Many people have never heard of the Canada Customs duty refund program, or Casual Refund Program, but it could really pay off to know how to claim duty back. Many Canadians go over the US border for an occasional day of shopping. Even more commonly, they shop online and order products from outside of Canada. If you do too, you might be missing out on some cash from the Canada Customs duty refund program.
By the end of 2019, Canadians are expected to have spent nearly $40 billion CAD on online purchases. About half of all purchases Canadians make online are from foreign retailers. With so many items being ordered into Canada, you can be sure there are items being returned. Maybe the pants you ordered from Paris didn’t fit, or the computer monitor you ordered from China arrived with some damage. Maybe you’re just having shopper’s remorse. It happens. Whatever the reason, having to return a package can be annoying.
There’s some good news, though. When you return an item to a foreign supplier, whether by mail or by hand, you’re entitled to a refund on the duties, GST/HST, and provincial taxes that you paid to get the item into Canada. The process can be a little confusing, but we’ll break it down for you. Keep reading to find out how to claim duty back.
What is the Casual Refund Program?
The Casual Refund Program is an initiative put in place by the Canada Border Services Agency (CBSA) to allow Canadians a near-complete refund when they return items purchased outside of the country. Whether you purchased an item online, by courier, or by hand, the Casual Refund Program applies to your return and allows you a refund for duties and taxes.
When you buy something in a foreign country, you usually have to pay duties. For many classifications of items from NAFTA countries (The United States, Mexico), duties are low or non-existent, but you still have to pay Canadian taxes if the item is imported by mail or courier. If you’re bringing the item in by hand, taxes and duties may apply if your goods exceed personal limits. For more information on import duties, consult this CBSA document.
When does it apply?
- It is only for non-commercial purchases. This means the item must be for personal (or casual) use and not for resale of any kind. The program is not intended for the refund of duties and taxes on commercial importations.
- The item must be returned to the retailer. You must provide proof that the item is no longer in Canada. There are some exceptions. In the case of goods damaged in the factory, a shortage in goods, overpayment, or inferior quality, the retailer may not require that the item be returned. You will still need proof of a credit or refund from the company, however. In Appendix A of the CBSA Casual Refund Program Guidelines, these situations and others are explained in more detail.
- The item had duties and taxes placed on it. You must prove the amount of duties paid. Duties and taxes totalling less than $2.00 CAD will not be refunded.
- Brokerage fees and special services will not be refunded by the CBSA. Prices for customs clearance services vary by company and they are not part of the Canada Customs duty refund program. Express, expedited and optional international services are not included either.
- The Canada Customs duty refund request must be made within one year of the purchase. In some of the exceptional cases mentioned above, this is extended to four years.
Let’s use apparel, the most common online purchase, as an example. A 100$ dress ordered by mail from the U.S. won’t have any duty on it, as per NAFTA. You will still pay about $13 in GST, HST, or PST if the item comes by mail. A similar dress ordered from outside of North America, let’s say Japan, might have an additional $20 duty. In total, you’ll pay $133 CAD.
Note: It’s important to understand that duty rates are entirely dependant on the type of item and the country it comes from. A dress from Japan and a dress from Thailand could have different duty rates. Likewise, a cellphone from Japan would have a different duty rate than a dress.
After you’ve received the dress, you decide to return it. You ship it back (possibly at your own expense, depending on the policy of the retailer) and the retailer refunds you 100$. In order to get the remaining $33, your duty refund, you need to apply for the Casual Refund Program.
Many people write off the duty and taxes as a loss, thinking it would be too complicated to try and get a duty refund. But if you know how to use the program, you’ll be aware of which documents to keep when you receive your package and you’ll be ready to contact the appropriate agencies.
How to get a Canada Customs duty refund
If you want to use the Casual Refund Program, the first thing you’ll need is a B2G (CBSA Informal Adjustment Request) form. Go to the CBSA website to find a link to the Customs refund form in PDF format and instructions on filling it out.
You will need to attach one of the three following documents to the B2G form, depending on your importation method:
Hand Carried Goods: When you enter Canada with dutiable items, you will receive a form called the Casual Goods Accounting Document, or BSF715.
Mailed Goods: There will be an E14 Form attached to your package. All duties and taxes you paid will be recorded here.
Couriered Goods: If your item arrives via courier company, such as UPS or Fedex, you will be provided with a receipt that has a CBSA B3 transaction number on it.
Always keep these documents. Hold on to them at least until you’re sure you won’t be returning the goods. There’s nothing more frustrating than realizing you tossed something important, only to need it later. You’ll also need to contact the retailer for proof that they received the returned item. This can be a simple credit note or shipping receipt. You’ll need to attach this to the CBSA refund form as well.
Once your B2G and supporting documents are prepared, send them by mail to the nearest CBSA Casual Refund Centre. The centre corresponding to your address can be found on the CBSA website. If you send it to the wrong centre the CBSA refund form will be redirected, causing unnecessary delay. Once the correct centre has reviewed and accepted your application, you will be sent a cheque for the duties and taxes you paid within 91 days.
Some people might not want to go through all the effort to get a small duty refund. But consider that if you’re regularly making online returns, or returning large value items, you could actually be entitled to a good chunk of money! If this process still seems confusing, we’re here to help. We can handle the Casual Refund Program process or walk you through it so you can do it yourself. We have an expert team of brokers who are ready to help you with all of your import and export needs.