Purchasing goods from stores outside Canada always seems extremely attractive, especially during the peak shopping dates like Black Friday, Cyber Monday and Boxing Day. Offers made on these dates offer discounts on latest products and fashion that Canadian retailers might not be able to match.
Online shoppers tend to forget factoring taxes and duties on goods they’re planning to purchase and import into Canada while comparing prices. Its only when you proceed towards the check out screen that reality begins to dawn on you and after setting your heart on what you’ve just added to your cart you make the difficult decision of either going ahead with the purchase or even abandoning your cart before finalizing payment.
This has happened to many of us, online shoppers in Canada, deals too good to be true are often abandoned when you look at the final price at the time of payment during check out.
In this article we have mentioned a list of things you should be aware of if you plan to purchase goods online from retailers outside Canada.
What are the shipping costs to Canada?
Well known and established online retailers are usually upfront about their internal shipping costs. The costs are calculated based on the weight, size, distance and quantity of your purchase items. Another important factor that determines shipping cost in the speed of delivery, items shipped via air will be multiple times more expensive compared to those shipped via sea. While calculating the item cost, you might also factor in the exchange rate. International shipping costs are most of the time calculated in USD for items purchased in the US and either GBP or Euro for items that are purchased from a European retailer. Asian retailers like AliExpress also indicate shipping costs in USD but they offer currency conversion at the time of checkout so you know what you would actually end up paying towards shipping.
What are duties and taxes?
In short, it’s what you will be dinged by the Canadian government to bring goods into the country. Duties and taxes are usually broken down into import tax or tariff and sales tax.
Import tax, or tariffs, on goods imported vary depending on the country it’s made in, where it’s coming from and on the item itself. Certain goods, like Clothing, have some of the highest tariffs.
Sales tax, is similar to tax you would be paying on goods purchased at a Canadian store or online retailer. Sales tax varies depending on the province you are living in. It’s a minimum of GST 5% plus whatever your provincial rate is. Taking Ontario as an example, you will be paying HST of 13% on the goods you are importing. You do not have to pay GST on goods worth less than CAD $20 or less and for gifts from family members or friends who live abroad when its worth CAD $60 or less.
Here is a link to the Canada Government website for sales tax on imported goods based on your province.
Brokerage fee is a fee that’s charged by whoever clears your package from its point of origin through customs all the way to your destination. The brokerage fees vary from provider to provider. Canada Post is authorized to charge the recipient a handling fee of $5 for mail items and $8 for express mail items for collecting duties and taxes assessed by the Canada Border Services Agency (CBSA). If there is no duty or tax owed, they don’t charge a fee.
Is there an online tool I can use to calculate duties and taxes for imported goods to Canada?
Yes, the Government of Canada has an online tool that you can use to calculate duties and taxes. The tool factors where you live, the type of product you have brought or intent to purchase, if the product was made in either Canada, US or Mexico and finally what’s the cost of the product in CAD.
Here’s a link to the calculator.
I noticed that sometimes I didn’t have to pay any duty on goods purchased online.
This is possible when you buy goods online that cost less than CAD $20. It’s more likely to happen when you buy goods from websites like Ali Express or eBay. You might not end up paying duties on a transparent case for your new iPhone if it costs less than CAD $20. There have been cases where the seller labels the item with an incorrect price to avoid duties. The seller might use a label that prices a CAD $30 item to CAD $10 and provide an incorrect name to the item. These tactics happen quite often on low-cost items purchased from Chinese sellers.
As a buyer can I avoid paying customs and duties?
The answer is no, not because it’s not possible, but it’s considered unethical and you would be lying to Canadian customs. Some of the practices that sellers use to avoid goods from attracting duties and taxes is to fudge the label or label the package as a gift where in you would not have to pay taxes if your package is worth less than CAD $60. While sellers do that so you buy the item from them, it’s the wrong thing to do.
While buying goods online and importing them into Canada might seem a daunting task, it could still end up being profitable even after all these additional costs. Sometimes an item is only available in a particular online store where you would need to import it into Canada. Knowing all these additional costs beforehand will help you prepare a budget for your purchases and will also assist you with making an informed decision before you add the product in your shopping cart. Have fun shopping!