How to Import Goods into Canada: A Guide for Businesses
Are you interested in importing goods into Canada for your business? If so, you need to know the basics of the import process, the requirements and regulations, and the costs and benefits of importing. In this article, we will provide you with a step-by-step guide on how to import goods into Canada, based on the information from the Canada Border Services Agency (CBSA) and other sources.
Step 1: Obtain a Business Number
Before you can import goods into Canada, you need to have a Business Number (BN) issued by the Canada Revenue Agency (CRA). A BN is a unique identifier for your business that allows you to interact with various government agencies. You will need an import/export account as part of your BN, which is free of charge and can be obtained online or by phone.
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Step 2: Identify the Goods You Want to Import
The next step is to gather as much information as possible about the goods you want to import. This includes the description, composition, value, quantity, origin, and intended use of the goods. You will also need to determine the tariff classification number of the goods, which is a 10-digit code that indicates the duty rate and any other applicable taxes or regulations. You can find the tariff classification number using the Customs Tariff or by contacting the CBSA.
Step 3: Determine if You Will Use a Licensed Customs Broker
You have the option of preparing your own import documentation and dealing directly with the CBSA, or hiring a licensed customs broker to act on your behalf. A customs broker is a professional who can help you with the import process, such as classifying your goods, calculating duties and taxes, preparing and submitting declarations, obtaining permits, and arranging transportation and delivery. However, you are ultimately responsible for the accuracy and compliance of your import transactions, even if you use a broker.
Step 4: Determine the Country of Origin for the Goods You Are Importing
The country of origin is the country where the goods were grown, produced, or manufactured. The country of origin determines the preferential tariff treatment that may apply to your goods under various trade agreements, such as the Canada-United States-Mexico Agreement (CUSMA). You will need to obtain a proof of origin document from your supplier or exporter to claim a preferential tariff treatment.
Step 5: Ensure the Goods You Wish to Import Are Permitted into Canada
Some goods are prohibited or restricted from entering Canada for various reasons, such as health, safety, security, or environmental concerns. For example, you cannot import child pornography, hate propaganda, used mattresses, or some used automobiles into Canada. You will need to check if your goods are subject to any import controls, permits, licenses, certificates, or quotas before importing them. You can consult the CBSA’s website or contact them for more information on import requirements.
Step 6: Determine Whether the Goods You Intend to Import Are Subject to Any Duties, Taxes, or Fees
When you import goods into Canada, you may have to pay various charges depending on the type, value, origin, and end-use of the goods. These charges may include:
Customs duties: These are taxes levied on imported goods based on their tariff classification number and their value for duty (VFD). The VFD is usually the price paid or payable for the goods in Canadian dollars. However, some adjustments may apply depending on factors such as freight, insurance, commissions, royalties, etc.
Goods and Services Tax (GST): This is a federal tax of 5% applied on most imported goods based on their VFD plus any applicable duties.
Provincial Sales Tax (PST), Harmonized Sales Tax (HST), or Quebec Sales Tax (QST): These are provincial taxes that may apply on some imported goods depending on their destination province. The PST rates vary from 5% to 10%, while the HST rates vary from 13% to 15%. The QST rate is 9.975%.
Other taxes and fees: These may include excise taxes on certain products such as alcohol and tobacco, anti-dumping and countervailing duties on certain products that are sold below their normal value or subsidized by foreign governments, simulated border tax adjustments on certain products that are subject to carbon pricing in Canada, and administrative monetary penalties for non-compliance with import regulations.
You can use the CBSA’s Duty and Taxes Estimator tool to get an estimate of the duties and taxes that may apply to your goods.
Step 7: Ship and Report Your Goods
Once you have prepared all the necessary documentation and paid all the applicable charges, you can ship your goods to Canada using your preferred mode of transportation (air, sea, rail, or road). You will need to report your goods to the CBSA when they arrive at the port of entry, either electronically or in person. You will also need to present your proof of origin document, if applicable, to claim a preferential tariff treatment.
Step 8: Get Your Goods Released
After you report your goods, the CBSA will inspect them and verify their compliance with import requirements. If everything is in order, the CBSA will release your goods and you can take possession of them. However, if there are any issues or discrepancies, the CBSA may detain your goods until they are resolved. You may also be subject to penalties or fines for any violations or errors.
