Canada dynamic economy offers a lot of opportunities for anyone wanting to venture into Import of goods from China or any other part of the world. The country has a high income per capita at US $50,231 which means you have a huge market for your products.
You have decided to finally start that business you have always dream of. You have done research and concluded that China’s expanding economy offers what you need. The cost of production is quite low there meaning you can make good margins in Canada. But you need help to navigate the various import regulations. Taxation can be complicated with some goods falling at different regulation levels that may include provincial level.
This article is designed to over the various steps you need to import your goods into Canada. If there is an agency that you will encounter all through the process, it’s the CBSA; but who is this?
Canada Border Services Agency (CBSA)
This is the federal agent that is responsible for the border, customs and immigration enforcement. The agency has over 1,200 service stations located all over Canada and in 39 other countries. Their customs officers carry out the mandate of the Agency. They inspect, document and implement taxes and duties for any goods imported into Canada.
The CBSA runs an Electronic Data Interchange which is a standardized way of electronically exchanging information between businesses and the government. This is the portal you will use to interact with the government and file most of your documents. The system is very interactive and user friendly.
A company that imports goods to Canada is called an importer of Record(IOR) because you are responsible for ensuring that all import declarations are true and accurate, all relevant duties have been paid. The IOR should maintain all related records for 6 years and report any import declaration errors within 90 days of detecting them. You can choose to delegate this duties but you still be responsible for any violations.
Being a resident Canadian you can begin the very first stage in importing goods from China to Canada:
Steps and procedures to follow when importing products from China to Canada
Register a Business
This is the first step when starting. Select a suitable name and decide the form of ownership: partnership, sole proprietorship or company. Each has it’s set of benefits, with a company offering the best protection as your liability is limited to your capital. Determine how much capital to invest in the company and who your shareholders or partners will be. Register for any company taxes that may be required. The Canadian company act should guide you in this.
You should also come up with a business plan that highlights the road map for the company. The business plan will also show ways you intend to finance your imports.
Obtain Business number
Before you start importing goods you need a business number issued by the Canada Revenue Agency. This is what will be used for any duties and taxes. The business number is offered free of charge and takes few minutes to complete.
Identify the goods you want to import
Next, you need to clearly define the type of goods you need to import. This information will be used in getting you a classification number which will be used in determining your rate of duty.
You may also need to check the following for certain goods imported from China:
- Goods subject to various anti-dumping and countervailing duties. Anti- dumping rules apply to goods which are sold less than their fair value in Canada which may result in hurting indigenous companies. Countervailing duties are applied by World Trade Organisation(WTO) to neutralize the negative effects of subsidies.
- Determine whether the exporter knows how to fumigate wood products. This is to prevent pests from making their way into Canada. As an importer you need fumigation certificate, otherwise goods are shipped back to China.
- It’ the duty of the importer to check whether goods imported are counterfeit or pirated. You should check whether goods are subject to any trademarks and intellectual rights and dues have being paid to owners. You can check original copy of good against e you suspect to be pirated. The packaging and spelling usually is incorrect example “Adidus” instead of “Addidas”.
Some common products imported from China include: Motor vehicles, iron and steel, plastics, clothing, and footwear, furniture, toys, power and electrical equipment.
You would need to check with your individual province on to see what regulations and controls are imposed. The CBSA website has a list of controlled goods.
Firemans, drugs, used vehicles, mattresses, etc are some goods that are illegal and no import licenses are granted to import such things from China to Canada.
Determine whether to use a licensed customs broker
You can be choose to prepare your own import documentation directly with the Canada border services agency or you may hire a licensed customs broker to act as your agent. This is largely optional, but if you lack the expertise and lack the time, a broker comes in handy.
A Canadian licensed broker carries the following responsibilities
- Obtaining the release of imported goods
- Paying any due duties and taxes
- Preparation of necessary documents, maintaining and submitting them to relevant authorities.
- They also respond to CBSA queries on your behalf
- Determine permits, regulations for each good being imported
Classification of goods
You need to determine the correct tarrif classification number. These number plus the country of origin are used to determine the rate of duty to be paid. The country of origin may be different with the country of manufacture or assembly. Taxes may apply to different parts of a product.
You should be issued with a 10 digit HS code that identifies your product. The HS code is universal at 6-digit level.
The tax payable when importing goods include: federal portion (GST), excise tax and excise duty. For imported goods you only pay the GST taxes if you reside in a province that charges HST (Harmonized provincial taxes).Check which goods are zero-rated like medical supplies,basic groceries, agriculture and fishing goods. If your goods are tax exempt, you must quote the tax exemption code on your import documentation.
Excise tax amplies on: automobile air conditioners, certain vehicles designated for use as passenger vehicles and certain fuels. Excise duty applies to tobacco and certain alcohol products.
When importing goods you may need a warehouse to store your goods before they are cleared by customs. This applies when you have a very large shipment. You can lease a warehouse for a fee. Different warehouses are available, including: sufferance warehouses and bonded warehouses.
Trasportation costs should also be factored in depending on where the goods are being taken.
Select method of shipping
Your carrier is responsible for shipping of the goods into Canada. The carrier is required to fill out the cargo control document. Most shipments are released at the CBSA office when they arrive in Canada, if you are CBSA bonded carrier you may choose another inland service point that is closer to you.
Besides shipping your goods the shipper also maintains the following documents:-
- Packing list – It describes the goods in detail.
- Bill of Landing – this describes goods to be shipped, acknowledges their receipt and sets out the contract for the goods transport.
- Commercial invoice – Document from which to pay exporter
- Canada customs invoice – document used to declare your goods to customs when importing to Canada.
- Certificates of origin – This document verifies parts shipped and whether they are subject to any favourable tarrifs.
Besides the above the shipper prepares a cargo control document(waybill),which is used to report shipment to CBSA using their Electronic Data Interchange system. He also needs to be familiar with CBSA Memorandum D3-11. The CBSA has the rights to inspect your goods for any illegality.
If the shipment is less than $1600 CAN, you will be notified be Canada post or by the courier company that has being handed your shipment. For orders above this amount, you will be notified by your courier, the CBSA or by your courier company.
Payments are usually made in cash, debit card, certified cheque or money order, travelers cheque and credit cards for amounts upto $500.
Release of Goods
Your goods are finally ready for collection. You will need to have settled any pending duties and fill out the B3-3 Canada customs coding form. This is the main accounting document that is provided by CBSA, instructions are available on their website on how to fill it out. Other documents that you may require include:
- Two copies of Cargo Control Document (OCD), which is provided by your carrier.
- Two copies of Canada Customs Invoice
- Hard copies of all import permits, certificates, licenses and any other document that may be required by various government departments.
Regulations after receiving of Goods
If you make an accounting error and it has not being corrected by a CBSA officer you are required to correct the information within 90 days after discovery where the charge is revenue neutral or you owe money. You can then pay amount owed with interest or get a refund.
You also must keep all records pertaining to your importations for 6 years in either electronic or paper format. Information relates to quantities received, price paid, country of origin, vendor, product and any other related material.
With the goods in your hands you are now ready to start transacting and making sales in Canada. The process may differ depending on the type of goods being imported.