Financial Services

Importing Goods

Every shipment arriving in Canada, regardless of the reason for the shipment (E.G. purchase, free sample, loan), is subject to the application of duty and tax on importation. However, not every situation will attract duty and/or tax.

Vendors, shippers, carriers, purchasers, and importers each have a responsibility for various aspects of a shipment, but the Importer of Record is the party legally liable for the accuracy and completeness of information submitted to Customs. The Importer of Record is defined as the “Person” who causes the goods to be brought into Canada. A Person can be an individual, partnership, corporation or institution. The University is a registered commercial importer and exporter.  

The Customs and Logistics team manages the Customs affairs of the University and works with a contracted Customs broker (agent) to release and account for University shipments.  Where the University is the Importer of Record, clearance in the University’s name is approved by the Customs and Logistics team.

The University would be considered the importer of record where goods:

Personal Shipments

Shipments containing goods purchased using a personal credit card, or gifts of a personal nature, are not considered University business. The responsibility for the Customs formalities will rest with the purchaser or the individual who causes the goods to be shipped to Canada. Personal shipments are not to be consigned to individuals in care of their work address at Western as this creates confusion regarding the true Importer of Record and can create a liability to the University. Most carriers and couriers are able to deliver to residential addresses and handle personal transactions.

Doucmentation Requirements

It is important to understand the documentation requirements for importing goods into Canada. The responsibility for the accuracy of the import transaction rests with Western.

Failure to have proper documentation can:

  • Delay the release of goods from Customs
  • Result in financial penalties for inaccurate accounting for imports
  • Result in the seizure and forfeiture of the goods as well as monetary penalties (fines).

The type of document required can vary depending on the value and nature of the goods. Basically this can be the sales invoice for the goods, with the country of origin notated on the document, a Canada Customs Invoice, where the value of the shipment exceeds $2,500.00 CAD, a Proforma or Commercial Invoice, or a combination of any of the above.

Every document used to declare goods to Customs must contain:

  • Vendor’s full name and address
  • Consignee’s full name and address
  • Importer’s name and address (if different from the consignee)
  • The reason for the shipment (sale, donation, warranty replacement, etc.)
  • A complete detailed and accurate description of the contents of the shipment. This is to include detailed descriptions of the contents including, where applicable, model numbers, serial numbers and, where necessary, general descriptions to assist with properly identifying the goods. If biological specimens, the source of the material (human, rabbit, rat etc.) and information regarding and hazard associated with it.
  • Quantity, unit of measure, unit price and extended value. The value used for calculating duty and tax is to be based on the transaction price (the price paid or payable for the goods). Discount types and amounts, where applicable, are also to be identified.
  • Country Origin of the goods. This is the country where the goods were produced or manufactured and not where the goods are shipped from.

Two Issues that can result in delays, penalties and seizure:

Valuation

Everything has a value, even if given to you at no charge or is by nature something that is not normally sold. Valuation law is specific regarding the determination of the value for duty. Failure to declare or disclose accurate values can result in delays, monetary penalties and seizure of shipments. Customs can levy seizures and penalties on shippers who misrepresent the values of goods being shipped to purchasers or consignees in Canada. Penalties can be applied retroactively on transactions dating back 6 years.

Descriptions

General descriptions such as “laboratory reagents for research”, “supplies”, “harmless amino acids for research” or “scientific equipment” are too general and NOT acceptable to Customs. They do not sufficiently identify the contents of a shipment. Customs and any other Government Department or Agency who may have jurisdiction over the import of goods will reject transactions where the goods cannot be precisely identified. Descriptions of this nature will delay the clearance of the shipment and can result in penalties and seizure. Penalties can be applied up to 6 years following the importation of goods where they have not been properly imported.

Import Permits & Licenses

There are several types of import controls which apply to certain types of goods. Failure to have the appropriate approvals, by way of an import permit or license, prior to the shipment being made, will result in the refusal of entry into Canada. It is possible that seizure, forfeiture and destruction will occur, depending on the type of good involved.

It is the responsibility of the end user of the controlled material to apply for most import permits. Often this is with the involvement of the Customs and Logistics team and personnel in Occupational Health and Safety. However, there are some types of permits which require the University be the applicant. In these circumstances, the Customs and Logistics team and/or Occupational Health and Safety will be the applicant.

Examples of Import Controls

These are the most common controls, but not all inclusive. Refer to the web links indicated or contact the Customs and Logistics team for assistance.

