Import / Export business in Canada

Here at Webtax Online, we are dedicated to providing up close and personal attention to customers who are less knowledgeable about importing and exporting to Canada. Businesses with limited knowledge in this area can face many obstacles in managing their financial records and Webtax Online with the Canada Revenue Agency (CRA). Each country has its own tax rules regarding imports and exports, such as GST/HST in Canada. We can provide you with top-notch accounting services for import and export businesses.

How can you register for GST/HST for your import-export to Canada?

1. You may be required to charge, collect and remit GST/HST on taxable supplies owned and operated in Canada.
2. You may need to submit a GST/HST return on a regular basis.
3. You may be able to claim Input Tax Credits (ITC) to recover GST/HST paid or payable on your purchases and operating expenses.

If you are importing goods into Canada or exporting goods to other countries, you must register for an Import-Export Program account. The Canadian Revenue Agency will use your Import-Export Program account number to process customs paperwork.

To avoid delays in clearing your goods at the border, open your program account before importing or exporting goods. When you import or export goods or services, you may have certain requirements from the CRA that you must meet. These can be 1) paying taxes, 2) describing your shipments, 3) accounting for your goods, 4) paying customs, and much more.

If you are an importer/exporter, you need to have all of the following on hand: GST/HST number with invoices, receipts, and any other documentation required by the CRA to apply for Purchase Tax Credits (ITC). The importer/exporter must also keep duplicate invoices, receipts, etc. to request the GST/HST paid from ITC.

When you register for a corporate number, you need to fill out the RC1 form. You must include all of your business names on customs clearance forms and documents such as invoices. If the name on the goods release document does not match the name on file, your goods may be blocked at the border.

Looking for accounting services for import and export businesses? Talk to us.

At Webtax Online, we have many years of experience with many import and export companies. We have helped our clients prepare their financial statements, and file business taxes and GST/HST returns. You can rely on Webtax Online’s accounting expertise to manage the financial data used to file corporate tax returns and GST/HST returns.

We are familiar with the import-export processes and how to register for a CRA-required import-export program account. If you want a reliable accounting firm in Toronto to take care of your import-export, you’ve come to the right place. We will work hard to provide you with the best accounting solution for your business.

If you’re looking for a combination of personal service and experience in corporate accounting and tax services, you’ve come to the right place. At Webtax Online, we help import and export businesses with strategic tax planning, tax preparation, and business advice.

At Webtax Online, we have observed that many businesses jump right into importing and exporting without proper prior knowledge. As a result, they face many hurdles in keeping their financial records and filing taxes with the CRA. Each country has its own set of tax rules relating to imports and exports, such as GST/HST in Canada.
Looking for accounting services for import and export businesses? Talk to us.

Import and export companies may need to register for GST/HST. This means that:

1. Must charge, collect and remit GST/HST on Canadian taxable supplies
2. Must submit GST/HST returns on a regular basis
3. They should be able to claim Input Tax Credits (ITC) to recover GST/HST paid or payable on purchases

Importers/Exporters are required to provide the GST/HST number on invoices, receipts, and any other documentation required to claim Purchase Tax Credits (ITC). In addition, the importer/exporter must keep copies of invoices, receipts, etc. to request the GST/HST paid from ITC.

If you are importing goods into Canada or exporting goods to other countries, you must register for an Import-Export Program account. CRA will use your Import-Export Program account number to process customs documents. When you import or export goods or services, you may have multiple obligations to the CRA, such as 1) reporting your shipments, 2) accounting for your goods, 3) paying taxes, 4) paying customs duties, etc.

You must complete Form RC1 – Application for Company Number and Certain Program Accounts, which contains all company names that may appear on customs clearance forms and documents such as invoices. If the name on the goods release document is different from the name we have on file, your goods may be held up at the border.

At Webtax Online we have worked with many import and export companies to prepare their financial statements, corporate tax returns and GST/HST returns. Not only do we care about their financial data which will be used when filing corporate income tax and GST/HST, but we also know the import-export processes, import-export obligations, and the CRA requirement for registering an import-export account program. If you are an import and export business and are losing control of your accounting function, Webtax Online is here to help you regain control.

If you intend to become an importer/exporter, Webtax Online is the right place to outsource the accounting and tax aspects of your business and we will do everything for you.

