ne of the changes that came into effect with the implementation of CUSMA is an increase in de minimis thresholds of duty and taxes. As an importer, understanding what the new threshold levels mean for your business is essential. This article will walk you through the new de minimis thresholds that can impact your imports into Canada.
As of July 1, 2020, the date CUSMA entered into effect, the Canada Border Services Agency (CBSA) implemented changes to the de minimis thresholds with respect to customs duty and taxes for courier imports.
What is the De Minimis Threshold?
The de minimis threshold is the monetary value for courier shipments that can enter Canada without paying duties and taxes. Under CUSMA, Canada has agreed to maintain a de minimis threshold of at least CAD$150.00 for customs duties, and CAD$40.00 for taxes, at the time or point of importation of goods shipped by courier from the United States or Mexico. It is important to note that de minimis rules are based on the place of direct shipment, not on where the goods originate.
As defined in the Courier Remission Order (CIRO) of the Financial Administration Act, the word courier refers to any commercial carrier engaged in scheduled international transportation of shipments of goods, other than goods imported by mail.
CBSA’s Customs Notice 20-18 stipulates that the implementation of the CUSMA customs duty and taxation de minimis commitments will happen through changes to the Excise Tax Act and the Courier Imports Remission Order.
The New Di Minimis Thresholds
While some thresholds relieve duty, others relieve duties and applicable taxes. Here is a breakdown of the new de minimis thresholds under CUSMA and their implications on your import business:
Goods imported into Canada from any country (except the US and Mexico) by courier. If the importer of record is a Canadian resident or business, and the imported goods are valued at CAD$20.00 or less, than customs duties, Goods and Services Tax (GST), Harmonized Sales Tax (HST), or Provincial Sales Tax (PST) will not be payable.
Goods imported into Canada from the US or Mexico by courier. If the importer of record is a Canadian resident or business, and the imported goods are valued at CAD$40.00 or less, then customs duties, GST, HST or PST will not be payable.
CAD $40.01 – CAD$150.00
Goods imported into Canada from the US or Mexico by courier after entering into the commerce of US or Mexico. If the importer of record is a Canadian resident or business, and the imported goods are valued between CAD$40.01 and CAD$150.00, then customs duties will not be payable, and GST, HST, or PST will be payable. To clarify, goods that are in transit through the US or Mexico are not entitled to this threshold.
CAD $150.01 and Greater
Goods imported from any country, including the US and Mexico, by courier. If the imported goods are valued at CAD$150.01 or greater, then customs duties, GST, HST or PST will be payable.
Exceptions to the De Minimis Threshold
Regardless of their value, certain goods such as alcohol and tobacco products are not eligible to use the Courier Remission thresholds.
Splitting or dividing a shipment into several lower value importations to benefit from the courier remission thresholds is not permitted. The shipment value must reflect all items that make up an order, regardless of whether shipping dates or place of export differ.
De minimis thresholds do not apply to goods imported into Canada by mail. The Postal Imports Remission Order applies to goods imported through this stream.
Low-Value Shipment (LVS) Thresholds
To expedite low-value shipment (LVS) processing, couriers need not apply the CUSMA rules of origin to determine if de minimis thresholds would apply.
It is worth noting that as of July 1, 2020, the low-value shipment (LVS) threshold has also increased for all imports into Canada. As stated in CBSA’s Customs Notice 20-15, LVS thresholds have increased from CAD$2500.00 to CAD$3300.00.
Compliance with CBSA Rules and Regulations
After importation, CBSA may request source documentation to substantiate claiming the benefit of courier de minimis thresholds. Source documentation may include a commercial invoice, a Canada Customs Invoice, proof of payment, etc.
Compliance with PGA Requirements
Importing goods within the courier de minimis thresholds does not exempt the goods from the scrutiny or regulation of Participating Government Agencies (PGAs). Regardless of their value, imported goods must meet the requirements of PGAs, including permits, certificates, or licenses.
If you have questions about the new de minimis thresholds or would like to learn more about CUSMA/USMCA/T-MEC, our Global Trade Services (GTS) would be happy to help you.