{"id":735,"date":"2012-10-21T08:37:24","date_gmt":"2012-10-21T08:37:24","guid":{"rendered":"http:\/\/clearit.ca\/customs-broker-blog\/bid\/183779\/6376f609-aa38-4143-9336-cf6b8f231ef1"},"modified":"2014-04-02T14:17:53","modified_gmt":"2014-04-02T18:17:53","slug":"canada-customs-import-penalties","status":"publish","type":"post","link":"https:\/\/clearit.ca\/canadian-customs-broker-blog\/canada-customs-import-penalties\/","title":{"rendered":"Import Penalties"},"content":{"rendered":"

Import Penalties & How to Avoid them<\/h1>\n

While it may seem like no big deal to a new company just entering the import business<\/strong>, Incorrectly\u00a0classifying goods<\/em> can cause major problems and cost you more money the you might expect. If not spotted on time, these import\u00a0penalties<\/a> can compound and lead to even greater loss by overpaid duty that is not\u00a0recoverable\u00a0or<\/em> fines for underpaid Duty. <\/p>\n

Working with a Customs Broker<\/a> does not guarantee zero import penalties, however, working with someone with experience greatly reduces the chances of\u00a0something\u00a0going wrong; and the money paid for service is generally made back in time savings alone. <\/p>\n

Problems arise when importers<\/em> do not pay enough attention to their import’s classifications<\/strong>. For example, a poor translation into\u00a0English\u00a0cost one company that was importing gears when it incorrectly identified the items as “grease dispensers”. This mistake was never caught and resulted in a retroactive assessment<\/em> of over $50,000 in import penalties (duty) plus interest. <\/p>\n

Using the U.S Customs Database<\/a> as a tool to classify goods could also cause serious problems. Although it is a good tool to use for research in classifying an import<\/strong>, it\u2019s\u00a0rulings are not accepted by the Canada Border Services Agency (CBSA)<\/strong>. For example, one Canadian company used a U.S. customs\u00a0ruling\u00a0in order to\u00a0classify\u00a0parts of their items as “Duty-Free<\/em>“. When Canada Customs examined the transaction, they changed the classification, resulting in a 6.5% duty rate. This was applied to 4 years worth of imports and resulted in the company owing in\u00a0excess\u00a0of $300,000 in import penalties plus interest. <\/p>\n

Correctly declaring the value<\/strong> of your imported goods is something to think about as well and not doing so may result in import penalties<\/em> just as serious as a misclassification<\/em>. The selling price is generally the basis of value for duty<\/strong>, converting the currency paid into Canadian dollars the day of. Any costs or fees associated with the goods should be taken into\u00a0consideration\u00a0as well. For example, royalties, licensing fees, commissions, tooling costs should all be included in the value for Duty; freight and transportation charges, however, should be left out.\u00a0 <\/p>\n

Once your imports have been properly classified and valued, it is important to review all of your paperwork, declarations, and any required permits for accuracy and errors. If you are importing a number of different items, keeping your own database of classifications may be a good idea. <\/p>\n

Keeping proper documentation of your transactions<\/em> is paramount as well. It is important to show customs<\/strong>, should they require, that you are fulfilling your obligations; especially if you are importing specific targeted goods. Every year, the CBSA<\/strong> will choose several different types of products for audits as well as tariff classifications. These audits can result in re-assessments<\/em>\u00a0and can go back as far as 4 years. For 2012, the CBSA<\/strong> is targeting products that include light-duty automotive goods, video recording\u00a0equipment,\u00a0jewelry, vegetable fats & oils, pumps for\u00a0liquids, and cocoa powder. <\/p>\n

There are\u00a0opportunities\u00a0to reduce duties<\/strong> as well. For example, your imported goods may be coming from a country that has a free trade agreement<\/strong><\/em> with Canada; this would allow the product to come in Duty free<\/strong>, but proper documentation is required. Goods\u00a0being\u00a0imported that will later be exported may enter Duty free as well. For example, importing packaging product that will later be filled with goods and exported can generally enter Canada duty free<\/em>. <\/p>\n

Moral of the story: Work with someone who knows what they are doing; work with\u00a0Clearit.ca<\/p>\n

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