I have been reading a lot of discussion on the forums regarding the CBSA duty-collection process and noticed that a lot of answers are based on speculation that stem from a general lack of understanding of basic CBSA functions. Many people, it seems, have had experiences where certain CBSA actions took place, but were either poorly explained to them by the officer, or were simply misunderstood by the person who is reporting them here. So, in this post I am going to attempt to demystify the duty-collection process and help clarify some common misconceptions.
The “What” and the “Why” of Duties
Duties and taxes are NOT one and the same
. PST and GST are collected on goods/services that are sold/rendered in Canada. Duties on the other hand, are charged as compensation for revenue lost when the Canadian consumer removes capital from our economy and transfers it to a foreign exchequer by means of purchase of foreign goods. The logic is that if you are buying a Chinese-made good directly from overseas, you are taking away the opportunity from a Canadian business to provide that good to you. Ultimately, this has a negative impact on the job market and the economy of our nation as a whole.
Take eBay for example. Retailers located in Hong Kong often sell items for a fraction of what Canadian retailers charge. When you buy directly from China, you are getting a sweet deal because you are cutting out the middlemen in the transaction (brokers, distributers, etc); by that same token, your money is going straight into a foreign pocket, making less of it available to go around at home. Duties even out the price-gap between foreign and domestic goods, thereby reducing the loss of domestic revenue that results from the Canadian dollar being spent outside Canada. Duty collection is part of the CBSA mandate to help protect the livelihood of the Canadian prosperity as a nation, which brings us to the next point.
CBSA Duty Collection Process and Airsoft Items
Before importing an item, you can always call a CBSA port of entry and have them do an inquiry on the item you wish to import to find out the breakdown of the applicable duties and taxes you can expect to pay at the border. The complete list of CBSA offices can be found here: http://www.cbsa-asfc.gc.ca/do-rb/map...carte-eng.html
General rule of thumb: items that do not fall under NAFTA (basically anything made outside Canada, US and Mexico) will incur a duty rate, which is separate from GST and PST. Most Airsoft parts and accessories are made in China, Japan and Taiwan. These generally fall in the 6% duty rate range (under the MOST FAVOURED NATIONS TARIFF).
An item with a 6% duty rate will cost $18.72 at the border to bring across in Manitoba. Here's the math:
1) $100 x 6%(Duty) = $6. The total value of the item before taxes is now $106.
2) PST and GST are then applied to the sum of value of item and duty ($106).
3) So, $6(Duty@6% of the initial value of $100) + $5.30(GST@5% of $106) + $7.42(PST@7% of $106)= $18.72.
Moral of this story: if you don't qualify for a personal exemption, expect to pay duties of at least 6% with PST and GST on top of that when importing Airsoft accessories and parts made in Japan, Taiwan, China. For items made in the US however, THERE IS NO DUTY (as per NAFTA) and only GST and PST apply.
More on personal exemptions in the next section.
As mentioned, before you import you can either call a CBSA office and have them do an inquiry on the item you are thinking of importing, or use the following link to the Customs Tariff which lists many of the common goods seen in international commerce:
(NOTE: to expedite the search, use Ctrl+F to fast track to specific words)
Between the information available from the CBSA directly over the phone and the Customs Tariff, there should be no surprises at the border as to the amount owing in duties and taxes on any given item.
Understand that different types of items are assigned different duty rates, so one item may be 6% while another may be 8% or greater. (Clothing items that are made outside Canada, US and Mexico, for example, incur 17% duty, with taxes being added on top of that! If your length of absence does not qualify you for a personal exemption, EXPECT TO PAY AN ARM, LEG AND FIRSTBORN WHEN IMPORTING CLOTHING MADE OVERSEAS!)
Shipping is often left out of the equation and not collected on. Note I say “often” and not “always”. CBSA looks at the fair market value of items, which is what is used for the collection of duties and taxes. Again, think of eBay listings where the seller/vendor deliberately lists an item for a ridiculously low price and then overcharges on the shipping to make their profit. Example: an item you want is being sold on ebay for $40, plus $10 shipping. As you keep searching, you find the same item being sold by another seller for only $0.01 (“buy it now” option ). You notice that this seller is charging $50 for shipping. In this case it is clear what it happening: the markup is applied to the shipping fee, and not the item itself. This however does not change the fact that the fair market value of the item remains at around $40.
