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Resident and Non-Resident Importers: Making Sense of Canadian Duty and Tax

The Canadian market is a prosperous place for importers, be it resident or non-resident importers (NRI). There’s room for large profit and lucrative business opportunities, but depending on your residential stature within Canada, you will be subject to a varying degree of duties and taxes.

The province your business operates in will also impact how you are taxed, as well as the amount of money you make within one fiscal year.

Resident Importers

For residents in Canada, but outside of Quebec, there are two tax variables that will be applied to your business.

Goods and Services Tax (GST): This tax applies to a number of goods and services made in Canada. It also applies to real and intangible personal property, which means it will affect land, building and property interests, as well as trademarks, patents and digitized products.

Harmonized Services Tax (HST): Similar to GST, it applies to same base of property, goods and services. Some provinces provide point-of-sales rebates on certain, specific items.

It’s important to note that importers are considered a resident of Canada if they have a fixed place of business, i.e. a branch, an office, a factory, a mine, and a timberland — to name a few. It could even be a fixed place of business for a person acting on behalf of another importer outside of Canada.

If you’re a resident of Canada but hold a permanent location outside of Canada, you may have to register for both GST and HST. It depends on a number of factors:

  • You’re not a small supplier and provide taxable supplies in Canada.
  • you’re not a small supplier and make taxable supplies of admissions in Canada, i.e. a seminar or activity.
  • You’re not a small supplier and sponsor an event in Canada with more than 25% of participants being Canadian.
  • You’re not a small supplier and you solicit sales of printed publications, i.e. books, periodicals and newspapers.

In Quebec, resident importers will automatically be subject to the usual GST and HST, but there will be an added tax — the Quebec Sale Tax. If your business resides in Quebec, you will have to file your taxes through Revenu Québec, unless you are considered a Selected Listed Financial Institution (SLFI).

Non-Resident Importers

Importers that conduct business within Canada, i.e. exports goods and services to Canada but exist outside of the country and acting as an importer into the country, are considered non-resident importers (NRI).

Typically, they need to be more familiar with the Harmonized Tariff System, because they deal directly with border and customs, and with governmental regulations. They are usually considered the “Importer of Record” and they handle anything from paying fees to providing all relevant government documentation.

Based on the Harmonized System (HS Code), NRIs are bound to accurate tariff classification and country of origin fees.

NRIs used to have the option to apply for GST and HST rebate, but that no longer exists for non-residents. While rebates are no longer available, there is a tour package that could be helpful under the Foreign Convention and Tour Incentive Program (FCTIP).

It’s worth noting that while acting as an NRI in Canada can be a fruitful business venture, border laws and regulations are constantly changing. An NRI needs to be thorough and diligent, otherwise they can be blindsided by unexpected fees, duties and taxes.

If you’re interested in learning more about Canadian duties and taxes, the Government of Canada provides all the information you need. Clearit is also here to provide the necessary information and hands-on experience from our brokers.