Import Compliance FAQs

Trade Talk Blog • January 19, 2023

t GHY, we receive a lot of compliance questions from importers. That’s why we put together this guide to answer the most frequently asked questions.

What goods can I import into Canada?

Some goods are prohibited in Canada, such as material suspected of constituting hate propaganda, sedition, or treason — less obvious goods that are prohibited include used mattresses. You can find more information on prohibited goods in CBSA’s Departmental Memorandum.

Most prohibited goods are subject to the regulations of other government agencies. These agencies are called Participating Government Agencies (PGAs) and include the Canadian Food Inspection Agency (CFIA), Transport Canada, Environment Canada, and Health Canada.

Departmental Memorandum Series D19 provides detailed information on the Acts and Regulations of Other Government Departments.

What steps are needed to import goods into Canada?

If you are importing commercial goods into Canada, you will need to follow these seven steps:

• Obtain a business number
• Know what you are importing
• Determine if your goods are subject to any other government departments regulations
• Classify your goods under the Tariff Classification
• Identify where your goods originate?
• Determine the value of your goods
• Calculate your duty and taxes

For more details on these steps, you can refer to The ABCs of Importing | Your 7-Step Guide to Importing into Canada.

What paperwork do I need to submit to CBSA?

The documents you’ll need to submit to CBSA when importing goods into Canada are:

1. Canada Customs Invoice (CCI)
2. CUSMA/USMCA/T-MEC Certificate of Origin (when importing goods from the U.S. or Mexico)
3. Packing List
4. Bill of Lading
5. Import Licenses or Certificates (if applicable)
6. B3 Customs Entry Form

Do I need to have a Business Number (BN)?

If you are importing goods into Canada for commercial use, you will need a Business Number (BN). BNs are issued by the Canada Revenue Agency free of charge. You can register for a BN through the Canada Revenue Agency (CRA) website, by calling 1-800-959-5525 or by apply for one with us here.

What is duty and how is it calculated?

Duty is an amount levied on the value of imported goods based on a percentage or specific amount. Rates of duty are determined by the type and origin of the goods that are imported.

What is GST, PST, and HST? How are they calculated?

The Goods and Services Tax (GST) is a 5% value-added tax levied by the federal government for most goods and services sold or provided in Canada, including imported goods. There are some exceptions to the GST such as basic groceries, prescriptions, agricultural, and fishing products. A full list of exceptions can be found in Schedule VI and Schedule VII of the Excise Tax Act.

The Provincial Sales Tax (PST) is a tax levied by some provincial governments and imposed on the sale of many goods and some services within these provinces. The rate charged varies from province to province. PST is not collected on commercial imports.

The Harmonized Sales Tax (HST) combines the GST with PST into a single tax that the federal government collects. Newfoundland and Labrador, Prince Edward Island, New Brunswick, Nova Scotia, Ontario, and British Columbia are the only provinces that have adopted HST right now (at varying rates).

More details on GST and HST can be found in the Government of Canada’s General Information for GST/HST Registrants.

What is Tariff Classification?

Most countries use the Harmonized System to classify their goods. The first 6 digits are always the same across all countries for the same good. In Canada, classification numbers contain 10 digits. For example, if you were importing live, ornamental freshwater fish, the tariff classification would be 0301.11.00.00.

• 03 – Chapter
• 0301 – Heading
• 0301.11 – Subheading
• 0301.11.00 – Tariff Item
• 0301.11.00.00 – Tariff Classification

Not all goods are named in the Customs Tariff, nor are all of them easy to classify. We recommend that you speak to your customs broker to ensure classification accuracy.

Why is origin important?

Canada has numerous free trade agreements with countries around the world. That’s why country of origin is important. If the goods you are importing are originating in one of these countries, they meet the Rules of Origin and can be certified then duties may be reduced or free of duty.

For more information, refer to our Certificates of Origin and Free Trade Agreements article.

How do I value my goods for customs?

There are six methods of appraisement to determine the value of your goods, which are detailed in Sections 48 to 53 of the Customs Act. CBSA primarily uses the Transaction Value Method (TVM) to calculate the value of imported goods. This method is based on the Price Paid or Payable (PPP), with additions and deductions.

The Price Paid or Payable (PPP) is the total of payments made, or to be made, directly or indirectly to the vendor of the goods or for the benefit of the vendor of the goods. This definition of PPP ensures that all payments are included, even those that may not appear on a commercial or vendor invoice.

You can refer to The Criteria for Applying the Transaction Value Method (TVM) on Your Imported Goods for more details.

My declaration made to CBSA was incorrect. What should I do?

If your declaration to CBSA is incorrect, an entry should be submitted to amend the error, be it tariff classification, origin, value, or discrepancy. You can correct discrepancies in the information provided to CBSA at the time of release by submitting a Form B2 – Canada Customs Adjustment Request.

CBSA allows importers 90 days to self-correct once they have Reason to Believe an error has taken occurred in accounting for their goods.

You can refer to our Post Entry Corrections article for more details.

What happens if I am not compliant with customs regulations?

Non-compliant importers are subject to Administrative Monetary Penalties (AMPS) issued by CBSA. AMPS are assessed based on the type, frequency, and severity of the contravention.

Understanding the Administrative Monetary Penalty System (AMPS) provides detailed information about AMPS.

You can refer to our Post Entry Corrections article for more details.

When do customs penalties apply?

Penalties can be assessed for a vast number of contraventions, but some common examples of non-compliance are:

• Failure to report goods to CBSA, including overages and shortages in quantity of goods received
• Failure to provide required information to CBSA about:
  • Tariff classification
  • Origin
  • Valuation
• Failure to self-correct an incorrect declaration
• Failure to pay duty
• Failure to maintain records
• Direct delivery of goods prior to release from CBSA control

A full list of penalties can be found in this Master Penalty Document. The document outlines the contravention and provides guidelines on how the penalties are applied.