Canadian Food Inspection Agency (CFIA)

    • the import of animals, animal products and by-products (import requirements are based on the disease status of where a shipment originates)
    • Veterinary biologics and biohazardous materials
    • Animal feeds
    • Plants, plants with novel traits, plant products, seeds, grains and fertilizers
    • Insects

Public Health Agency of Canada (PHAC)

    • Human and most terrestrial animal pathogens. This is a combined set of controls for Public Health and CFIA.

Canadian Nuclear Safety Commission (CNSC)

Foreign Affairs and International Trade

Prior to Customs release, the requirements of any other government agency such as those noted above must be met and, where required, import permits or licenses must be surrendered. The Customs and Logistics team can assist with reviewing your specific situation to determine import controls, licensing and permitting.

General Duty Information

Every good entering Canada is subject to duty and tax regardless of whether it is being purchased or being supplied free of charge to the Importer.

The rate of duty is determined by the tariff classification of the good and the applicable trade agreement which is based on the country of origin (country of manufacture) of the good.

Duty rates have been declining for several years and many goods imported by the University are duty free irrespective of the Country of Origin of the goods. However, there are some tariff provisions which will reduce or eliminate Customs duties, if applicable. These would include situations where the goods qualify under the rules of origin of a Free Trade Agreement or, where the goods qualify for the statutory provisions based on the end use of the goods.

Statutory end use provisions, afforded to Universities, require that:
  • The goods be within the defined scope of “apparatus, utensil, or instrument”
  • The goods are imported by a University
  • The goods are used directly in teaching or research.

End use provisions are only applied where a purchase order is issued and the requisitioner has certified their end use of the goods to be teaching or research. End Use exemptions requires that the purchaser not divert the goods to another end use for a period of 4 years after the date of importation. Failure to correct a declaration involving an end use exemption within 90 days of the date of diversion to another end use will result in the assessment of the duties owing, interest on the duties that would have otherwise owed and a financial penalty.

Duties may also be overridden where the goods are being given (donated) to the University. In this case, taxes are also reduced to zero. To qualify for the donation provisions, the vendor or shipper of the goods is required to produce a statement to the effect that the goods are given freely, at no charge, to the University. These no charge provisions are not affected by the fact that Western is paying for the transport costs.

Enquiries regarding any Customs matter should be directed to the Customs and Logistics team.

HST

Most goods and services, supplied to residents of Ontario, are subject to the 13% Harmonized Sales Tax (HST). HST consists of an 8% provincial component and a 5% federal component. Universities are eligible to claim various rebates of tax paid irrespective of being imported or purchased domestically.

The HST payable on goods imported into Canada is applied in a different fashion than goods purchased within Canada.

For Casual Importers, such as travelers and individuals who import occasionally on their own behalf, Canada Border Services Agency (CBSA) calculates and collects the entire HST at the time of import.

However, for Commercial Importers, such as the University, the CBSA collects the Federal component of the HST (5%) at the time of import. The University has the legal obligation to self assess the applicable provincial component of the HST (8%), once the goods have been received.

There are two exceptions which tend to create confusion:

  • Non-Resident Importers - HST Registrants Generally, these are companies who are considered to be selling their goods and services within Canada in the same fashion as domestic companies. The place of supply is Ontario where the transfer of the good, or purchase transaction, is considered to take place within Canada. They are registered with Canada Revenue Agency and collect and remit the HST on their invoice. Non-Resident Importers who are HST Registrants are responsible for importing the goods, paying the taxes on the import into Canada and are entitled to an input tax credit on those taxes paid to Customs.
  • Non-Resident Importers - Non-Registrants Some companies, as a service to their customers in Canada, look after the Customs import formalities on their behalf and charge the federal component of the HST (5%) on their invoices. These companies recover the tax paid at the border from their customer in Canada via their invoice for the goods. Since they are not HST Registrants, they are not entitled to claim tax credits from the government. To be eligible for reimbursement for the import taxes, they must provide evidence of payment of the GST with their invoices. This is a copy of the import entry for the goods.

Due to the documentation requirements to substantiate taxes charged on invoices, this practice is to be discouraged where possible. The University is in the best position to ensure that Customs formalities are conducted properly and that all entitled exemptions are applied.

Drop Shipments

Purchases made from Canadian companies which are shipped directly to Western from foreign locations are referred to as drop-shipments. The Canadian company is the correct importer of record in such situations and is responsible for the Customs formalities. Often they are not mentioned on the Customs paperwork resulting in delays clearing Customs and the shipment remains pending clearance by their Customs broker. Being mistakenly identified as the importer in these situations will result in an overpayment of duty and tax to the end user. Corrections to the entry are required to permit a refund of these amounts. Penalties on the identified importer can be levied where a correction to the importer of record is not filed within 90 days of importation.