Personal Exemptions, or "How much am I allowed to bring back?"
If you are a citizen, permanent resident, or a holder of a valid work/study permit who makes his/her permanent home in Canada, you qualify for the returning residents personal exemptions when returning to Canada from abroad. Basic exemptions are as follows:
0<24 hour absence:
No exemption. Applicable duties and taxes payable on full value of imported goods.
24<48 hour absence:
Goods purchased up to a total of $50CAD
are imported duty/tax free. Alcohol and tobacco products do NOT qualify under this exemption and are subject to full duties and taxes.
NOTE: If you go over the $50CAD limit, you lose the entire exemption and must pay applicable duties and taxes on the FULL amount. In other words, if you spend $76, you don't get to bring in $50 duty/tax free but will pay on the full amount of $76.
Residents may import up to $400CAD
duty and tax free, including limited quantities of alcohol and tobacco. Unlike with the 24 hour exemption, if you go over your allocated $400, you ONLY PAY ON THE OVERAGE and NOT the full amount.
Residents may import up to $750CAD
duty and tax free, including limited quantities of alcohol and tobacco. Once again, the exemption is not lost if you go over the allowed $750CAD, and you will only be required to pay on the overage.
Residents eligible for both the 48 hour and the 7 day exemptions can also benefit from what's called a Beneficial Duty Rate Exemption if they go over their limits. This can get a bit confusing, so I will only say that if you go over your exemption in your spending, you get a bit of a tax/duty break on the first $300CAD of your overage.
Vendors Marking Items as "Gift" When Sent by Mail
Just because the sent item is marked as “Gift” doesn’t mean you won’t pay duty/tax.
“Gifts” sent by post whose value is under or around the $50 mark are usually exempt from duties and taxes (unless they are exception goods such as alcohol and tobacco which cannot be gifted duty/tax free). This is why you won’t see too many instances of duties being collected on packages whose declared value is close to $50. If, however someone sends you a gift that is worth $600, you WILL be paying applicable duty/taxes on the amount over $50. In other words, you will be paying duties and taxes assessed on the $560.
If it is assessed that duty and taxes are owed on your package (i.e., you are over the $50 threshold), you will also pay a CBSA handling fee which ranges from $5-$8.
Intentional Avoidance of Duties, Taxes, Import Regulations
I’ve seen several posts where people have made comments about "smuggling" as a potential option for getting stuff across the border. The response from other members to these types of posts has been commendable, and I would like to add a little bit more to the good advice already given by people on this topic.
The Customs Act is a federal statute that doesn’t just concern the CBSA or the RCMP (who also enforce it); it outlines the responsibilities of the travelling public with respect to the law. Two sections of the Customs Act are particularly important:
12. (1) Subject to this section, all goods that are imported shall, except in such circumstances and subject to such conditions as may be prescribed, be reported at the nearest customs office designated for that purpose that is open for business.
13. Every person who reports goods under section 12 inside or outside Canada or is stopped by an officer in accordance with section 99.1 shall
(a) answer truthfully any question asked by an officer with respect to the goods; and
(b) if an officer so requests, present the goods to the officer, remove any covering from the goods, unload any conveyance or open any part of the conveyance, or open or unpack any package or container that the officer wishes to examine.
Oh, and then there is this:
159. Every person commits an offence who smuggles or attempts to smuggle into Canada, whether clandestinely or not, any goods subject to duties, or any goods the importation of which is prohibited, controlled or regulated by or pursuant to this or any other Act of Parliament.
While the pain of the reality that there are so many wonderful AEGs available on the world market is made even more unbearable by the fact that they are on average $200 cheaper in the States, when it comes to the law, one must always ask the question “is the juice worth the squeeze?
Anyway, this has been a long-winded post, but hopefully it clarifies some points on the payment of duties and taxes at the border. I will keep updating this post regularly in order to address any other questions that may arise about customs processing.