We have gathered some of the more frequently asked questions here.
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A customs broker is a company that is licensed by Revenue Canada, Customs, Excise & Taxation to represent importers in their dealings with Canada Customs. The customs brokerage company employs professionals who have passed examinations and who are authorized to represent the company in their dealings with importers. If a company wanted to import into, or export from, Canada, that company can employ a customs brokerage company to handle their transactions at Canada customs.
Most companies who import goods into Canada find that it is far too expensive and time consuming to travel to the facility where their goods are held awaiting the clearance process, prepare a formal declaration for Canada Customs, pay the charges due and then await delivery of their product. The trend today, as in other industries, is to outsource. That is, they do what they do best and leave the clearance process up to the professionals.
No. Canada Customs administers the regulations of some 60 other Canadian government departments. Some of these other departments, along with Canada Customs, may prohibit the importation of certain products. A lot of these are obvious and the list of prohibited items would include, but are not limited to: handguns, drugs, pornography, products made from endangered species and so on. It is best to check with a customs broker prior to placing an order to ensure that your product will be allowed into Canada.
AMPS is the Administrative Monetary Penalty System - "AMPS will provide the flexible and effective sanctions regime necessary to ensure and preserve the public trust in the fairness and integrity of the self-assessment system. It will achieve this through a graduated response to non-compliance which would range from warnings to penalties based on the violator's compliance history and the nature of the contravention. Increased penalties would apply to repeat violators.
The Goods and Services Tax (GST) is an end-use tax collected on a multi stage basis. The present rate of GST is 7%.
Goods imported into Canada are subject to the Goods and Services Tax (GST). The GST is payable upon importation and is based on the duty paid value of the Goods, in turn you will also collect the GST from your Canadian customers by billing them GST Sales Tax on your invoice to them. All Firms with (Canadian) annual sales exceeding $30,000.00 must register and must post a GST Bond. You will be issued a Business Number (BN) with an annex code of "RT" for GST and "RM" for importing. Remember, even if you do not need to register for GST you must still register for a BN for importing into Canada, which will include an annex code of RM for importing only. After registering you would prepare and submit a GST return at selected intervals showing the amount of tax you charged and the amount of tax you paid. If the amount of GST charged is greater than the amount you paid, the difference would be owed to the Government of Canada. If the amount of GST paid is larger, you could claim a refund. More information is available regarding the GST Taxation and Returns from Welke Customs Brokers Ltd.
*NOTE: You must be a GST registrant, and the registration number must appear on your commercial invoice to enable your client to obtain an ITC (income tax credit). Should you choose not to register, then a copy of the Canada Customs entry evidencing the amount of GST paid must support your invoice to your client so that they may benefit from the ITC. Revenue Canada Customs and Excise has an import program that simplifies the GST remittance to Revenue Canada. The program involves the deferral of GST payment on all imports until the last day of the month. The acceptance onto this program involves the issuance of a very simple letter (attached GST Letter) to Revenue Canada and requires that a Separate Canada Customs Bond (from the GST Taxation Bond) be issued. Once implemented, the process follows these steps:
All imports cleared from the 21st of the previous month up to the 21st of the current month will be noted on Revenue Canada's statement. One cheque is issued for this amount and payable to Welke Customs Brokers.
A statement is issued by Welke on the 25th day of the month and faxed to your accounting department. If the Statement is over $100.00 Your accounting department will then issue one cheque or a Bank Transfer at the end of the month for all the GST payable to Welke Customs Brokers. If issuing a cheque, it must be sent via courier to reach Welke Customs Brokers on the third to last day of the month to ensure prompt payment to Revenue Canada the last day of the month.
Invoices during the month will be sent to you, which will reflect duty and brokerage. The GST will be calculated and the amount shown on the entry summary, yet it will not appear on our invoice. This program has become very popular as a cash management tool and a means to streamline the GST capture as a single Input Tax Credit per each month. Contact Welke for clarification.
Generally companies are not GST exempt. There are certain conditions that may allow a company to be GST exempt.
A company set up and operating on an Indian Reservation controlled by the Indian band, or,
A company that manufactures and exports at least 85% of their products can qualify for GST exemption provided they apply to CBSA for an exemption certificate.
The CBSA refers to these companies as exporters of processed services.
HST is a value added tax which replaces the provincial sales tax (PST) and GST in three participating provinces. Newfoundland, New Brunswick and Nova Scotia. It applies a single rate of 15% to goods sold and services provided in the three participating provinces.
The Canada Customs and Revenue Agency (CCRA) still ranks marine containers as the highest risk for smuggling contraband into Canada. Over the past decade, $6.2 billion in drug seizures were made by Customs. Of these, 45 per cent ($2.8 billion) were made in marine containers. Consequently, the CCRA continues to place significant emphasis on the targeting and examination of high risk containers arriving in Canada to protect Canadians from smuggled drugs and other types of dangerous goods.
Implemented on January 1, 1994 between Canada, the United States, and Mexico to phase out duty on most goods within a ten year period. The exporter must provide a NAFTA Certificate or Statement of Origin for goods that qualify under the NAFTA " Rules of Origin" to the importer so that they can claim NAFTA tariff preference.
