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CBSA: Importations and Collection of Duty 101



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Old September 20th, 2009, 05:02   #1
Mynock's Avatar
Join Date: Jan 2009
Location: Manitoba
Exclamation CBSA: Importations and Collection of Duty 101

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 have taken place, but were either poorly explained to them by the officer, or were simply misunderstood by the person reporting them here. So, in this post I am going to attempt to provide a reader’s digest explanation of the duty-collection process at the border to 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:

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%) + $5.30(GST@5%) + $7.42(PST@7%)= $18.72.

Moral of this story: 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, only GST and PST apply.

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.

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. Period.

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 at the border.
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Last edited by The Saint; September 20th, 2009 at 13:09..
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