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Shipping to Canada (GST/Duties/Etc)
rise2it




msg:4044575
 6:05 am on Dec 17, 2009 (gmt 0)


I've followed some discussions here where US Sellers have gotten murdered (brokerage fees, customers refusing to pay to UPS/Fedex, etc) on smaller orders, and from what I understand, even the Post Office has a $6 extra charge.

For example, let's go bigger...

Let's say I was selling a 40 pound item that cost $1000

What fees/taxes/duties are the customers going to be hit with? Can the customer 'get out of' paying those and have them fall back on me?

Since (I assume) I couldn't do AVS on a credit card, how would a merchant lower his chargeback risk?

What (UPS/USPS) would be the best way to ship for the benefit of the customer (and again, protecting the merchant)?

 

Rugles




msg:4044856
 4:17 pm on Dec 17, 2009 (gmt 0)

Let's say I was selling a 40 pound item that cost $1000

The GST is 5%, so you can expect the customer to be on the hook for that when it gets delivered. For some reason, it is not always applied for every shipment (the sheer amount of paperwork overwhelms the tax collectors I assume). But something worth a $1000 may not escape the GST. Brokerage is included in a UPS or Fed Ex Air shipments. It is not included in Ground shipments and the driver may be required to collect it.

The safest way for a US company to ship something to Canada (safest meaning that nothing will be charged to the shipper after it ships) is USPS.

Brokerage will range for $10 to $40 depending on the broker that was used. The cheapest being the Postal Service.

I think AVS still works for Canadian credit cards, I could be wrong. I am a Canadian merchant selling into the US so I dont know exactly how that works in the other direction. But I certainly know what happens with shipments going in both directions.

Duties are only applied to things not made in a Nafta country(with the exception of fabrics). If the duty is so small they often dont collect it.

smartwork




msg:4045028
 8:09 pm on Dec 17, 2009 (gmt 0)

If the duty is so small they often dont collect it.

Out of curiosity, what is small? We ship from the US and recently had a CA customer get tapped for $46 on a $100 order shipped UPS Ground.

bakedjake




msg:4045036
 8:23 pm on Dec 17, 2009 (gmt 0)

What fees/taxes/duties are the customers going to be hit with?

Duties (* if applicable)
GST
PST (if the province has an agreement with CRA to collect provincial sales tax)
HST (instead of GST, if dealing with an HST province)
Provincial luxury tax (on things like booze and cigarettes)
Brokerage fees (levied by the carrier)

Duties are typically non-existent for most consumer goods shipped between the US and Canada. Note that duties and taxes are not the same thing.

If you ship something to Canada, the recipient will get charged GST 100% of the time unless the shipper claims that the shipment is a gift. GST will be 5% of the declared value of the good.

PST and/or HST may be charged depending on how something is shipped, how it is cleared through customs, and how the particular CRA agent feels on a particular day. It is wildly variable. PST will be the provincial tax rate of the declared item.

HST is harmonized tax - that is - GST and PST combined. You'll get charged one or the other.

Provincial luxury tax and other top up fees - some provinces, like Ontario, will charge you a luxury tax or a "top-up" - the difference in retail values between the price paid and the price they retail for in Canada. This happens on very specific goods (like alcohol and cigarettes). These luxury taxes and top-ups can be very expensive - often 2x to 3x the declared value of the good.

Brokerage fees - this is highly dependent on the carrier you use (and as Rugles said - the service level - air vs. ground makes a big difference) and whether or not you use a dedicated customs brokerage house. Unless you instruct them otherwise, the carriers (DHL, UPS, FedEx, USPS/CP, etc) will do it automatically for you when it enters Canada for what could be fairly exorbitant rates. One of them charges something like 10% of the declared value of the shipment. If you're going to be shipping very frequently get a customs broker. They're cheap, efficient, and can clear things much quicker than standard carriers can.

Other notes:

If you do not collect taxes upfront, the customer will have to pay them on delivery.

AVS works fine in Canada.

The best way (from a consumer's perspective) to ship is to use a traceable carrier in combination with a customs brokerage. The customs broker I use (when I import goods) charges a flat fee of CAD$20 for shipment values under $1600, and 0.5% of shipment value for values over $1600.