A blanket NAFTA Certificate can be used to cover goods being imported into Canada for a period not exceeding one year and for goods being imported into the US for a period not exceeding six months.
In order to use a blanket certificate, the goods must be clearly identified by part and/or model number and components can be tracked as not having changed origins during the blanket period. For a more comprehensive answer, we would need to obtain more information regarding the products and their manufacturing backgrounds.
If there is a "purchaser in Canada" on the export invoice, the purchaser is responsible.
If there is no purchaser indicated on the invoice, the consignee is responsible.
If the goods are delivered before customs release has been requested and the purchaser or consignee have not paid the duties and taxes, the carrier is responsible.
If the terms of sale is a delivered "duty and tax paid" price in Canada, the vendor would be responsible.
Drawback - refers to a drawback of duties paid on goods imported into Canada:
When exported from Canada in the same condition as imported.
When used to produce another product in Canada and exported.
There is a separate rule for goods imported into Canada from non-NAFTA countries, further manufactured in Canada, and then exported to a NAFTA country. This is: The rate of duty paid on the imported product or the rate of duty paid on the further manufactured product when imported into a NAFTA country, whichever is the lesser.
Forms required are:
K32 - form on which a drawback is claimed.
K32A - form used, in conjunction with a K32, when the importer of the goods is not the claimant for the drawback.
Yes, documentation for any customs related transaction can be sent via EDI (electronic data interchange). If specifics on your particular situation are provided, Welke can work with you to create a tailored solution. At such time we can introduce you to our IT department and arrange for the mapping to be sent.
The two standard documents required are the customs clearance document and the NAFTA Certificate of Origin. However, depending on your commodity / product, you may require more documentation. It is best to ask one of our experts, and describe exactly what you would like to import.
One of the main results of the North American Free Trade Agreement (NAFTA) is the elimination of tariffs between Canada, Mexico and the United States on all qualifying goods by the year 2003. In fact, qualifying goods traded between Canada and the United States have become duty free since January 1998.
Canada, Mexico, and the United States agreed to establish a uniform Certificate of Origin to certify that goods imported into their territories qualify for the preferential tariff treatment accorded by NAFTA. Only importers who possess a valid Certificate of Origin can claim preferential tariff treatment.
The Certificate of Origin must be completed and signed by the exporter of the goods. A certificate is not required on every import. A blanket certificate can be filed. We assist you in determining if your goods qualify.
Yes. By becoming a Non-Resident Importer (NRI), it will allow you to include duty, tax, freight and brokerage fees establishing a true delivered price to your customers door in Canada.
All import shipments require specific information for Canada Customs clearances. Use of your commercial invoice for customs clearance is perfectly acceptable as long as the data elements customs require are included on the invoice.
Welke Customs Brokers is a Canadian customs broker. We are experts in this regard and are committed to supporting our customers Canadian importing needs fully. While there has been great demand from our customers to provide US clearance services as well, Welke has instead decided to partner with already established firms that are as dedicated in their local jurisdiction as Welke is in Canada. Call us for a referral today.
The Pre-Arrival Review System (PARS) allows brokers to submit the release information to Revenue Canada for review and processing prior to the arrival of the goods in Canada. This speeds up the release or referral process when the carrier arrives in Canada with the goods. The release information can either be submitted in paper format or electronically. PARS includes the processing of goods that require permits or certificates. Brokers can provide release information for pre-arrival processing for goods sent by different modes of transport. Goods arriving by highway and cleared at the border use PARS, goods arriving by rail use RAIL PARS, marine freight uses MARINE PARS, and air freight uses AIR PARS. Goods cleared at inland highway sufferance warehouses use IN PARS (Inland Pre-Arrival Review System).
With PARS at the border, the shipment can actually be set up ahead of time, waiting for the driver to arrive. The driver arrives at the border, the Customs Officer scans in the *PARS Barcode*, and if the PARS was accepted, the driver is released without having to go see the broker or at some ports, without even getting out of their truck.
The Accelerated Commercial Release Operations Support System (ACROSS) allows the customs broker to transmit Customs releases and invoice data to Revenue Canada (Customs) in an electronic format using Electronic Data Interchange (EDI).
It allows the customs broker to clear your shipments 24 Hours a Day, 7 Days a Week. If the customs broker you are using is clearing the goods by EDI, you only have to fax one office to process EDI releases for several points of clearance. No more asking the customs broker "Who do you use at Coutts, Alberta ?" "Who do you use at Windsor, Ontario ?" Just fax the PARS / INPARS to the customers customs broker, state where and when you are clearing, and it is that simple.
Electronic Data Interchange (EDI) is a vital tool in today's marketplace, since it allows you to electronically move data from one computer to another. It can take the form of formal EDI messaging (ANSI X12, EDIFACT) via a VAN (Value Added Network), be as simple as an email, or use current technologies such as XML and the Internet.
Releasing Goods with ACROSS: Most brokers in Canada are established EDI (ACROSS) participants with Revenue Canada. Typically, invoice information is faxed to the broker who rekeys into their system and then sends it electronically to customs.
