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GST/HST – Imports and exports On this page Find out about the process of importing goods for personal use Find out about the process of importing or exporting for businesses Find out how the GST/HST applies to imports and exports Determine which export programs provide GST/HST relief
Find out about the process of importing goods for personal use For an overview of importing goods for personal use such as motor vehicles or boats, or by mail/courier, see the import goods for personal use segment.
Find out about the process of importing or exporting for businesses For an overview of the commercial importing or exporting process for businesses, see the step-by-step guides on: importing commercial goods into Canada exporting goods from Canada If you are a non-resident doing business in Canada, you may need to register for the GST/HST. This means that: You may need to charge, collect, and remit the GST/HST on your taxable supplies of property and services you make in Canada You may need to file GST/HST returns on a regular basis You may be able to claim ITCs to recover the GST/HST paid or payable on your purchases and operating expenses For more information, see Registering for a GST/HST account.
Find out how the GST/HST applies to imports and exports Different GST/HST rules apply for businesses that import or export goods or services. Select the situation that applies to you to get more details. Imports
Imports Most goods imported into Canada are subject to the federal GST, which is calculated at the rate of 5% of the duty-paid value of the shipment. This tax must be paid at time of entry and is collected at the border, unless the goods are going directly to a bonded warehouse. In this case, the GST is collected when the goods leave the warehouse and become eligible for sale in Canada. Several provinces have combined the GST with their provincial sales taxes on various categories of goods, thus creating a Harmonized Sales Tax (HST). On most commercial imports, however, only the federal (GST) portion of the HST is applied to the sale. To know which supplies are GST/HST taxable and at which rate, see Which GST/HST rate to charge. Select the situation that applies to you to get more details. Find out how the GST/HST applies to imported goods Find out how the GST/HST applies to imported services and intangible personal property Exports
Exports Goods and services that are normally subject to the GST/HST may be untaxed when exported from Canada. In this case, they are referred to as “zero-rated” goods or services. Select the situation that applies to you to get more details. Find out how the GST/HST applies to exported goods Find out how the GST/HST applies to exported services Find out how the GST/HST applies to exports of intangible personal property Drop shipment rules
Drop shipment rules A drop-shipment generally happens when a non-resident who is not registered for GST/HST acquires goods from a registrant in Canada and tells the registrant to deliver the goods to another person in Canada. A drop-shipment also occurs when an unregistered non-resident contracts with a registrant in Canada to have certain commercial services performed on goods, and the registrant causes the goods to be delivered to another person in Canada or to a non-resident person for export. The drop-shipment rules generally relieve the non-resident (the supplier) who is not registered for GST/HST from paying tax. An unregistered non-resident can take advantage of the drop-shipment rules where a GST/HST registrant sells goods to the unregistered non-resident or does commercial services-manufacturing, processing, inspecting, testing, repair, maintenance, or storage, on goods owned by the unregistered non-resident and then delivers them to a third party. The third party may be a customer of the non-resident or another resident who is taking possession of the goods for the purpose of performing additional work on them. In this section: Drop-shipments to registered persons Drop-shipments to unregistered persons
Drop-shipments to registered persons When a GST/HST registrant transfers physical possession of your goods to a third party (consignee) who is a GST/HST registrant, the consignee must issue a drop-shipment certificate to the registrant in order for tax not to apply to the supply of goods or commercial services from the GST/HST registrant to you. Drop-shipment certificates ensure that consignees are aware of their potential GST/HST liability when another registrant transfers physical possession of your goods to them. By issuing the certificate, the consignees acknowledge that they are responsible for the GST/HST payable if they do not acquire the goods for consumption, use, or supply exclusively in the course of commercial activities, or if an unregistered person ultimately uses the goods in Canada. For more information, see Drop-shipments to unregistered persons. We accept blanket drop-shipment certificates. These certificates cover more than one transfer of physical possession of goods from one registrant to another (the consignee). See example
Example You buy radios from a registered supplier. You instruct the supplier to have the radios delivered to a registered inspector. The inspector provides the supplier with a drop-shipment certificate. The supplier invoices you for the radios, but does not charge GST/HST. You instruct the inspector to deliver the radios to a registered customer. The customer provides the inspector with a drop-shipment certificate. The inspector invoices you for the inspection service, but does not charge GST/HST. You invoice the customer, and as an unregistered nonresident, you do not charge GST/HST.
A valid drop-shipment certificate must contain the following information: the consignee's name and Business Number (BN); the consignee has taken or will take physical possession of the goods; the goods are acquired for the purpose of performing commercial services on them or that they are for the recipient's consumption, use, or supply; and the consignee assumes liability to pay or remit any GST/HST that may become payable.
Note A registrant may become liable to account for tax on an unregistered non-resident's goods upon taking physical possession of those goods. The liability does not come from issuing a drop-shipment certificate. It can only be avoided by not taking physical possession of the goods.
