty specified under this column.

Here is the list of reduced duties based on agreements:

North American Free Trade Agreement (NAFTA), on or before June 30, 2020: United States Tariff (UST), Mexico Tariff (MT), Mexico-United States Tariff (MUST)

Canada-United States-Mexico Agreement (CUSMA), on or after July 1, 2020: United States Tariff (UST), Mexico Tariff (MXT)

Canada-Chile Free Trade Agreement: Chile Tariff (CT)

Canada-Israel Free Trade Agreement: Canada-Israel Agreement Tariff (CIAT)

Canada-Costa Rica Free Trade Agreement: Costa Rica Tariff (CRT)

Canada-European Free Trade Association Free Trade Agreement: Iceland Tariff (IT), Norway Tariff (NT), Switzerland-Liechtenstein Tariff (SLT)

Canada-Peru Free Trade Agreement: Peru Tariff (PT)

Canada-Colombia Free Trade Agreement: Colombia Tariff (COLT)

Canada-Jordan Free Trade Agreement: Jordan Tariff (JT)

Canada-Panama Free Trade Agreement: Panama Tariff (PAT)

Canada-Honduras Free Trade Agreement: Honduras Tariff (HNT)

Canada-Korea Free Trade Agreement:  Korea Tariff (KRT)

Canada-European Union Free Trade Agreement: Canada-European Union Tariff (CEUT)

Canada-Ukraine Free Trade Agreement: Ukraine Tariff (UAT)

Comprehensive and Progressive Trans-Pacific Partnership Tariff (CPTPT)

Particular trade agreements require proving the origin of the product at the time of importation. For example, the United States Tariff requires having a valid NAFTA Certificate of Origin.

Determining the value of goods.

After figuring out classification numbers and tariffs, you should determine the value of your goods for duty purposes.

Usually, the value of duty is the cost that is paid to the supplier. The declaration of value for duty should contain an invoice from the supplier. Note, that the value for duty is calculated in Canadian funds.

There are six methods of valuation. The first method is the transaction value method, which requires an invoice. Most imported products are sold to buyers who are located in Canada. In that case, the percentage of duty would be based on the paid price.

For more information, you can visit this official web-page

Estimating in advance

We take the cost indicated on the invoice and convert it into Canadian dollars.

Most goods are subject to customs duty and GST.

Let’s calculate the tax that we should pay. As an example, we can take a tablet/pc that is going to be imported to Alberta, Canada. And as an example, we take $100.

CAN$100 (value for duty) x 0% (customs duty rate for tablet/pc) = $0

($100(value) + $0(duty)) %5 = $5 (GST)

Total of customs duty and GST (in Canadian dollars) is $0 + $5 = $5.

You can use this website to calculate duties and taxes for your product.

4.    Reporting

All importing goods for sale should be reported to the CBSA.

Carries should use a bar-coded Cargo Control Document (CCD).

There are different reporting requirements, depending on the carrier. Here is the official webpage 

If your shipment’s value is higher than CAN$3.300:

The carrier will notify you when the goods arrive.

The CBSA will inform you of the arrival of postal shipments that are valued at more than CAN$3,300.

The courier service will inform you of the arrival of shipments valued at more than CAN$3,300.

If it is less than CAN$3.300 or less:

A postal shipment valued at CAN$3,300 or less will be delivered to you by Canada Post. It will include Form E14, CBSA Postal Import Form, indicating the classification, value, and applicable rate of duty and taxes according to the information (invoice) accompanying your shipment. Canada Post will charge you a handling fee for this service.

For shipments that are valued at CAN$3,300 or less and forwarded by courier, the courier company may offer to complete the customs documentation on your behalf for a fee.

5.    Releasing

There are two methods of getting goods released. The CBSA will assign your shipment a 14-digit transaction number to identify your goods throughout the clearance.

Option 1: Full accounting and payment of duties

You should present your B3-3, Canada Customs coding form at the CBSA office. Here you can find additional information about the Coding of customs accounting documents.

You should present the following documentation:

Two copies of Form A8A-B, Cargo Control Document (CCD), provided to you by your carrier.

Two copies of Form CI1, Canada Customs Invoice (or the commercial invoice that contains the data). For information on Canada Customs Invoice requirements, refer to Memorandum D1-4-1, CBSA Invoice Requirements.

A paper copy of all import permits, certificates, licenses, or required documents from other government departments and agencies (OGD) or an electronic copy for EDI participants (OGD Interface).

Some CBSA offices can offer a Commercial Cash entry processing system, that helps you to complete the B3-3 coding form and estimate the duties and taxes. Here in the appendix - B , you can find the list of offices.

Duties can be paid by cash, debit card, cheque, or credit card (if the amount is less than $5.000). If you want to read more about accounting documents, you can visit this official web page 

Option 2: Release of products before the payment

Release on Minimum Documentation (RMD) permits the release of products before the payment of fees. You must follow an application process created by CBSA in terms of security.

For full information about RMD, please, refer to Memorandum D17-1-4

If you want to read more about accounting and release of commercial goods, please visit this page

6.    Post-importation

If you had an error in the accounting, you must correct the information within 90 days after you discover the mistake.

Note that you must keep all records that are connected with your importation for six years in either electronic or paper format.

Conclusion

From the article, you could understand that tablets/pc and some other electronics are not taxed. But most home appliances’ duty rate is around 13%. Some products can be inspected by authorities, however, the inspection of electronics and home appliances is done for free of charge.