Of course, if you're doing a lot of e-commerce back and forth across the border, the best solution is to have warehouses in both countries. There are great third-party logistics providers on both sides of the border that become very cost efficient if you're doing frequent transborder business.

Be careful that whatever you're doing you're mindful of nexus issues in the places that you do business.

The safest way for a US company to ship something to Canada (safest meaning that nothing will be charged to the shipper after it ships) is USPS.

I disagree with my friend here. Unless you lie and ship the good labeled as a gift (and if you're caught, expect very heavy fines), consumers should be told upfront to always expect to pay sales taxes on declared value shipments. If they get lucky, great, but I've received many shipments via USPS/Canada Post (one hands off to the other when it crosses the border) from the states, both personally and commercially, and they always get dinged.

Plus, Canada Post's redelivery scheme is brain dead.

bakedjake




msg:4045044
 8:37 pm on Dec 17, 2009 (gmt 0)

We ship from the US and recently had a CA customer get tapped for $46 on a $100 order shipped UPS Ground.

Yeah, UPS Ground is one of those exorbitant carriers. They charge $29 for a shipment of $100 value, plus $4.25 COD charge, plus some kind of invoice integrity fee if you don't have a proper commercial export invoice filled out, plus GST.

That customer wasn't getting charged by the government - that was UPS. ;-)

Philosopher




msg:4045061
 8:53 pm on Dec 17, 2009 (gmt 0)

yeah...I just had a customer get nailed for $426 via UPS ground on an order that was $1,299 USD. She paid it, but was not happy about it. Can't say that I blame her.

Rugles




msg:4045091
 9:37 pm on Dec 17, 2009 (gmt 0)

Provincial luxury tax and other top up fees - some provinces, like Ontario,

I live in Ontario, never heard of a "luxury tax" in my 47 years. There are heavy taxes on booze and smokes but its not called a luxury tax.

CA customer get tapped for $46 on a $100

The brokerage fee would have been most of that $46.

Rugles




msg:4045095
 9:40 pm on Dec 17, 2009 (gmt 0)

If you're going to be shipping very frequently get a customs broker. They're cheap, efficient, and can clear things much quicker than standard carriers can.

^^^^ This is the best advice on this thread. Having your own broker is key to making cross border shipments the easiest and cheapest.We have two brokers, one for each direction.

bakedjake




msg:4045101
 9:48 pm on Dec 17, 2009 (gmt 0)

There are heavy taxes on booze and smokes but its not called a luxury tax.

Luxury tax = sin tax. All the same to me. I think it's officially called an excise tax. :) But if you're importing personally and you're over your exemption they charge you not only a high tax rate, but the retail value difference as well.

For example, for alcohol in Ontario it breaks down:

Federal excise tax (rate depends on type)
Federal import duty (rate depends on type)
Provincial border levy (this is the top up - and it's high - something like 40%)
GST (5%)
ORST (12%)

Legally in Ontario, with only a very small number of exceptions, you can't import alcohol commercially.

rise2it




msg:4045142
 11:26 pm on Dec 17, 2009 (gmt 0)

"yeah...I just had a customer get nailed for $426 via UPS ground on an order that was $1,299 USD. She paid it, but was not happy about it. Can't say that I blame her."

----------------------

..and what made up THAT fee? (Since brokerage fees would only have been $30-$40 through UPS, right? A 5% tax would be about $65....what made up the other costs?)

What if the customer just refused the package (and there are some that would) - then the merchant would be handed a $426 bill by UPS?

[edited by: rise2it at 11:33 pm (utc) on Dec. 17, 2009]

rise2it




msg:4045148
 11:32 pm on Dec 17, 2009 (gmt 0)

I appreciate all the info in this (and the other) threads by the way. My issue (and I'm sure that of others) is unknown variables....you can't plan and price if you don't know WHAT all of the costs are going to be upfront, and I've yet to find an explanation online that actually details those.

bakedjake




msg:4045157
 11:50 pm on Dec 17, 2009 (gmt 0)

Give me:

The type of goods you are shipping
The weight of the items
The number of items
The value of the shipment
Where (zip code) you are shipping from.
Where (postal code) you are shipping to.
What carrier you generally use
What level of service (air/ground) you use

... And I will walk you through a calculation with all of the resources you need.

