With the Xmas season around the corner, Do you know what qualifies as a “Gift” for Canada Customs?
Today’s topic is one that is commonly misunderstood by the general public and it is to do with the $60 gift exemption under tariff 9816. So here are 8 facts associated to tariff 9816:
1. This tariff 9816 applies only to casual donations sent by non-residents of Canada to a resident of Canada. A common mistake is that some residents of Canada returning from a trip or holiday purchase gifts for friends and family and believe that these items will qualify under 9816. They do not. These types of gifts retired to fall under tariff 9804 to be imported duty and tax-free as part of their personal exemption.
2. Gifts under tariff 9816 may not be considered advertising matter, or the alcohol or tobacco.
3. If the value of the gift under tariff 9816 exceeds the $60 amount, then the taxable amount will be reduced by $60. For example, your uncle from Poland brings you a sweater valued at $100 Canadian, then tariff 9816 would be applied by taking off $60 and leaving $40 is the amount duties and taxes would be applied to.
4. An association, organization, company, or business of any kind does not qualify as eligible recipient under tariff 9816.
5. In order to qualify under tariff 9816 for duty and tax free importation, no individual item/gift can be valued at more than $60 Canadian, notwithstanding the number of joint recipients. For example, a gift valued at $180 cannot be divided equally by 3 family members.
6. There are no limits to the number of gifts that can be imported free under tariff 9816 so long as they are under $60 Canadian and for different individual who is a resident of Canada.
7. In order to qualify for tariff 9816, items should be clearly marked and identified as a gift. For example, they should be a card or gift to be wrapped.
8. Gifts can be sent by nonresident Canada directly from a third-party such as an online store and qualify for tariff 9816 so long as the customs officer is satisfied that the gift was unsolicited and bona fide.
The Canada Border Services Agency has a Duty Deferral Program to help Canadian business stay competitive by deferring duty and taxes on imported goods that will be eventually exported or will enter the Canadian economy at a later date.
Under the umbrella of this program are three sub programs.
Duties relief program – This is where duties and taxes are deferred on the understanding that the goods imported whether further manufactured or not will eventually be exported from Canada. No bond is necessary. If you qualify you can apply to be part of this program by completing an application form K90 linked here and mailing it in to your local CBSA office. You normally have 4 years to export the goods and you can also sell the goods before export to another company in Canada so long as they are also part of the program.
Drawback Program – Under this program you can apply for a drawback or refund on Canada Customs duty and taxes paid on goods that were imported that you eventually exported in the same condition, with minimal use, or further manufactured. There is also a waiver system where as part of the program one can apply for drawback on imported goods sourced from a local company. As per the CBSA” the program provides for drawbacks on consumable and expendable goods used in production processes, as well as scrap materials.” Drawback claims can be made by submitting a completed form K23 and attaching supporting documents showing the goods qualify to your local CBSA office. Please note that claims must be made within 4 years of the date of importation and cannot be submitted prior to export of the goods which were imported.
Custom Bonded Warehouse Program – Directly from the CBSA website “A customs bonded warehouse is a facility operated by the private sector but regulated by the Canada Border Services Agency (CBSA). Through the Customs Bonded Warehouse Program, you may qualify for a complete deferral of customs, anti-dumping and countervailing duties and excise duties and taxes, including the goods and services tax and the harmonized sales tax. You only pay duties and taxes on the portion of goods entering the Canadian market. If you export goods, you don’t have to pay any duties. While the goods are in the warehouse, they may undergo certain minor manipulations such as marking, labelling, testing, inspection, packaging, display, dilution, normal servicing and maintenance, grading, shorting, trimming, slitting or cutting and repackaging.
These programs are useful to your business if one of the following applies:
-you import goods into Canada for storage or minor manipulation;
-you consolidate imported and domestic goods for export or Canadian consumption;
-you import goods for display at conventions, exhibitions or trade shows and you export the goods after the event; and
-you are involved in facilitating the movement of goods into and out of the North American marketplace.
Applying to operate a customs bonded warehouse
To apply to become a customs bonded warehouse operator, complete Form E401, Application for a Licence to Operate a Customs Bonded Warehouse. The CBSA will review your application and schedule a visit to review the proposed site and your record-keeping system. As soon as the CBSA approves your application, you will be issued a unique customs bonded warehouse licence number.
Both residents and non-residents can apply to operate a customs bonded warehouse. You also have the option of contacting an existing warehouse operator to use his or her facility to take advantage of this program.
An annual licensing fee applies. If the CBSA identifies a need for security during the processing of your application, you may also have to post security based on the types of goods to be imported and your financial compliance profile.
In most cases, you have to remove the goods you import under the Customs Bonded Warehouse Program within four years of the date they entered Canada. There are provisions for extending this time limit if the CBSA agrees that it is necessary.
From time to time, the CBSA will check if the imported goods have been removed from the warehouse and properly documented and accounted for. However, it is your responsibility to properly control all goods and immediately report any non-compliance.”
Keep in mind that if you are a producer of goods that are exported to the United States or Mexico, you may be subject to restrictions under the North American Free Trade Agreement (NAFTA). See Memorandum D7-4-3, NAFTA Requirements for Drawback and Duty Deferral (PDF, 56 KB), for more information.
To learn more about the Duty Deferral Program, visit the Canada Border Services Agency Web site or contact a trade compliance officer through the Border Information Service at 1-800-461-9999 for service in English and 1-800-959-2036 for service in French.
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