GST
NAFTA
AMPS and Compliance
FAST, C-TPAT, CSA and PIP
Reasons To Believe

What is GST?

GST is a value added tax.  It stands for Goods and Services Tax.  GST is assessed at the rate of 7% on all goods imported into Canada with the exception of zero rated or exempt supplies such as basic groceries.  GST paid on importations by a GST Registrant are recoverable as an Input Tax Credit.

What about non-resident importers and the GST?

GST is still applicable on imports to Canada .  However, only companies registered for the GST can collect and remit input tax credits.  According to Revenue Canada’s de facto rules, the Canadian importer is deemed to have paid the GST and is therefore entitled to the input tax credit. The non-resident vendor needs to work with the Canadian purchaser to preserve the input tax credit.

If there is an error on the entry, that affects GST – can my broker get it back with a refund claim?

No. Since GST is automatically claimed back by way of an input tax credit whether paid in error or not, brokers cannot claim GST back with a refund claim.  The importer must pay it and claim an input tax credit.

What about temporary imports?  Or leased goods?

GST is applicable on leased goods, they are treated by Revenue Canada as a sale.  GST is still applicable on temporary inputs.  Since it’s recoverable as an input tax credit, it’s considered a flow through and therefore Canada customs has not made regulations to remit it.

How is GST calculated?

GST is calculated at 7% of the duty paid value of the goods.  That is the value of the goods, in Canadian dollars, with any applicable duties added to it. The exchange rate used to convert the value from a foreign currency is the rate of exchange used by the Bank of Canada on the date of direct shipment to Canada. 

Are all goods imported from the USA to Canada duty free?

No.  If the goods normally attract a duty rate they only become duty free if you have a valid NAFTA certificate in your possession.  The fact that the good are shipped from the U.S. is not sufficient to make them duty free.

How do I know goods qualify for NAFTA and can I prepare the NAFTA certificate?

The supplier of the goods should prepare the NAFTA as only they, or the manufacturer, know if the goods qualify as originating under the specific rules of origin.  Signing of the NAFTA certificate imposes obligations and liabilities to the party signing it.  Only those with sufficient knowledge to make a declaration should sign the NAFTA certificate.

Who should keep the NAFTA certificate on file and who makes sure it’s right?

It is a requirement of Revenue Canada that the Importer of Record keep the NAFTA certificate on file for 5 years plus the current year of the import in question.  The exporter should keep the original with copies provided to each Canadian importer claiming NAFTA tariff treatment.  If your company is audited and you do not have a valid NAFTA certificate on file for an import where you claimed the NAFTA tariff, you could be eligible for an AMPS penalty.  Although a customs broker can be requested to verify a NAFTA certificate, the ultimate responsibility lies with the importer.  The importer must ensure certificates are on file and are correct.  If a NAFTA claim is made and you learn the goods are not eligible, you must amend the entry to pay the additional duty.  If you pay duty and a NAFTA certificate is subsequently available, you can file for a refund of the duty within prescribed time limits – one year from the date of importation.

What is AMPS?

AMPS stands for Administrative Monetary Penalties System.  For imports prior to October 7, 2002, Customs will not issues AMPS.  AMPS is a civil penalty regime intended secure compliance with customs legislation through the application of monetary penalties.  If you are involved in importing or exporting goods to and from Canada, you need to make sure you are aware of customs reporting requirements.  Assess your level of compliance and implement a plan to ensure your company’s compliance with customs regulations.

What do the acronyms FAST, C-TPAT, CSA and PIP stand for?

FAST stands for Free and Secure Trade.  It is a joint Canada-U.S. initiative involving the Canada Customs Revenue Agency, Citizenship and Immigration Canada, the United States Customs Service and the United States Immigration and Naturalization Service.  FAST supports moving pre-eligible goods across the border quickly and verifying trade compliance. For more information see:  http://www.cbsa-asfc.gc.ca/import/fast/menu-e.html

C-TPAT  stands for Customs-Trade Partnership Against Terrorism.  It is also a joint U.S. government-business initiative deisnged to strengthen the overall supply chain and border security.  For more information see:  http://www.customs.gov/xp/cgov/import/commercial_enforcement/ctpat

CSA  - a Canada Customs program for Canadian importers for self assessment.  For more information see:  http://www.cbsa-asfc.gc.ca/import/csa/menu-e.html

PIP – The Partners in Protection program is designed to enlist the co-operation of the private sectors to enhance border security.  For more information see:  http://www.cbsa-asfc.gc.ca/general/enforcement/partners/menu-e.html

WHAT IS "REASON TO BELIEVE"?