Like many people, I have placed an online shopping order and eagerly awaited its arrival only to receive a text message demanding I pay import taxes, duty, and fees before it can clear customs.
When this happens it's often frustrating because the costs can wrack up, sometimes totalling the same amount if not more than the original cost of the item. More often than not it also can't be returned to the seller if you decide you don't want to pay the fees. Sure, you could abandon the item at customs but you don't get your original investment back and you still need to find a dress for your cousin's wedding. So you're out a few hundred dollars with nothing to show for it.
To help avoid the nasty shock in the future Â鶹´«Ã½Ó³» reached out to the Canada Border Services Agency (CBSA) and asked them why we have to pay these kinds of fees and what can be done to prevent them from happening in the first place (if anything).
The good news is there is a rhyme and reason to the fees and so they can be avoided.
Why do import taxes and fees apply when items arrive in Canada?
A spokesperson for the CBSA told V.I.A. over email that they are "required to collect duties and taxes on all goods entering Canada unless there is specific legislation in place that will entirely or partially relieve the importer of this obligation. These amounts are based on Federal and Provincial tax rates, as well as current rates of duty, which are established by the Department of Finance based on trade agreements."
If an item is made in a CUSMA country, which refers to the Canada, United States, Mexico Agreement, it isn't subject to duty but is subject to tax. At the time of writing this tax is 12 per cent of the product cost and duty is 18 per cent.
The CBSA says, "In addition, importers may incur fees from service providers, such as couriers or customs brokers, who facilitate the movement or clearance of their goods. The collection of third-party fees such as these is not regulated by the Government of Canada."
They also note, there has been a 117 per cent increase in the volume of Courier Low-Value Shipments over the last three years and with "the evolving e-commerce landscape," they anticipate that percentage to continue to rise.
The Low-Value Shipment courier program refers to a streamlined customs release process offered by Canadian Customs to couriers when a shipment is valued at less than $2,500 so it can gain expedited release across the border.
Are different postal services (ie. Canada Post, DHL, FedEx, etc.) subject to different fees?
According to the CBSA "postal and courier services are two separate and distinct streams of importation. Each stream of importation is subject to different fees."
Canada Post charges a handling fee of $9.95 CAD per dutiable or taxable mail item but if the item is duty-free and tax-exempt, no amount is charged.
Customs clearance may require that you pay import duties or sales taxes to the Government of Canada while service fees, such as customs brokerage fees, transportation fees, or clearance fees charged by international couriers or customs brokers may apply when you are importing a product from outside of Canada, however this is a lot less likely to occur in your everyday online shopping.
Even so, administrative fees are charged by private, third-party companies and can sometimes be billed after the delivery. The Government of Canada does not regulate the collection of these additional service costs by private companies so it's important to be aware of shipping policies before hitting purchase.
CBSA also makes a point of noting that Finance Canada, the Canada Revenue Agency, and provincial revenue agencies are the ones responsible for the rationale for the collection of duties and/or taxes, CBSA is just the ones who enforce it.
How can people find out if their purchases will be subject to fees before hitting purchase?
CBSA recommends before placing an order verifying the shipping and handling fees that may apply and even receiving an estimate of the fees if possible although many online retailers may not know or be willing to confirm the amount. Whether or not the customer is responsible for customs and duty fees can be found in the shipping policy section of the website or in the terms and conditions at the point of sale.
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"It is important to take steps to protect yourself against risk when making international purchases. Consumer protection laws and standards in other countries may not be the same as those in Canada. For example, you may find yourself paying service fees on top of any potential duties and/or taxes owed when purchasing from an international seller," adds the spokesperson.
Some popular online shopping sites that aren't subject to duty fees
To totally avoid duty and taxes it's easiest to shop at Canadian businesses because American ones may drop ship from countries that fall outside of the CUSMA. It's also helpful to be aware that the more expensive an item the more likely it is to get held up at customs. Shein products should theoretically qualify for duty fees but most often they don't get stopped at customs. However, the site does include a disclaimer that says "generally, you don't have to pay any customs taxes. However, owing to increasingly strict customs inspection, we can not 100% ensure whether you will be charged by the customs for taxes or duties or not."
They offer when the shipping company returns it.
Other popular stores from outside Canada that won't get stopped for duties and taxes include:
(they will cover duties but additional taxes may apply)