To learn more how drop-shipment rules apply see the following: Transfer of goods to a carrier or warehouse Goods kept by registered suppliers Goods subsequently exported Conditional sales contracts and sale-leaseback arrangements When the drop-shipment rules do not apply Drop-shipments to unregistered persons If you instruct a GST/HST registrant to deliver goods in Canada to an unregistered consignee such as a consumer, GST/HST is payable when the registrant delivers or transfers the goods to the recipient. GST/HST is as follows: based on the fair market value of the goods, if the registrant transfers physical possession of the goods in Canada to you or to a third person; or nil, if you provide the goods to a customer free of charge and the registrant transfers physical possession of the goods to the customer in Canada on your behalf. These rules also apply if a registered consignee does not issue a drop-shipment certificate to the GST/HST registrant.
Determine which export programs provide GST/HST relief You may be eligible for relief of the GST/HST on certain imports and domestic purchases. Use the following tabs to find out more about the two programs. Export Distribution Centre Program
Export Distribution Centre Program (EDCP) The Export Distribution Centre Program (EDCP) permits eligible export-oriented businesses that do not manufacture or produce goods and that add limited value to goods in the course of their processing or distribution activities to use an EDCP certificate to acquire or import, without having to pay the GST/HST, most inventory, property to be added to other goods in the course of processing, and customers' goods on which processing services are provided. For more information, see GST/HST Technical Information Bulletin B-088, Export Distribution Centre Program.
Find out if you are eligible to apply for an authorization You can participate in the EDCP if all of the following apply: 1. You are a GST/HST registrant. 2. You are engaged exclusively (90% or more) in commercial activities 3. It can reasonably be expected that during the fiscal year in which the authorization will be in effect, all of the following criteria are met: Your export revenue percentage will be 90% or more You will not engage in substantial alteration of property The value you add to your customers' goods from the provision of non-basic services will be 10% or less, or the total value you add to your customers' goods will be 20% or less
How to apply for authorization If you meet the above eligibility conditions, you can apply for an authorization by using Form GST528, Authorization To Use an Export Distribution Centre Certificate. The EDCP authorization is valid for three years, unless it is revoked earlier, and can be renewed. Exporters of Processing Services Program
Exporters of Processing Services Program (EOPS) The Exporters of Processing Services Program (EOPS) enables eligible businesses to import certain goods and/or acquire goods in Canada that will eventually be re-exported without paying the GST/HST. A GST/HST registrant may obtain authorization to import goods on a tax-free basis where the goods are imported solely for the purpose of having services performed that are supplied by the registrant to a non-resident person. This program is intended to alleviate the cash-flow cost that would typically occur for such a registrant where the registrant imports the goods and would otherwise be required to pay tax on their importation and then have to wait for a net tax refund to be paid to recover the tax. The GST/HST registrant must import the goods for the purpose of supplying a "processing", storage, or distribution service in respect of the goods in Canada in circumstances in which the goods, or the product of their processing, if any, will subsequently be exported without having been consumed or used in Canada except to the extent reasonably necessary or incidental to the transportation of the goods. For this program, "processing" includes adjusting, altering, assembling or disassembling, cleaning, maintaining, repairing or servicing, inspecting or testing, labelling, marking, tagging or ticketing, manufacturing, producing, packing, unpacking or repacking, and packaging or repackaging. This includes imported goods that are to be incorporated or transformed into, attached to, or combined or assembled with, other goods that are processed in Canada. EOPS also applies to imported materials that are consumed or expended directly in the processing of other goods that will be exported without having been consumed or used in Canada.
Find out if you are eligible to apply for the GST/HST relief You can participate in the EOPS program if all of the following apply: 1. The processor must be a GST/HST registrant that has been authorized to use the program (the application to use the program must be made prior to the importation of the goods). 2. The GST/HST registrant cannot be closely related to the non-resident owner of the imported goods or to the non-resident recipient of the importer's services if that is another person. 3. The GST/HST registrant does not obtain ownership or co-ownership of the imported goods or of the exported processed products while they are in Canada. However, the importer may supply property, such as components or parts, taken from the importer's own inventory, which is added to the imported goods in the course of their processing. 4. Neither the imported goods or the processed products are the property of a resident while they are in Canada. 5. The GST/HST registrant must not transfer physical possession of the imported goods or the processed products to another person in Canada. For example, the goods cannot be drop-shipped to another service provider in Canada. An exception to this is where the importer transfers possession of the imported goods or the processed products for the purpose of their storage, their transportation to or from a place of storage, or their transportation in the course of being exported. 6. The exportation of the imported goods or processed products must occur within four years from the day on which the goods are accounted for under section 32 of the Customs Act. 7. The GST/HST registrant has provided any security that may be required as a condition of obtaining an import certificate.
How to apply the GST/HST relief GST/HST registrants who import duty free goods and have no need to seek duty relief must apply to use the EOPS program by sending a letter making this request to their nearest tax services office. The letter should contain evidence showing that the person will import goods or materials to provide processing services and/or has done so in the past where the resultant products are exported. To apply for duties relief in addition to EOPS relief, see Form K90, Duties Relief Application. Form K90 would be sent to your local CBSA office A review of your operations will be conducted and the CRA tax services will be consulted to determine whether an import certificate for the GST/HST would be allowable. When both offices are in agreement, you will be given a duties relief certificate allowing the GST/HST relief. The authorizations for relief from the payment of the GST/HST under the EOPS program are valid for three years.
Date modified: 2016-12-06
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