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Importing from U.S. to Canada high $

     
3:14 pm on Nov 12, 2017 (gmt 0)

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We have a company that sells horizontal garage doors. We are certified for U.S. and Canada. We have not made a sale yet in Canada so I am trying to understand the GST, Duties, payments etc.

First question; our typical sale will be $5000 to $15000 USD. All of our parts except for the garage door motor, are made in the USA. The value of the motor is approximately $400 USD. In consideration of NAFTA, would we pay duties only on the motor or have to pay on the full value as it includes on part that is not made in the U.S.A. We could always ship the motor separately if that makes a difference.

Second, I see that there will be a 5% GST or PST/HST depending on the province. My question is, we are shipping via common carrier. Will we pay that GST/PST/HST or will our customer when it is delivered?

Lastly, does incorporating our business in Canada help us at all? At this time we have no intention of opening an office or a warehouse etc as all of our products (besides the motor which is made in Germany and we purchase it in the U.S) but just curious if incorporating in Canada has any benefits for us. I have inquiries out to our merchant processor as I do not know if we can accept Canadian credit cards or not so thinking I may need to open a Canadian bank account which means I would have to incorporate in Canada.

Thank you!

Amy
6:47 pm on Nov 12, 2017 (gmt 0)

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If you are exporting goods to Canada the buyer will pay tax on the goods when it crosses the border. You do not need to collect any Canadian taxes as a foreign entity.

As for opening a business in Canada. Strictly for tax purposes, I see no benefit. As for other reasons that is difficult to say as it will be very much dependent on the type of business and associated regulations. From how you describe your business, things such as motor, must meet CSA regulation, but most electric motors manufactured for sale in the US generally meet this specification. The other issue is language, Quebec is French speaking, so any users manual and safety instructions need to be in both English and French.

As a US company you would not need to worry about the above, but the Canadian buyer would. As Canadian company one would need to comply with all regulations and laws.

I am not lawyer, tax-expert or expert on US-Canada trade, I am simply a Canadian. So this is simply my opinion.
3:04 pm on Nov 13, 2017 (gmt 0)

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Thank you. Our entire system is UL certified in Canada as well as the U.S. The motor is made in Germany but is UL certified in Canada as well. We do have our manuals in French Canada so we are covered there.

But in regards to the duties, everything that comprises our system is manufactured in the U.S. except for the motor. So I am curious; am I paying duties on the entire system even though on part is not manufactured in the U.S. (thinking of NAFTA). If it is, we will ship the motor separately so we are just paying duties on the motor and the rest of the system will fall under NAFTA.

Thanks!

Amy
3:39 pm on Nov 13, 2017 (gmt 0)

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So I am curious; am I paying duties on the entire system even though on part is not manufactured in the U.S. (thinking of NAFTA).

That is a complex question that is well outside of this forum. Simply, it all depends on the value of all the items in the system and what the percentage of the value of the items that are not covered by the free trade agreement.

And, it should be noted that the free trade agreement is currently being negotiated, so the present situation is subject to change in relatively near future.