How do I Avoid Duty Fees when Shipping to Canada?

Cross-border shipping from the USA to Canada has major advantages for both small and large businesses. It opens up a whole new audience for your products and grows your reputation. However, paying duty fees when shipping to Canada can be a major and expensive hassle for you and your customers.

The cost may seem to fluctuate, be astronomically high, and possibly raise the price of your goods so much that they will become prohibitively expensive. Some expenses may fall to you as the shipper or to your customer.  Either scenario is not ideal.  Fortunately, there are ways you can reduce your fees, hassle for your customers, and still grow your business.

Here we will look at ways to reduce or avoid duty fees when shipping to Canada and how RoadLINX can make your cross-border shipping even more cost-effective and fast.

What Are Duty Fees When Shipping to Canada?

When shipping to Canada, a 5% Goods and Services Tax (GST) may be charged. This government tax goes to support various programs in Canada and is applied to most items with the total tax amount based on the value of the goods themselves. GST is not only paid on imports, it is applied to most goods and services throughout Canada.

There are also separate fees for customs which are exclusive to imports and taxes on specific types of goods like alcohol and tobacco. These fees can vary greatly due to a number of factors including the value of your shipment, the goods you are shipping, and other issues. A primary exception to this is if your shipment is valued under $20CDN. In this case, an item valued under this amount will not go through customs and be able to avoid fees associated with customs.

How to Reduce Costs and Fees when Shipping to Canada

Be Thorough When Preparing Documents and Shipments: Complete all proper forms indicating the value of and description of your goods and including all necessary information. Being thorough in your preparation of all applicable documents will help to ensure you are not hit with fees associated with items returned to sender or items that do not pass inspection due to improper declarations.

Preferential Tariff Treatment: One of the most important items you can include is the Canada-United States-Mexico Agreement (CUSMA) Certificate. This certificate gives preferential rates and other benefits to goods that are certified as originating from the U.S., Canada, or Mexico.  Note that this is not a specific form but, instead, you will have to provide documentation proving the origin of the goods.

Choose Your Customs Broker: When your shipment is over $20 CDN, it will require brokerage services. A customs broker is an individual who will help with the process of ensuring your shipment has proper documentation and can make its way successfully through customs. Generally, it is best if you can choose your own customs broker and negotiate fees directly. Typically, if you hire your own broker, you will be able to get a lower rate.

Commercial Invoice and Value: When filling out your commercial invoice, you must detail the shipment and its value accurately. While it might be tempting to underestimate the value of your items to get them under the $20 CDN rule this can cause a host of both legal issues and problems if your items are damaged or lost – the real value will not be insured. However, if your items truly are under $20 CDN this should be clearly indicated on your commercial invoice. This will ensure your items do not need to go through official customs procedures or have customs brokerage fees applied.

Include Duty Fees

Should I Include Duty Fees in the Cost of My Products?

Oftentimes it is a good idea to include duties and fees right in the total price of your product. This will help to simplify final total costs for your customers. Generally, most customers would rather pay a higher upfront cost than be hit with additional costs later.

Whether you include the fees in the price of your items or not, you should inform customers of this before their purchase. If the cost is included, this can be a selling feature. If it is not included, customers will appreciate knowing this ahead of time.

Consider the Canadian Non Resident Importer Program (NRI)

The NRI program is a unique option that is beneficial to both exporters in the United States and the Canadian customers they sell to. Consider this program especially if you are selling directly to Canadian retailers, individual consumers, and companies.

When you qualify as an NRI, you essentially become both the exporter and importer of your own goods. This simplifies and expedites the process and helps to reduce certain shipping costs as well.

Benefits of the NRI Program

  • Bundled Pricing: While being an NRI does not automatically reduce prices across the board, it does combine customs, duties, taxes, and transportation costs right in the price of the goods themselves. This simplifies the pricing for you as the exporter and especially for the customer.
  • Price Stability for the Consumer: When you are able to bake in the price of taxes, duties, and other fees into your total price, your consumer will not see as great of a fluctuation in what they pay. This tends to inspire far more confidence and customer loyalty versus ever changing prices.
  • Simplicity for Consumer: Without the NRI program, your consumer may have to jump through more hoops than they would if they were buying from within their own country. Unless you offer goods that are not available from a Canadian supplier, this can be a major deterrent for customers.
  • Reduced Shipping Charges: While certain taxes and duties may not be reduced, shipping can be. This is because, as the importer and exporter you will have more control over how shipments are made. By combining multiple shipments into a single shipment, you can reduce your shipping costs.
  • Customer Relations: You will also be able to offer prices closer to what could be found within Canada and make the overall buying process similar to what Canadian consumers would experience within their own borders. This is a competitive advantage and a way to build customer loyalty.
  • More Predictable Shipping: As both the importer and exporter of the goods, you will have a more transparent view of the shipment’s progress. This will allow you to offer both faster shipping times and more accurate shipping updates and time estimates to your consumers.

Reduce Your Costs by Partnering with a Trusted Carrier

One way to reduce your overall costs when shipping to Canada, is to partner with a carrier that has connections in both Canada and the United States.  As a Canadian based carrier with connections throughout the U.S. and Canada, RoadLINX has the experience necessary to help reduce your costs wherever possible and expedite your cross-border shipping.

We offer a comprehensive range of cross-border services including air freight, ocean freight, flatbed truck shipping, temperature controlled trucks and much more. To get started with a free quote on cross-bordering shipping to Canada, contact us at 905-760-1141.

Get a quote today!

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