Maybe you've been on a business trip and have collected unique items that you want to sell in Canada. Or, without even leaving your desk, you've discovered a more inexpensive source of supplies for your business out of the country. Now you want to know how to start an import business. This guide will cover every step in the process.
Get a Business Number
If you don't already have a business, you will need to start one before you can begin importing into Canada. A business number registers you for an import/export tax account with the Canada Revenue Agency (CRA).
While you are registering for a business number for an import/export account, you should also register for your GST/HST, corporate income tax, and payroll tax accounts if you need them. (You will definitely need to register for the GST/HST as well as for importing/exporting. GST is payable on most goods at the time of importation.)
Get Information About the Goods You're Going to Import
Besides having an accurate description of the goods you plan to import, you also need to be sure that they can even be imported into Canada. This step-by-step guide to importing from the Canada Border Services Agency (CBSA) will help you find out if the goods you want to import are prohibited or restricted in any way.
Calculate How Much Duty and Tax You'll Have to Pay
To do this, you need to know:
- The tariff classification
- Applicable tariff treatment
- Rates of duty
- Tax payable when importing goods
A tariff classification is a 10-digit number used to determine the rate of duty payable when importing. You can find both the tariff classification number and the rate of duty by consulting the Customs Tariff guide.
The "tax payable when importing goods" refers to GST, excise tax and excise duty (which may or may not apply to the goods you wish to import). Note that for imported goods you only pay the federal portion (GST) of taxes even if you reside in a province that charges HST (i.e., has harmonized the provincial sales taxes with GST). Note also that no GST is charged on imported goods that are zero-rated in Canada, such as medical devices or prescription drugs.
Get a Customs Broker
Many small businesses find it convenient to hire a customs broker to facilitate the import process. In the case of certain goods, it's mandatory. A customs broker will obtain and prepare the customs release documents needed by the CBSA, arrange payment of customs duties and taxes, secure the release of imported goods, and generally make it easier to navigate the customs maze.
Place Your Order With Your Chosen Exporter
A chosen exporter is also known as the shipper or vendor. Besides shipping the goods, the exporter is responsible for getting the documentation together for sending the goods to Canada:
- Packing list: Prepared by the exporter, this describes the goods in detail.
- Bill of lading: Issued by the exporter to a carrier, this describes the goods to be shipped, acknowledges their receipt, and sets out the contract for the goods' transport.
- Commercial invoice: This is the document from which you pay the exporter.
- Canada Customs Invoice: This document is used to declare your goods to customs when importing into Canada.
- Certificates of origin (if necessary): These verify where various materials and parts originated and are required for goods eligible for favorable tariff treatment under particular trade agreements.
These documents are given to the carrier. If the value of your shipment is less than 2,500 Canadian dollars, you don’t need a separate Canada Customs Invoice, as long as the commercial invoice has all the necessary details for declaring your good to customs.
Choose a Carrier to Transport Your Goods
The carrier is responsible for preparing a Cargo Control Document. This document (also known as a manifest or waybill) is prepared from the exporter’s bill of lading and is used to report the shipment to the CBSA. Cargo may also be reported through the Electronic Data Interchange (EDI) system.
If the value of your shipment is less than CA$2,500, you will be notified by Canada Post or by the courier company that has forwarded the shipment when your shipment arrives.
If the value of your shipment is over CA$2,500, you will be notified by your carrier, the CBSA, or the courier company. The CBSA may choose to inspect your shipment.
Obtain the Release of Your Goods
To get your goods released, you can either present a full accounting and pay all duties or get your goods released prior to the payment of duties.
Presenting a full accounting means to have all your paperwork present and in good order. The B3-3 Canada Customs Coding Form is the main accounting document you need to fill out. See Memorandum D17-1-10 for more information about this documentation.
You will also need:
- Two copies of the Cargo Control Document (CCD), which will be provided by your carrier.
- Two copies of the Canada Customs Invoice (or the commercial invoice that contains the data).
- A paper copy of all import permits, certificates, licenses, or required documents from other government departments and agencies or an electronic copy for EDI participants with other government departments.
For more information on how to get your goods released prior to the payment of duties, see the CBSA's Memorandum D17-1-4: Release Procedures.
Once you've followed these steps. you've successfully imported your goods into Canada and are ready to get your new import business up and running.