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Step 9: Keep Records of Your Import Transactions
As an importer, you are required to keep accurate and complete records of your import transactions for six years after the year of importation. These records include invoices, receipts, contracts, permits, declarations, and any other documents related to your imports. You must make these records available to the CBSA upon request for audit or verification purposes.
Importing goods into Canada can be a complex and challenging process, but it can also be a rewarding and profitable one if done correctly. By following this guide, you can learn the basics of the import process, the requirements and regulations, and the costs and benefits of importing. You can also consult the CBSA’s website or contact them for more information and assistance on importing goods into Canada.
The Growth of Canada’s Import Industry
Canada is one of the world’s largest importers of goods and services, ranking 11th among all countries in 2020. According to Canada import trade data, the value of merchandise imports to Canada totalled $405 billion in 2020, a decrease of 10.4% compared to 2019. This decline was mainly due to the impact of the COVID-19 pandemic on global trade and demand.
The main categories of goods that Canada imports are consumer goods (19% of total imports), cars and parts (23%), and energy products (7%). The main sources of Canada’s imports are the United States (49% of total imports), China (14%), Mexico (5.5%), and Germany (3.1%). These four countries accounted for more than 70% of Canada’s total merchandise imports in 2020.
Canada’s import industry plays a vital role in the country’s economy, as it provides access to a variety of products and services that are not available or produced domestically. Imports also help lower the cost of living for consumers, increase the competitiveness of businesses, and support innovation and productivity growth.
The Challenges and Opportunities for Canada’s Import Industry
Despite its significant contribution to the economy, Canada’s import industry also faces some challenges and risks. One of the main challenges is the uncertainty and volatility of global trade conditions, especially in light of the ongoing trade disputes and tensions between major trading partners such as the US, China, and the European Union. These disputes can affect Canada’s access to foreign markets, as well as the price and availability of imported goods and services.
Another challenge is the environmental impact of importing goods and services, especially those that have a high carbon footprint or generate waste. Canada has committed to reducing its greenhouse gas emissions by 40-45% below 2005 levels by 2030, and achieving net-zero emissions by 2050. To meet these targets, Canada will need to adopt more sustainable and circular practices in its import industry, such as increasing the use of renewable energy sources, improving energy efficiency, promoting recycling and reuse, and reducing packaging and transportation costs.
On the other hand, Canada’s import industry also has some opportunities for growth and diversification. One of the opportunities is to leverage digital technologies and e-commerce platforms to facilitate cross-border trade and expand market access. According to Statistics Canada, online sales accounted for 8.6% of total retail sales in Canada in 2020, up from 5.9% in 2019. This trend indicates a growing demand for online shopping and delivery services, which can benefit both domestic and foreign sellers.
Another opportunity is to explore new markets and regions that offer potential for trade expansion and diversification. For example, Canada has signed several free trade agreements with countries such as Japan, South Korea, Vietnam, Chile, Peru, Colombia, Costa Rica, Panama, Honduras, Ukraine, Israel, Jordan, Morocco, Iceland, Norway, Switzerland, Liechtenstein, Singapore, Australia, New Zealand. These agreements can provide preferential access and lower tariffs for Canadian importers and exporters, as well as enhance cooperation on trade-related issues such as standards, regulations, intellectual property rights, labour rights, and environmental protection.
The Future of Canada’s Import Industry
Canada’s import industry is expected to recover from the pandemic-induced slump in 2021 and beyond, as global trade conditions improve and consumer demand rebounds. According to the International Monetary Fund (IMF), world trade volume is projected to grow by 9.7% in 2021 and 7% in 2022. Canada’s merchandise imports are forecasted to increase by 12.4% in 2021 and 6.2% in 2022.
However, the future of Canada’s import industry will also depend on how well it can adapt to the changing needs and preferences of consumers, businesses, and society at large. Some of the key factors that will shape the future of Canada’s import industry are:
- The degree of digitalization and innovation in the import industry
- The level of environmental sustainability and social responsibility in the import industry
- The extent of trade diversification and integration in the import industry
- The quality and competitiveness of imported goods and services
By embracing these factors, Canada’s import industry can enhance its resilience, efficiency, and value-added contribution to the economy.
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