Specialist knowledge to support a complex customs environment

The field of customs compliance is often challenging and changes at a record pace. Stricter restrictions, evolving regulations, and uncertainties around critical supply chains, the Canada-US-Mexico Agreement (CUSMA/USMCA), and other free trade agreements can create challenging situations for importers. This leads to overpayment of the duty, uncertainty about the possibilities of recovery of the duty, and the submission of incorrect trade data elements to the customs authorities, resulting in the possibility of financial penalties.

Advice on various commercial, customs, and customs tax issues

Webtax Online’s customs advisory team provides customers with comprehensive solutions to these problems. Careful review and planning of a company’s cross-border trading activities can reduce costs through recovery or minimization of duties. Additionally, developing and implementing a comprehensive customs compliance plan can have a positive impact on an importer’s profile at customs, reducing the risk of fines and costly border delays.

We provide the following services:

1. CARM onboarding and monthly compliance monitoring
2. Customs compliance checks and process planning
3. Studies and solutions on supply chain risks
4. Duty Refund / Duty Refund
5. Crucial requests
6. Voluntary Disclosure
7. Establish a free trade agreement
8. Help with commercial verification audit
9. Tariff classification / Valuation / Determination of origin
10. Help with customs valuation
11. Complete solutions tailored to your business

Webtax Online works with clients to develop practical strategies for important business decisions. With over 20 years of proven experience in public accounting and day-to-day customs brokerage, we have the unique expertise to advice clients and help them navigate their customs experience. Contact us today to find out more about our customs advisory services.

Account settings

There are usually no special accounts that need to be set up specifically because the business is importing or exporting. There are likely to be normal transactional accounts (credit, debit) with the customs broker or Canadian IRS relating to duties and taxes resulting from the import transaction, but these accounts have no special attributes.

Need help in filing t2 tax returns, want bookkeeping services for import and export businesses, or looking for an accountant near me; talk to us at Webtax Online.

Import to Canada

The CBSA publishes a fairly comprehensive guide on how the import process works. It should be remembered that the following discussion is only about importing goods – tangible things (those you can touch or feel). There are no control procedures that apply to intangible goods or services because they do not physically cross borders. However, as noted below, you may need to account for GST when importing Intangibles or services into Canada.

Import/export number

An importer intending to bring his goods into Canada must have an import/export account with the Canada Revenue Agency. This account is simply an extension of the business number that every registered Canadian business should already have.

The import/export account number is used by the importer each time goods are imported and usually must be reported with each transaction.

Any Canadian business that already has a business number can simply add an import/export number to their account by calling toll-free. If the business is new, the business may ask you to open an import/export account when you apply for a business number.

Canadian import/export documentation

Goods entering Canada must be “cleared” through the CBSA. The customs clearance process ensures that the nature of the goods is understood (illegal goods will not be permitted),
Canadian safety issues are addressed, and all applicable duties and taxes are collected and paid.

Canada is a trading nation and huge volumes of goods cross its borders every day, so the CBSA and the import industry have developed many sophisticated methods to process imports. Companies that import regularly often use these methods to streamline the processing of import/export documentation. However, it is still possible to clear goods through a paper-based process, and a business that rarely imports will likely have little trouble adapting to using more sophisticated, computerized methods.

For the customs clearance of the goods it is necessary to present the following documentation:

1. two copies of the Load Control Document (CCD);
2. two copies of the invoice;
3. two copies of completed Form B3-3, Canadian Customs Encoding Form;
4. any import permits, health certificates, or forms required by other federal government departments; And
5. form A, certificate of origin (if necessary)

What is CCD?

The Cargo Control Document is the primary document used to report the importation of goods into Canada. As the name suggests, the document accompanies the goods and is delivered by the carrier of the goods (Transport Company, railway, airline, or company driver if the goods are imported directly by the company) upon arrival of the goods in Canada. The carrier will provide a copy of the CCD to the CBSA and a copy to the consignee – the consignee of the imported goods.

Invoices for importing goods into Canada

The CBSA requires two copies of the supplier’s invoice to clear goods through Canada.

There is a certain amount of information that an invoice must contain to be acceptable, and the CBSA has a form that can be used as a substitute for a commercial invoice. However, it is not necessary to use this form and a standard commercial invoice issued by the seller will suffice for importing goods into Canada, provided it contains the information required by the form.

The CBSA publishes a manual describing the information that must be on an invoice to be accepted for customs clearance in Canada.