Use example zips/postals if you need to.

Rugles




msg:4045597
 4:45 pm on Dec 18, 2009 (gmt 0)

ORST (12%)

If this is the Ontario Retail Sales Tax, it is 8% not 12%.

---------------------
update: i guess alcohol is different than everthing else, but normally its an 8% sales tax

•alcoholic beverages sold through retail stores - 12%

[edited by: Rugles at 4:53 pm (utc) on Dec. 18, 2009]

Rugles




msg:4045600
 4:50 pm on Dec 18, 2009 (gmt 0)

"yeah...I just had a customer get nailed for $426 via UPS ground on an order that was $1,299 USD. She paid it, but was not happy about it. Can't say that I blame her."
----------------------

..and what made up THAT fee? (Since brokerage fees would only have been $30-$40 through UPS, right? A 5% tax would be about $65....what made up the other costs?)

What if the customer just refused the package (and there are some that would) - then the merchant would be handed a $426 bill by UPS?

Your answer to "what made up the rest of the cost". I would guess that is duty (tariff) for goods made outside of the Nafta agreement. Was this stuff made in China or something? Was it a fabric?

If it was refused and sent back to you, you would not be on the hook for duties to the Canadian government because the stuff did not stay in Canada. In theory ;-) .

Philosopher




msg:4045605
 4:58 pm on Dec 18, 2009 (gmt 0)

Well, it was some electronics equipment sent from the manufacturer in California. The issue was likely the number of items...I believe there were 7 different boxes total. She also lived in Newfoundland and I believe the total tax there is around 13% (don't know for sure, but a bit of searching seems to point to that).

bakedjake




msg:4045612
 5:12 pm on Dec 18, 2009 (gmt 0)

UPS Ground brokerage fees on that would be $69.80, plus misc. charges (I think they hit you over a certain number of invoice line items, COD charges, etc). Likely close to $90 all in. Depending on how the parcels were shipped you may get hit with 2x or 3x brokerage fees if they were separate shipments with separate tracking numbers and separate commercial export invoices.

Newfoundland is HST at 13%. Don't forget that HST is charged on the converted amount, so let's call it total $1400 CAD. That's $182 there.

UPS Ground has an "extended area" surcharge to cover the cost of delivery to remote areas. Some of Newfoundland is covered. It is possible this surcharge would be incurred but I'd need to know delivery postal code to be sure. This charge varies, and if you don't contract with UPS to pay it on shipment, the customer would have to pay it at the time of delivery.

Different types of goods have different duties. At times if they're coming from the US they're duty exempt even if they're manufactured internationally because of NAFTA when US duty has already been paid. Some electronics, automobiles, and weird stuff are not exempt and would have duties.

My point: You actually can calculate all of this in advance if you know what you are selling and how it is classified on the export invoice. The formulas are readily available on the web. Also, there are ways you can ship to minimize the amount of brokerage fees applied. One of the advantages of using a customs broker is that they can help you to understand those strategies.

Noname_Nick




msg:4045621
 5:42 pm on Dec 18, 2009 (gmt 0)

As a frequent purchaser of US goods, I much prefer USPS over the other couriers. So much so, that it influences my purchasing decisions. UPS within Canada is just fine, however as soon as it crosses the border, the fees become just silly.
As far as I'm aware, USPS charges no brokerage fees for items valued under $500.
Everyone here expects to pay tax (GST/PST/HST) and duty seems to be hit or miss. I've often crossed the border with items which have no clear "made in" statements, or "assembled in", in which case customs usually gives you the benefit of the doubt.
Another bit of information which may be useful for larger purchases (for consumers): If you live in a city close to the border (which is a large percentage of Canada), a quick trip across the border to a holding warehouse can be easy, faster, and cheaper than letting a courier do it for you. For example, I might have something shipped to Blaine or Point Roberts in Washington State (where there are many companies who will receive and hold a package for you for a nominal fee (~$5). Obviously it doesn't make a lot of sense for small items, but for larger items, if the shipping stays within the US, it is often significantly cheaper.

