According to Statistics Canada, in Canada, 13.4 million online orders were made by over 2.2 million households. By 2007, the Internet was used to make almost 70 million orders by about 8.4 million Canadian individuals. By 2009, Canadians used the Internet to place orders for goods and services valued at $15.1 billion, up from $12.8 billion in 2007. Considering the recession
The most common types of online orders are travel services, entertainment products such as concert tickets, books and magazines; and clothing, jewelry and accessories. According to the website creditcardscanada.com in 2009, the breakdown in percentages for online shoppers who purchase goods and services is as follows:
35% Reading Material
33% Apparel and Jewelry
With the advent of deal sites like Groupon, I’m sure this has altered the landscape a bit but the big 6 are probably still the bulk of the popular items being purchased. So with this in mind, I thought it would be useful for Canadians and residents of Canada to understand how much they would be paying in Customs duty and taxes if they some did some online shopping for Christmas gifts.
With the Canadian dollar near par with US dollar, many products are considerable cheaper south of the border. However, most people are unable to figure out how much they would actually save without knowing how much duties, taxes, brokerage and shipping feeds will be. Once you know all these costs, it is easy to determine if there really is a deal to be had.
In a nut shell, in the simplest terms, customs duties are calculated based on the commodity or HS (Harmonized System) Code and tariff treatment applied…and there are a myriad of commodity codes in the Customs Tariff. As such, without knowing the exact details of a commodity it is impossible to make a determination. As such I have decided to take the top ten items gifted on Amazon.com and figure out how much the duty and taxes would be if sent to Canada.
Please note that the following classification and rates of duty I am providing on specific goods are solely that of my opinion and not sanctioned by the CBSA in an way.
For the purposes of this article we will be assuming the following:
*That Customs Clearance is going to be handled by a courier company for an average $20 charge per type of commodity…and the
*Exchange rate will be the rate used today (day of this writing this article) November 17th 2011 of $1 USD = $1.0206 CAD.
*Keep in my mind that Provincial sales tax is dependent on your province of residence/destination. I.e. Ontario – HST of 13% is calculated on the purchase price plus any customs duty; while in Alberta no provincial sales tax applies so only GST will be charged on the purchase price.
1. Electronics for Kids – The number 1 gift in this category is the LeapFrog LeapPad Explorer Learning Tablet $156.99 USD or 160.22 CAD. This item is great for kids. I myself have been handing my kids the iPad as it entertains them with games and movies. It is a godsend in the car or at a restaurant. Now there is a cheaper version for kids by LeapFrog. This type of item would be classified under HS code 8471.30.00.00 for Portable automatic data processing machines, weighing not more than10 kg, consisting of at least a central processing unit, a keyboard and a display and would be subject to no duty regardless of country of manufacture.
2. Books – The number 1 seller is the Steve Jobs [Hardcover] $17.88 USD or $18.25 CAD. This item is classified under 4901.99.00.91 for Printed books, brochures, leaflets and similar printed matter, whether or not in single sheets, other: hardbound books. Good news folks, you get to read about the founder of Apple without paying any duty.
3. Baby & Toddler Toys – The best seller is Vulli Sophie the Giraffe Teether for $17.27 USD or $17.63 CAD. Sophie would be classified under HS Code 9503.00.90.54 for Tricycles, scooters, pedal cars and similar wheeled toys; dolls’ carriages; dolls; other toys; reduced-size (“scale”) models and similar recreational models, working or not; puzzles of all kinds, Other, Toys representing animals or non-human creatures: Other, not battery powered. Sophie is also free of duty regardless of country of manufacture.
4. Dolls – Under this category, the most popular is FIJIT Friends Willa Interactive Toy for $59.75 USD or $60.98 CAD. I’m not quite sure what this toy is but it appears to be some kind of robot that interacts by responding to speech. This toy would be classified under HS code 9503.00.90.53 for Tricycles, scooters, pedal cars and similar wheeled toys; dolls’ carriages; dolls; other toys; reduced-size (“scale”) models and similar recreational models, working or not; puzzles of all kinds, Other, Toys representing animals or non-human creatures: Other, battery powered. No duty again regardless of country of manufacture.
5. Beauty Gift Sets – In this category, the top seller is Shany Studio Quality Natural Cosmetic Brush Set with Leather Pouch, 24 Count $16.95 USD or $17.30 CAD. These professional grade brushes are made of goat and badger hair for applying make up and would fall under Harmonized System code 9603.30.90.00 for -Artists’ brushes, writing brushes and similar brushes for the application of cosmetics, Other. No Duty associated with this product.
