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How to Estimate Cross-Border Shopping Duty and Excise Taxes

When you buy raw materials and unique items to sell in your retail shop from other countries, you may have to pay import duty and excise taxes on the goods you import into Canada that exceed your personal exemption. Before you do some Canada cross-border shopping, it’s wise to understand what types of goods require these extra payments and whether it’s worth it to buy them in the first place.

Canadian Duties and Taxes on Imported Goods

When you use the mail or a courier to import goods into Canada, those items may be subject to the Goods and Services Tax (GST) and/or duty. If your goods don’t have specific exemptions, you must pay 5 percent of their Canadian value in GST, as of September 2018. Do you import smaller, more frequent shipments? Then you can take advantage of the exception for all shipments worth $20 or less. The government lets gifts from family and friends worth $60 or less slide by without any duties as well.

Canadian Excise Duties and Taxes

The Canadian government requires you to pay excise taxes on fuel-inefficient vehicles, air conditioners for automobiles and certain petroleum products. But what if your industry requires you to use vehicles and equipment subject to excise taxes? In some instances, you can get a refund on the excise taxes you pay if you qualify for an E licence as a manufacturer or a W licence as a wholesaler. You may also qualify for the Duty Deferral Program depending on the types of goods you import. If you import tobacco, spirits, beer or wine, you must pay excise duties on those items.

Duty and Taxes Estimator

To help you make better cross-border shopping decisions, use the the Canada Border Services Agency’s duty and taxes estimator . Simply indicate your province of residence, the description of the product, the price you paid for it, and the place where it was made, which may differ from the country where you had purchased the product. The tool then provides an estimate of what you owe upon importation, so you can better calculate your expenses and profit margins.

Your small company thrives when you pay careful attention to the cost of things you need to do business. By using tools designed to eliminate surprises, you can keep projects on track and your small business running smoothly. Putting QuickBooks Online to work for you can also help you maximize your tax deductions. Keep more of what you earn today.

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