Frequently Asked Questions (FAQ)

We’ve answered several common questions to help you start shipping your products to Canada.

Do I need a business number?

Probably.  The  Canada Revenue Agency (CRA) requires every entity doing business in Canada to apply for and receive a business number.  The business number is used to identify a business for purposes of tracking tax payments and for any other interactions with federal, provincial, and municipal governments in Canada.

A business number is a nine-digit number that gives each business its own unique identifier.  That nine-digit number is used on all forms and correspondence with the government.

The business number is subsequently used to register with different CRA “program accounts.”  The four major program accounts are:  GST/HST, payroll deductions, corporate income tax, and import/export processing.

A business number may have multiple program accounts, but only one business number.

But not every business needs a business number.  If you do not need a CRA program account, you do not need a business number for tax purposes.  However, you might need a business number to interact with other federal programs.  In addition, business numbers are becoming a standard identifier for all federal business programs.

For most businesses, it makes sense to heed CRA’s own recommendation:  “If you import goods into Canada, you should register.”

How do I know if my shipment needs an “other government department” permit?

The easiest thing to do is check CBSA’s website for a comprehensive list of goods that are subject to regulations, restrictions or permits.  The agency keeps an updated “Other Government Departments and Agencies Reference List” that lists each OGD and the type of products over which it has jurisdiction.

Keep in mind though, that sometimes a product will fall under the purview of multiple OGDs, so make sure you review the entire list.

You can also ask your logistics provider for help, assuming they have Canadian expertise.

Is there a way to make sure I select the proper tariff classification?

CBSA asserts there is only one correct code for any given product.  But finding that code can sometimes feel like a needle in a haystack.  CBSA offers four ways to help identify the right code:

  • Call CBSA. Customs officers are available during business hours to answer questions about tariff classification.
  • Use the Canada Tariff Finder, which is a free online tool offered by Canada Post that helps identify the correct code.
  • Ask for an Advance Ruling.  A shipper can submit a request to CBSA asking for an “advance ruling.”  The shipper provides detailed information about its shipment, which CBSA then evaluates and uses to make a binding determination. 
  • Consult CBSA’s Advance Ruling database.  CBSA maintains an online library of all prior advance rulings.  A shipper can review previous CBSA decisions, to see if a determination has already been made for a similar shipment.

What if I make a mistake on documentation I submit to CBSA?

CBSA maintains a “Reason to Believe” policy, whereby any importer who learns that incorrect information has been filed, must amend their documentation within 90 days of “acquiring reason to believe” that the filing was incorrect. 

Along with correcting the shipment information, which could be an improper valuation or tariff classification, the importer would also need to pay any additional duties and taxes.

Shippers are obligated to correct errors up until four years after a shipment has been accounted for.  So if you send a shipment to Canada today, and you learn in 2020 that you used the wrong tariff classification code, you are responsible for correcting that mistake, and paying any duties that may have accrued.

Is it true that Trusted Trader programs only benefit large shippers?

Trusted trade programs really benefit all businesses, regardless of size.  Speaking specifically of C-TPAT, there were complaints during its early years that the security review required for membership was too exhaustive for smaller businesses, when weighed against the benefits.

Today C-TPAT membership has become so common, it’s similar to a “Good Housekeeping Seal of Approval,” where a customer might wonder why a business isn’t a member.

It is true though, that Trusted Trader program members have to undergo a thorough review of their operations.  It is not a simple process, which is why both CBSA and CBP offer such lucrative benefits.

Are there CBSA recordkeeping requirements for businesses registered as Non-Resident Importers?

CBSA is very clear about its recordkeeping requirements.  Basically, all records must be maintained for a period of six years, in addition to the year in which the request is made.  A NRI can either store their records with their Canadian-based customs broker or logistics provider, or they can keep them in their U.S. facility.  If the records are stored outside of Canada, CBSA must be notified via letter.  Should CBSA decide to do an audit, and the records are housed outside of Canada, the NRI will be responsible for all travel and accommodation costs incurred by the CBSA auditors.

It’s also worth noting what constitutes “a record.”  Basically, this refers to any document related to a Canadian import transaction – Commercial invoices, CBSA’s B3 accounting form, NAFTA Certificates of Origin, import permits, bills of lading, discount agreements, and the list goes on.  When in doubt – save it!

What types of penalties will a business face if a mistake is made in a valuation, or an incorrect tariff code applied?

CBSA expects a shipment arriving at the border will be accompanied by accurate, truthful and complete documentation.  CBSA has strict compliance mandates, and any business found to have submitted erroneous information will be held accountable.

The business may face a penalty, usually a fine, as outlined in Canada’s Administrative Monetary Penalty System, or AMPS.  A business that uses a third party to file documentation on its behalf is ultimately responsible for any fines.  These fines can run into the thousands of dollars.  In addition, and some believe this is a harsher penalty, a documentation mistake may raise enough flags to warrant an audit.

Can I ship products in a plastic container?

A plastic container can be used as packaging.  Steps should be taken to ensure the container is sealed properly and that the lid will stay securely fastened during transport.  Also, make sure the plastic container will not split or crack during transport.

I am considering ordering products from the United States for delivery to Canada. If shipped through Purolator, will there be an additional brokerage fee?

Possibly.  Additional brokerage fees will be assessed and applied based on the shipping terms the U.S. company has arranged with Purolator.  Brokerage costs should be revealed at time of check out, otherwise there may be additional costs.

You may want to reach out to the U.S. company and ask about their international shipping policies.  The important thing is to find out ahead of time if your shipment will be assessed additional charges.  This way you can avoid unwelcome surprises at time of delivery.

Are there trade incentive programs available for U.S. manufacturers that ship to Canada?

Yes there are.  U.S. businesses are eligible to take advantage of Canada’s Non-Resident Importer program, which allows them to collect Canadian sales taxes at time of purchase, and also allows them to act as “importers of record” in clearing goods through customs.  The NRI program eliminates significant trade barriers, and allows U.S. businesses to compete in the Canadian market on equal footing with Canadian businesses.

A business may also be eligible for Duty Drawback.  A business that pays import duties, taxes or fees on products that are subsequently exported or destroyed, may be eligible for a refund – or drawback – of 99 percent of those duties and fees.

Here’s an example:  A California clothing manufacturer imports silk ribbon from Japan for use in a new line of blouses.  Import duties are paid to bring that ribbon into the U.S.  The ribbon is sewn onto the blouses, and subsequently exported to Canada.  A subsequent duty will be paid upon entry into Canada.  The exporter would be eligible to seek drawback for the initial import duties paid when the ribbon entered the United States.

A U.S. business shipping to Canada may also be eligible for benefits under the North American Free Trade Agreement (NAFTA).  NAFTA eliminates tariffs on domestically produced goods moving between Canada, the U.S. and Mexico.  To be eligible, a product must meet conditions set out in NAFTA’s “rules of origin.” If a shipper believes a product meets eligibility requirements, a “certificate of origin” must be presented with other import documentation.

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