6. Music – This is a popular category. Many people are downloading their music via online stores such as iTunes but for those of you who still enjoy purchasing a CD, Christmas by Michael Bublé is selling for $11.88 USD or $12.12 CAD. CD’s are classified under HS Code 8523.40.90.00 for Optical Media, Other and has 6% duty associated to it unless it falls under specific tariff treatments. But before you get disappointed this is of no consequence to your wallet as pre-recorded CDs can be free of duty by applying Tariff 9948 as per Customs D memorandum D10-14-51. This Tariff provided duty free importation for goods that were “committed by design to enhance the functioning of computers and other high-tech products” and a ruling by the Canadian International Trade Tribunal in cases AP99-116 and AP2001-097 has found that CDs fall into this Category. So no duty folks!
7. Women’s Wraps and Pashminas – Sakas Pashminas 70″ x 28″ Border Pattern Double Layer Woven Pashmina Shawl / Scarf / Wrap / Stole ( 20 Cool Colors ) $19.99 USD or $20.41 CAD If this pashmina is made real cashmere wool, then in the Customs Tariff it would fall under the classification number 6214.20.90.00 with 18% duty unless it was manufactured in a country that falls under a few particular tariff treatments. So worst case scenario duty would be $3.67 and then provincial sales tax would apply on the sum of $20.41 + $3.67 which is $24.08; plus possible brokerage and shipping charges if applicable.
8. Movies & TV – Another popular category, currently in number 1 position is Harry Potter and the Deathly Hallows Part 2 DVD is selling for $13.99 USD or $14.29 CAD. Just like recorded CDs, DVD movies are classified under HS code 8523.40.90.00 for Optical Media, Other in the Customs Tariff. Once again duty is %6 but by using the duty remission tariff 9948 duty is completely zeroed out.
9. Gourmet Gifts – Under this category the most gifted item on Amazon is Numi Organic Tea Flowering Gift Set in Handcrafted Mahogany Bamboo Chest: Glass Teapot & 6 Flowering Tea Blossoms for $22.99 USD or $23.46 CAD. Included are 6 flowering tea blossoms, 1 x 16 oz glass tea pot which will make a total of 18 pots of organic tea with 100% natural ingredients. As per General Interpretative Rule 3(b), this item qualifies as a set with the item giving this set its essential character being the glass teapot. Glass teapots would be classified under 7013.49.00.90 as -Glassware of a kind used for table (other than drinking glasses) or kitchen purposes, other than of glass-ceramics: Other, Other and is free of duty.
10. Electronics and Computer tablets – These two categories are hugely popular. At number 1 for both we have the Amazon Kindle Fire for $199 USD or $203.10 CAD. At half the price of the iPad, The Kindle Fire is Amazon’s contribution to the tablet market with their full colour multi-touch display and Wi-Fi capability. You can watch movies, listen to music, surf the web and of course read books and magazines; and install apps. Just like the kiddy Leapfrog version and iPads, the Kindle Fire is free of duty.
11. Toys and Games – Toy manufacturer Mattel is top spot with Angry Birds: Knock On Wood Game for $32.95 USD or $33.63 CAD. I’m sure Rovio the company who built the app Angry Birds are making even more money licensing their brand to Mattel. This game would be classified under 9504.90.10.90 for Articles for funfair, table or parlour games, including pintables, billiards, special tables for casino games and automatic bowling alley equipment, Other, Bagatelle and other game tables or boards, Other and is again free of duty.
12. Bath and Shower Sets – Number 1 with their Honey Vanilla Bath Set – Style 34187 by Gift warehouse for $17.42 USD or $17.78 CAD. In this set, Bath gel, soap, lotion, and bath salts in a delicious ”Pure Pleasure Honey Vanilla” scent are combined with a wood massage tool and a sponge. This bath set would be classified under 3307.30.00.90 for Perfumed bath salts and other bath preparations, other bath preparations. Duty is 6.5% which is $1.16 for a total cost of $18.94 plus GST/HST and any applicable provincial sales tax.
13. Kitchen and Dining – In first place is the Cuisinart CSB-76BC SmartStick 200-Watt Immersion Hand Blender, Brushed Chrome for $28.99 USD or $29.58 CAD. This blender is has dishwasher safe, stainless steel blending shaft and comes with a 2 cup plastic beaker and 3 year limited warranty. This product would be classified in the Customs Tariff under HS code 8509.40.90.90 for Electro-mechanical domestic appliances, with self-contained electric motor, other than vacuum cleaners of heading 85.08, -Food grinders and mixers; fruit or vegetable juice extractors, Other, Other; and is duty free.