B3-3 Import form

Form B3-3 is used to provide information about imported goods in a format that corresponds to how they are accounted for by the CBSA. At first glance, this form seems incredibly complicated and requires information that the business probably doesn’t know. In recognition of this fact, the CBSA is issuing guidance for new importers of goods into Canada to help them complete the B3-3.

Sale of imported goods in Canada

Sales taxes that would apply to domestic transactions are not avoided by importing goods into Canada. They are just collected in a different way.

The CBSA collects GST at the border when goods are imported. Provincial retail sales taxes are also levied on non-commercial goods in most provinces, those that have collection agreements with the federal government.

GST

How GST is enforced varies depending on whether the imported goods are “trade goods”, e.g. for resale or personal property.

When an individual imports goods for personal use, GST is levied at the rate applicable in the individual’s province of residence. So an individual living in New Brunswick and entering Canada in Manitoba pays 13% HST on taxable imports, not 5% GST.

However, for commercial goods intended for resale in Canada, GST is always charged at 5%. If the importer imports these goods into a participating province (Newfoundland and Labrador, Nova Scotia, New Brunswick, and Ontario) and would not qualify for the full tax credit due to the way the goods are used, the importer is required to self-certify the provincial component (8% in Manitoba) HST.

Services and intangible assets

A person who imports an intangible product or service is required to self-certify related sales taxes. However, a GST or HST self-assessment is only required if the importer would not be eligible for the full input tax credit (or would be eligible if they were registered). Therefore, only consumers and exempt suppliers should normally be concerned with the GST or HST self-assessment on imported services or intangibles.

Export from Canada

Canadian law generally requires any person exporting goods from Canada to report that export. The purpose of these reports is generally to enable statistics to be compiled on the level of Canadian exports and the types of goods exported.

The CBSA has released helpful guidance outlining export reporting requirements.

Need help in filing t2 tax returns, want bookkeeping services for import and export businesses, or looking for an accountant near me; talk to us at Webtax Online.

Export Sales Tax

The provincial retail trade tax does not apply to the sale of goods for export. These taxes generally only apply to retail sales within the province.

GST for exports

A major goal in implementing GST was to eliminate the federal sales tax on exports from Canada. GST replaced manufacturer sales tax, which was charged on the value of goods manufactured in Canada and then incorporated into the cost of exported goods. This tax tended to make Canadian goods less attractive in export markets.

As a general rule, goods exported from Canada are tariff-free.

Fines for import and export

There is an elaborate system of sanctions to ensure that importers and exporters comply with the various requirements placed on them. The system is called ‘AMPS’ – Administrative Fines System.

One of its most notable features is that the penalty applies to each occurrence of an irregularity: although the penalty for each violation is graduated according to the number of times the importer or exporter defaults.

Because of this, even a first-time offender can be subject to very severe penalties if there have been a lot of incorrectly reported transactions. For example, an importer may have used an incorrect tariff classification many hundreds of times when importing goods before the error was discovered. The penalty will apply for any fault, even if calculated at the “first offender” rate.

For this reason, businesses in Canada that engage in many import or export transactions often have their documentation and other compliance procedures reviewed by a professional consultant to ensure they are compliant with the law.

Import-export program account

If you are importing goods into Canada or exporting goods to other countries, you must register for an Import-Export Program account.

We will use your Import-Export Program account number to process customs documents.

To avoid delays in clearing goods at the border, open a program account before importing or exporting goods. When registering for a business number, including any names of your business that may appear on customs clearance forms and documents such as invoices. If the name on the goods release document is different from the name we have on file, your goods may be held up at the border.

To register a business number, go to How to register a business number or Canada Revenue Agency accounts.

Formation of a new company

When two or more companies merge to form a new company, we can issue a new company number for the new company. We will immediately close all accounts of the import-export program you had for the merged companies.

Import and export obligations

When you import or export goods or services, you may have several obligations:

1. report your shipments
2. accounting of your goods
3. to pay taxes
4. pay the duty

Information required to register for an Import-Export Program account

You must have all of the following items on hand:
1. type of program
2. importer and exporter
3. importer
4. exporter
5. type of goods exported
6. the estimated dollar value of the goods to be exported
If it’s different than your business information, you’ll also need all of the following:
1. email address
2. physical address

Need help in filing t2 tax returns, want bookkeeping services for import and export businesses, or looking for an accountant near me; talk to us at Webtax Online.

Import / Export business in Canada