Table of Contents
April 27, 2021
. 4 min

Shipping From Canada to the US Customs Fee & Vice Versa: Full Guide

The most thrilling thing is growth—if you only shipped locally in 2020, you may look into expanding your business and opening your store to the international market this 2021. Since Canada and America are just a stone’s throw away, you can start expanding your business to your neighboring country. 

If you are among the sellers who will grab the opportunity of cross-border selling this year, we have prepared a brief overview on shipping from US to Canada customs fee and shipping from Canada to US customs fee (2021) to arm you with the knowledge you need. 

Customs fees are important because it protects the local industry, generates revenue for the economy, and shows partnership among countries through trade agreements.

Formal and Informal Entry Types

There are several US CBP entry types, but it’s important to note the difference between formal and informal entries. The tax you will pay depends on the declared amount of goods you are sending. Goods less than USD800 will not be charged import tax. 

  1. Informal Entry - If you are shipping allowable items that cost less than USD2,500, there is no need for you to get a customs broker to fulfill the last stretch of processes. In this case, the receiver can pick up the items in US CBP ports as long as the items have complete documentation and permits. 
  2. Formal Entry - This classification of goods is also called Commercial Entry. A shipment with a declared value of more than USD2,500 is considered a formal entry. A customs broker will help you fulfill the added steps like securing permits and certificates from the other US departments. 

US CBP may also recommend customs brokers, so it will not be difficult for you to find one. Hire a customs broker and skip the stress of accomplishing essential documentation once your goods are in the US CBP. 

Taxes

There are three main taxes you should remember for your shipping from US to Canada customs fee. 

Goods and Services Tax (GST) - This is the 5% tax you need to pay for all items you send into certain provinces in Canada.

Provincial Sales Tax (PST) - This 6-7% tax is charged on top of the 5% GST tax you need to pay specific provinces. 

Harmonized Sales Tax (HST) - A 13-15% tax to products entering certain territories in Canada will be charged to senders. 

With taxes being too high, HST can affect your business. You might consider lowering the price of your product, especially if your target buyers live in these provinces. The lowering of prices is the primary goal of HST proponents. Like other taxes, there are also exemptions to HST like groceries, medical, agricultural, and fishing needs. 

Check the UMSCA agreement details and see whether or not the goods you are exporting to Canada are considered duty-free (not requiring taxes). Also, note that you cannot enjoy this benefit if you are manufacturing outside UMSCA countries. The following may also enter the border duty-free:

  • Products worth CAD20 or less
  • Gifts worth CAD60 or less sent to relatives and friends in Canada

If you are selling and shipping items like clothing, cookware, textiles, furniture, car parts, and computer-related equipment, note that you need to pay a different duty rate. The CBSA will help you calculate the tax you need to pay. 

Another interesting detail about the taxation of goods is that you can be exempt from taxes if you are a resident of Canada who just returned after a few days out of the country. This exemption varies depending on the length of time you are away and the item you bring back. For instance, if you’re back after 48 hours, you can bring home up to CAD800 worth of goods from another country duty-free. The CBSA and Canadian brokers can provide you with more detailed information about this.

You can request a sample computation from CBSA or the shipping company you are partnered with to get an idea of how much you will pay. 

Sample Computation

To calculate the duty and tax you need to pay, you have to know about the Harmonized Tariff Schedule (HTS). Every item sent is given an HTS code, and each number represents a category of goods and a corresponding tax rate.

Final Thought

When shipping from Canada to US, customs fee knowledge is crucial. Computations may be a bit complicated initially, but understanding the basics will be helpful to your business in the long run. With the tax and duty rates in mind, you can wisely decide on the pricing of your items and how else you can make your product affordable for your target audience. 

In terms of shipping from Canada to the US or within Canada, Stallion Express can be your partner. We offer cheap shipping rates that are perfect for your growing business. Call us at 877-863-7447 to inquire or know us more. 

Get started today! Ship faster, smarter, cheaper with Stallion.

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