14. Jewellery – This is the last category I will cover – The most gifted item is the Sterling Silver “A Mother Holds Her Childs Hand For a Short While And Their Hearts Forever” Heart Pendant, 18” for $25 USD or $25.51 CAD. This is pendant is engraved with the inscription as a testament to the enduring love of a mother for her child. A polished 18” sterling silver necklace is also included. Silver jewellery is classified under HS Code 7113.11.90.00 for Articles of jewellery and parts thereof, of precious metal or of metal clad with precious metal, Of precious metal whether or not plated or clad with precious metal: Of silver, whether or not plated or clad with other precious metal, Other. With 8.5% duty associated if not manufactured in a country with a free trade agreement with Canada. In this case, duty would be $2.16. GST/HST and provincial sales tax depending on your province of residence will be on the total of $27.67 CAD.
Well that’s it folks, as you can see many of the popular items are free of duty. Just be aware that if you’re thinking about buying someone a gift of clothing the duty rate is 17-18% for most items and jewellery ranges from 5%-8.5% (unless the item is made in the US or Mexico, or another country we have a free trade agreement with; and there not many).
Happy Online Shopping!
I was given an idea to write a post about different shipping methods to Canada by dansmoncorps on Twitter. she has her own blog here with some nice photography. Anyway thanks for the idea.
I must confess that this is not my area of expertise but I thought it was definitely information that people out there want to know and is somewhat related to the Customs Process.
So here is how I see it.
Canada Post – by far the cheapest, with a $5 service charge for regular mail and $8 service charge for EMS. i.e. you order something off ebay and its sent by US postal service then it goes to one of the 3 international mail facilities where Customs will process your mail and if you owe duties and/or tax then you will receive notification from the post office to go collect your parcel. Contrary to what some may think this service charge does not go to Customs or the Government of Canada but to Canada Post. PST, GST, HST and Duty however is collected by Canada Post on behalf of the Federal and Provincial Governments.
Mail under $20 is released duty and tax free under a Postal Importations Remission Order. Over $20 you can be subject to duty and tax.
Over $1600 your mail can be deemed commercial and you may receive a letter in the mail directing you to clear your shipment at a prescribed Customs office offering commercial services. You will have to bring your receipts or invoices and 2 copies of the letter and 2 completed Form B3 to declare your goods commercially. After you present your paperwork to Customs and pay any duties and tax owing you can then fax a release stamped copy of the letter back to Customs at the mail centre and they will allow Canada Post to deliver your package.
The only negative I really see is the length of time it can take to send or recieve your shipment.
For Customs requirements on using Canada Post to send or receive goods in greater detail click here.
Canada Post also has the “Border Free” program that offers “hassle free online cross border shopping”. This actually seems to work quite well from what I have seen. The basic jist of it is that if you shop using participating online retailers like abercombie you get a price that includes all the different costs associated with no suprises and your package delivered to your door. For more info see here
You can download the UPS Customs Rate guide here. Its actually quite informative and breaks down the charges.
Some have complained about feeling blindsided by UPS standard’s fees for clearing Customs. As many retailers in the US will use their services it is best to be aware of the charges. As I mentioned in a previous post, you always have the option to self clear! Check out my previous post on how to do this.
DHL – Is a another air courier option. If you have not paid Customs fees in advance, DHL charges %2.5 of the value with a starting minimum of $7. Go here to see more details.
Fedex - Now if you’re shipping from the US there is also Fedex Ground which is cheaper but of course takes longer. Fedex Ground will often deliver your package and send you a bill later for brokerage fees. Again if you have not designated them as your broker you have the option to self clear and they have to reverse the charges once you show proof that you have accounted for the goods with Customs.
Purolator - Their fees for brokering are also invoiced after the fact by Purolator Trade Solutions for a minimum of $5 or %3 of the value for duty whether you owe duties and taxes or not.
Things to be aware of – The $60 gift exemption applies only to gifts being sent by Non-residents to residents and must clearly appear to be a gift. If the package is inspected by Customs and not determined to be in fact a gift (no indication other than the declaration) full duties and taxes will apply. If there is no indication of value, no invoice, or receipt, or bill, then the value may be assessed by the officer. Of course you can always dispute the charges afterwards.
Any questions? you can post here or tweet it @customsinfo