Bypass customs delay - warehousing in country.

[sun818]

I am a USA seller. If I want a warehouse in Canada to ship products to Canadians, do I have to pay import taxes to warehouse the products? What is the customer responsible for when it ships from the Canadian warehouse to him/her? Are there cross-provincial taxes that need to be paid?

[plumsauce]

The goods would be considered an import in the normal course of business. Therefore, you will pay any applicable customs duty and GST at the time of import at the transfer price. When you ship, you will charge the customer PST if the customer is in the province where the goods are located and GST to all customers. The GST and PST collected are remitted to the governments, but you will get a rebate for the GST you already paid. Example, you import widget @ $10, paying $0.70 in GST, then sell widget @ $20 charging GST of $1.40. You owe the federal government $1.40-$0.70=$0.70 in GST. Any PST you collect is remitted fully to the respective provincial government.

The drawback is having to pay the duties and GST upfront at the time of importation by your business presence in Canada. And of course, the cost of tying up stock in a warehouse. However, the cost of shipping to the end customer is reduced because it is one bulk cross border shipment and many domestic shipments.

You also need to consider that your pricing has to reflect that the customs duties are included in the retail price because it is not recoverable from the customer as a separate charge when shipping from inside a country. But, you are also much more competitive with respect to shipping charges.

Check your PM for an alternative.

[sun818]

I've been reviewing the shipping methods and costs associated with each service. Even with "Regular Parcel" using delivery confirmation, the cost is prohibitive to the point where it is more economical to ship from the United States. That is very unfortunate. I think I am spoiled in the United States with the US Post Office shipping rates.

[lgn1]

Can you find a Canadian Supplier who will drop ship for you. This will get rid of US customs problems altogether.

Otherwise you won't stand a chance to be competitive in Canada, and here's why.

As a Canadian, any goods under $200 clears US customs without any state taxes, customs fees, or brokerage, due to something called section 321 of the US customs act. This act basically says that US Customs can not be bothered to collect small amounts of duty, because it is not cost effective. Their are a few exceptions like shipping food that will get you in trouble with the FDA, but other than that, its almost like the border does not exist going south into the USA.

For Americans trying to ship to Canada, I pity you. Canada Customs will colect duty on any purchase over $20. Collect the sales tax and the Goods and Service tax and Canada Post will charge 6$ to collect the duty for customs on delivery. If you ship into Canada using a broker, that $6 charge quicly turns into a $30 dollar brokerage fee.

Canada Customs will lose money hand over fist, on low value shipments, but they don't care. They must follow policy rather than use common business sense.

On one hand, the Canadian dollar is getting closer and closer to par with the american dollar (it went from .65 cent to .82 to the american dollar and could be as high as .85 in a few more months.

Back in the early seventies, the canadian dollar was worth more than the American. So doing business in Canada is getting more conpetitive if you can find away to bypass those annoying problems with Canada Customs.

[Rugles]

>>> section 321

That was a great little secret that stymied competition for a long time.

We moved on to bigger and better ways to move product accross the border, both ways in fact.

[lgn1]

Section 321 and the lack of Canadian Equvalent, is still very effective of keeping the American competition out of the Canadian Market, for most of the small operators. Now, only if the Canadian dollar would stabilize within a small trading range.