Import Duty Calculations

Anyone who is bringing a product into Canada from another country may be required to pay duty. For example, many individuals from Canada go across the border to shop. They may be required to pay a duty on any items when bringing them into Canada.

There may also be a duty which needs to be paid on goods that are mailed into Canada. In this case, the CBSA will do a calculation of the duties payable based on the value of the assets being mailed in. For businesses, they can do import duty calculations so they can estimate this cost.

Calculating Duty Rates

Businesses which are importing goods are expected to determine the rate of duty along with taxes. The tariff classification number must first be determined. This means that the business must have an understanding of tariffs. Why this is important is, because the tariffs may indicate what type of trade agreement may be in place. This could allow for decreased rates of duty.

The Customs Tariff Schedule

This schedule is comprised of two columns with one being the Most Favoured Nation Tariff and the other being the Applicable Preferential Tariffs. This particular schedule outlines the rates of duty based on trade agreements with specific countries. For example, Canada has several trade agreements, with some of them being:

  • Nafta (although this is in the process of being re-negotiated)
  • Colt; a free trade agreement between Canada and Columbia
  • JT; Canada free trade agreement between Canada and Jordan

A business owner can go through the list to find the applicable country to determine what the reduced rates of duty are that apply to the goods being imported. This explains why the proof of origin of the products being imported is so essential. This is data that must be submitted in the import process. The tariff classification number tells the border authorities if the correct duty has been determined.

Duty is Based on Percentage of Goods Value

Generally speaking, the duty that is applied to imports is based on a percentage of the value of the goods. The tariff schedule is a precise way of knowing what these costs will be and what discounts may be applicable.

Classification of Goods

To get the proper tariff classification, it means having a good description of the goods. Each step in the import process is a necessary one and has a specific purpose. Although it may seem like a lot of work, doing it can save money when it comes to the duties. It can also mean not having to deal with problems at the border.

An excellent way to be able to deal with the calculation of duties is to put the import process in the hands of a customs broker. They will do the majority of the work that is involved in importing.