Noname_Nick




msg:4045626
 5:46 pm on Dec 18, 2009 (gmt 0)

And as a supplement to the above, receiving a bill from CCRA (Canada customs) for taxes (if you ship USPS or pick up yourself and cross the border) somehow feels better than paying a big chunk to UPS.

smartwork




msg:4045664
 6:14 pm on Dec 18, 2009 (gmt 0)

If you seek a broker outside of the carrier (ie UPS), how do you locate a reputable one, and what exactly does the broker do in the delivery stream?

Rugles




msg:4045695
 6:56 pm on Dec 18, 2009 (gmt 0)

Most of the Brokers are large multi-national companies. They are easy to find. Just google the name of the major entry points and the term broker and you will find a list.

rise2it




msg:4046030
 8:24 am on Dec 19, 2009 (gmt 0)

(BakedJake)Give me:

The type of goods you are shipping
The weight of the items
The number of items
The value of the shipment
Where (zip code) you are shipping from.
Where (postal code) you are shipping to.
What carrier you generally use
What level of service (air/ground) you use

... And I will walk you through a calculation with all of the resources you need.

Use example zips/postals if you need to.

=================

Okay, let's go with:

Type of goods...can't get too specific on here, but let's say it's made in North America or Europe - not China. If you need to categorize it, let's pick 'tools'.

40 Lbs

1 Item

$1000 US

Shipping from zip code 37664 (just picked at random...somewhere in TN)

Carrier: USPS

Method: Whatever is cheapest that will get it there in a reasonable amount of time.

Thanks ;-)

Lightguy1




msg:4047188
 8:36 pm on Dec 21, 2009 (gmt 0)

From what I can tell, USPS is the best to ship to Canada. The canadian govt rarely collects duties on these. On all my UPS and Fed Ex shipments duties and brokerage are collected. RARELY have I heard of this for USPS.

wheel




msg:4050853
 4:35 pm on Dec 29, 2009 (gmt 0)

I believe (stand to be corrected by bakedjake) that USPS is the way to go in most instances.

I think (going from memory here) the canadian post office will charge taxes for shipments under $200 in value. Over $200 they charge taxes plus $5 brokerage fee.

UPS on the other hand will charge taxes plus brokerage fee plus a fee for having already paid the taxes. yes, it's insane. You don't want to ship to Canadians using UPS.

When I used to ship from the US to Canada at the consumer level I would use post for this very reason. Talk about unhappy customers - send a $150 shipment across and have UPS demand a check for $80 at the door.

Please note: Canadians are well aware that they are likely to be gouged upon delivery for items shipped from the US. I can assure you that if you figure out how to ship from the US to Canada without high costs to the consumer AND you make this information predominant on your website, that you can then use this as a competitive advantage. i.e. put a Canadian flag on the site somewhere and describe in detail how you're going to get the product to Canadians and how much it's going to cost them. Canadians watch for this stuff - it's a 'primary' factor in their purchasing decision.

Another common Canadian 'trick' if it's available to you - is to clear customs yourself. Ship product to a border town in upstate NY or Washington. Have someone drive it across and clear commercial customs - then drop ship from within Canada. Noting that for US manufactured products there is free trade (no duty) then the only costs are the taxes - which Canadians know they are paying anyway. Customs clearance charges you don't pay when you clear them yourself. This method is a tradeoff of more work for lower costs of course.

In terms of taxes, they are required to be collected, even on products bought from the US. Now the Canadian gov't lets this slide in many cases because it ultimately gets collected at the border or by the shipping company. But the Can-US gov't have an agreement that requires US companies to actually register, remit, and collect taxes to the Canadian gov't. "But I'm in California" doesn't wash - the Canadian gov't has the authority to require that you do this on Canadian bound shipments. I've never heard of anyone catching grief for this - but be aware if you're doing it in a big way you're going to make the radar screen of the Canadian gov't.

And if you're shipping books into Canada - that's even worse. Canadians are required by law to purchase books from Canadian distributors when that book is available in Canada. That's a big part of the reason Amazon has a Canadian location. Initially they were shipping from the US, but with the Canadian Heritage Act that became illegal..well, illegal to buy, not illegal to sell. (Nobody cares, but it's like downloading music. Sure everyone does it. But you have to decide between legal and socially acceptable).

gpilling




msg:4050858
 4:46 pm on Dec 29, 2009 (gmt 0)

What if the customer just refused the package (and there are some that would) - then the merchant would be handed a $426 bill by UPS?