... OR ...
Releasing Goods with ACROSS & EDI: A better method than above is for the shipper, exporter, vendor, or carrier to transmit to the customs broker, the invoice and shipment information using EDI. The broker would then supplement this data with the customers product profile data (Tariff information) on file and submit to customs via ACROSS.
A customs officer reviews the information and enters a decision into the ACROSS system as either "to release" or "to refer."
Once the goods are released, ACROSS forwards the release notification electronically to the customs broker, and the carrier (If set up on RNS), through the Release Notification System (RNS).
Revenue Canada has an electronic system in place to notify importers, brokers, warehouse operators and carriers that goods have been released by Revenue Canada. This system is called the Release Notification System (RNS). Each client is identified in the RNS using a combination of carrier codes, account security codes, and release offices. Currently, the RNS provides the following data to system participants: the released status of the goods, transaction number, date and time of release, release office code, cargo control number, release service option, and Sub-Location Code (Warehouse Location). The RNS data is retrieved by the client and used as formal notification that the goods were released by Revenue Canada.
North American Trade Automation Prototype. NATAP is an electronic-commerce initiative being developed by Canada, the United States, and Mexico. Its purpose is to streamline the customs clearance of commercial goods through common data elements, documents, and processes. NATAP is also evaluating the use of Intelligent Transportation Systems (ITS) and the concept of a seamless border for low-risk cargo and preapproved drivers. The prototype is a low-volume test of the new concepts, and operates parallel to the current system. It allows the Department to experiment with and evaluate:
Concepts proven successful through NATAP will be incorporated into the mainstream systems of all three countries. To expedite the flow of legitimate goods coming across our border, a transponder system for trucks has already been tested. NATAP now is working on other high-tech alternatives such as smart cards or swipe cards that can instantly provide data on both the truck and the load it is carrying to customs. Under NATAP, the three countries are also harmonizing the data and the procedures for customs clearance. Work is underway on common software and an encryption system for exchanging electronic data.
The legislative authority for the administration and enforcement of all laws related to Canada Customs. It is a non-taxing statute
The Harmonized Commodity Description and Coding System (or Harmonized System), is a system for classifying goods in international trade. The first six digits of the HS number classify the goods internationally, and the remaining four digits classify the goods within the imported country. There are more than 10,000 different tariff classifications from which to choose. To ensure your products are classified correctly please provide your specialist at Welke with Literature and product information on all of the products you will be shipping into Canada.
A shipper or exporter who prepays all the charges into Canada, including the duty and GST, and clears the goods into Canada in their name as a Non Resident Importer.
An invoice in prescribed form, to be completed in the prescribed format by either the importer, the exporter, or their agents. All data on the prescribed CCI is required for shipments valued over $1,600 Canadian. A commercial invoice is acceptable in lieu of this document, if the required data elements are included (request document 5023 for further detail).
A non-resident importer is a legal entity (person or company) that resides outside of Canada but enjoys the right to import goods into Canada. Through the Non-Resident Importer program, foreign companies can participate on an even playing field in selling their goods in Canada. Welke Customs Brokers Ltd. has been setting up non resident importers from the United States and Internationally since 1985 and has built solid partnerships with many U.S. firms. While Welke views customs clearing your shipments at the border or airport as a priority of greater importance to you is our value-added services. These are designed to ensure you maintain an excellent relationship with Revenue Canada and are operating in the most effective way possible. These services can have a positive impact on your bottom line.
Canadian law requires all commercial records and documentation, to be kept for 6 years. Revenue Canada Customs may authorize certain importers to maintain records outside Canada provided they submit a "letter of undertaking". The purpose of this document is to record and set out the agreement made between the company and the Department of Revenue Canada, concerning the availability of records for Customs audit purposes. This document must be completed in full with complete physical (no post office box numbers) and mailing addresses of the company. The BN issued to your company must also be shown. Incomplete forms will be returned for proper completion. Please note that two officers of the firm must sign this document. If only one officer is available, the form must be endorsed with the corporate seal. The Agreement to Maintain Books and Records Outside of Canada form (available from Welke Customs Brokers Ltd.) must be the original application (photocopies for faxes are not acceptable). The original and a copy should be forwarded to Welke Customs Brokers Ltd. for submission. As with any legal document, the applicant should keep a copy.
The Value for Duty is established by deducting freight, brokerage, duty and taxes from the selling price to your Canadian Customer. It is very important that all documentation indicates the foregoing costs are included in the price to the Canadian Purchaser. Revenue Canada has six different methods of determining the Value for Duty (VFD) under the Customs Act. They are arranged in sequence and must be used in ascending order.
Call your representative at Welke Customs Brokers Ltd. for more information on the six (6) Methods of Valuation:
The Business Number (BN) is a serial number assigned to all commercial concerns in Canada. In order to import commercially into Canada a company must have a BN. The BN also serves as the GST registration number for firms whose sales exceed $30,000 CAD. (more on the GST later) Our first step in making you an NRI is applying for the BN on your behalf.