We had a customer refuse to pay the duties/sales tax/brokerage on a UPS shipment that was set to "bill to receiver" and UPS charged our account back for this. Not a nice surprise.

We had another customer in Canada not accept the shipment at all, and UPS returned it to us. We got charged duties/tax/brokerage going in to Canada, and brokerage plus return freight coming back. $180 in charges on a $149 sale. Neat.

If possible we ship USPS to Canada, since we have no account with them to charge back to. If we ship UPS we prepay all the duties and taxes and bill those to the customer. UPS Worldship has tools for this, although I don't find them easy to use.

Mostly we try to convince Canadian customers to get it delivered somewhere on the US side of the border and cross it themselves.

jomaxx




msg:4050929
 6:08 pm on Dec 29, 2009 (gmt 0)

I can't tell you what to do because I don't ship into Canada (where I live), but I can tell you NOT to dump the package off to a customs broker and leave the customer with an unexpected $30 brokerage fee in order to take delivery. To do so is incompetent and unethical. This happens to me occasionally, and I have been sorely tempted to refuse delivery.

As long as the customer knows what the true price will be, there will be no shortage of Canadian customers. Online shopping within Canada is woeful, and even retail shopping selection and markups leave a lot to be desired.

smartwork




msg:4050952
 6:34 pm on Dec 29, 2009 (gmt 0)

If all US to CA package duties/taxes/fees etc. are to be calculated on the front end and displayed to the customer ahead of time, is your shopping cart doing all of that real-time?

wheel




msg:4050968
 7:22 pm on Dec 29, 2009 (gmt 0)

If all US to CA package duties/taxes/fees etc. are to be calculated on the front end and displayed to the customer ahead of time, is your shopping cart doing all of that real-time?

You mention three things. Duties. Taxes. Fees.

Taxes are pretty straightforward. Same as in the US, just different percentages. Taxes are taxes :).

For US products being shipped to Canada there should be no 'duty'. Canada and the US have a free trade agreement. Duty is old school stuff and not really applicable very much. yes, if you're shipping up stuff from China or alcohol there's going to be additional duty or taxes. But if it's US consumer goods there shouldn't be any 'duty'.

Fees - the only other fees would be brokerage fees and they should be easy to calculate. If you're using USPS, (you need to confirm this) I think it's $0 under $200 of value and $5 on over $200 - but I haven't reviewed that in many years. If you're going UPS - and don't! - then you'll need to figure out with them how much they're going to gouge the client. As has been noted, UPS has crazy high brokerage fees AND then charges a fee on top of the taxes. That seems likely difficult to get programmed in on the fly.

Captaffy




msg:4051050
 11:29 pm on Dec 29, 2009 (gmt 0)

If you're going to be shipping to Canada, do it through USPS, and not a courier company. I have been dinged with outrageous brokerage/customs handling fees from both UPS and FedEx. I will not order anything from the U.S. that can not be shipped USPS now. When you ship USPS, your customers can expect to only have to pay the actual duty on the item, which is a government fee/tax, as opposed to the big companies' made up fees.

Edit-
Oh, and the way the fees are handled are another big problem. When you get a package from UPS they will surprise you at the door with their customs handling fee which can be up to a third of the cost of what you have already paid for the order. This will absolutely lead to customers refusing delivery.

FedEx was even more insidious. I accepted the package, and then later in the mail I received a bill from them for almost 1/3rd of my order cost. I refused to pay and they ended up charging the sender.

gpilling




msg:4051071
 12:07 am on Dec 30, 2009 (gmt 0)

If all US to CA package duties/taxes/fees etc. are to be calculated on the front end and displayed to the customer ahead of time, is your shopping cart doing all of that real-time?

Nope. My cart just calculates the shipping cost - the duties and taxes are not done. So then we have to do it manually. A pain.

Noname_Nick




msg:4051087
 12:39 am on Dec 30, 2009 (gmt 0)

I'll say it again....

As a consumer in Canada, please make USPS an option. I don't cross border shop if UPS and Fedex are the only options.

Canadian shoppers may also be willing to bring items across the border themselves if you will ship to a holding point near the border (of which there are many).

This 38 message thread spans 2 pages: 38 ( [1] 2 > >
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