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Everything You EVER wanted to know about Customs

REVOLUTION

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This isn't info BY ME, but from a very trustworthy CUSTOMS friend (cut and pasted from CGCC, another site I moderate)

____________________________________________________________________________________________________________

Importing of goods into Canada.

When importing goods into Canada, Canada Border Services Agency (CBSA) must be notified that there are goods coming into Canada. Rules have been established since the founding of Canada to protect Canadian businesses, and its economy, which impose Duties on the goods that are imported.

Through various trade relations (see Tariff Treatment) Canada has entered into agreements with certain countries to lower, or eliminate the Duty from imported and exported goods, that are manufactured in the participating Countries.

Let?s see some real world examples.

I purchase a fully working game from the US, and it ships up via Yellow Freight. I get a call from them letting me know that it has to clear through customs.

Yellow freight, once they have hit the border handed over a manifest of the goods that they are bringing into Canada, and who they are consigned to. This begins CBSA?s tracing and tracking.

The goods move (in bond) to a Yellow freight terminal (say London) awaiting for the consignee to be contacted, and to be cleared.

You drive over to yellow freight, and get a copy of the Manifest, and bring a copy of your Invoice for the cabinet to Customs.

Customs calculates out the Duty (if applicable) and Taxes (GST, PST, yadda yadda).

You pay them, they send an electronic message to Yellow freight, Yellow freight releases the goods, and you go home and are happy.

? Customs will help you every time if you are importing personal goods.
? Customs will help you once if you are importing commercial goods. After that, you either need a broker, or you need to generate the paperwork yourself.

I purchase a module for my Jukebox machine. They agree to ship it UPS to my door.
UPS tracks the package as soon as they pick it up, and notify you to let them know who your broker is.

Since UPS shipments clear at about 50 different crossings between Canada and the US, you *could* clear it yourself, but you would have to have the ability to get to the port where it is clearing, and get a manifest, take it to customs, etc. Not a problem if you live in Windsor, or Hamilton.. but what if it clears in North Portal, Sask?

UPS will clear it on your behalf. If you have *ever* cleared a shipment with UPS, they have your signature on file, authorizing them to clear your goods for every UPS shipment.

UPS charges for this service.

UPS will clear your package, assign Duty/Tax/Gst and pay it to CBSA on your behalf, and then slap a COD tag on your package, and collect it when they deliver it.

DHL, AirMail, and Purolator all work the same way; they usually bill you after the fact though. That is nice, because sometimes they mis-declare goods. I once got sent a teddy bear from the UK (rare) and they cleared it as lingerie. It was listed on the export docs as a ?teddy?.

Air Freight ? it?s a different ballgame.
I shipped a pinball machine from the UK. The airlines have arrangements with warehouses that are authorized to receive freight from airlines while under customs supervision. Since you are not authorized to go on the tarmac and get your freight, you have to pick it up from one of these warehouses.

The warehouse will cut the manifest for the goods. You will be notified that there is freight for you, and you can pick up the manifest at the warehouse, take it over to customs, and the process is the same for all the other shipments.

The catch is.. You have to pay the warehouse a fee for using their warehouse. ($50 - $150). You can?t get around it. And its usually in US Funds. And if you don?t clear the goods in 24 hours, they charge you storage. Fair is fair, you are taking up room in their warehouse, that they can use to make money. This is where a Freight Forwarder comes in. They arrange (for a fee) to have the freight taken to the warehouse, all the paperwork handled, and then the goods reshipped to your door? for a fee.

Ocean Freight ? More Fees.
If you can ever help it.. NEVER EVER EVER ship ocean freight. Since goods are containerized, and customs has a bill back procedure in place for checking ocean freight, it?s like playing Russian roulette.

Customs is now charging the importer, the costs associated with inspecting a container. 1 out of every 1000 or so containers gets inspected. Considering that it costs $1,000- $2,500 to inspect a container, this amount gets billed back to the importer. You can?t fight it. You just have to accept that as normal cost of doing business.
In addition to this possible charge, terminal fees are about $250 US funds. Then you get your manifest, and so on. But you cannot pick up the freight from the dock, you need to arrange with an approved carrier, who can go in and pick up the freight (you guessed it.. for a fee).

This isn?t to deter you from Shipping internationally at all. Just to educate a bit on what to expect.

---
Classifying the goods.

When you go to clear your goods through customs, they will assign the goods an HS number. The HS number is an international system of classifying goods.

Every item in the world can be classified by a 10 digit number. That Book is available at
http://www.cbsa-asfc.gc.ca/general/publ ... nts-e.html

The Harmonized System is divided into Sections, then Chapters, then Headings, then Subheadings.
Eg:

Pinball Machine. 9504.30.00.19
Is broken down into
95 ? TOYS, GAMES AND SPORTS REQUISITES; PARTS AND ACCESSORIES THEREOF
9504 - Articles for funfair, table or parlour games, including pintables, billiards, special tables for casino games and automatic bowling alley equipment.

9504.30.00 -Other games, operated by coins, banknotes (paper currency), discs or other similar articles, other than bowling alley equipmen


- - - - -Games:
11 - - - - - -Video
19 - - - - - -Other
90 - - - - -Parts and accessories

So a pinball machine is
9504.30.00.19

(and if you look closely, you can see that an arcade cabinet would be
9504.30.00.11)

---
Now that you know what the goods are, the HS book also shows us the amount of Duty that is payable. (In this case, it?s duty free). That Duty is based on the Tariff Treatment, or our relation with the country in which it was made.

Items that are MADE IN THE USA, and can be proved, are Duty Free (that whole NAFTA thing).

With personal shipments, a lot of the time customs doesn?t care where it was made, just where it came from. So if you have a PCB made in China, but it shipped from the US, they don?t care as its too much effort to go into the computer and change the Tariff Treatment from 10 (US) to 2 (China).
So, knowing that this pinball machine is duty free, lets see how everything gets calculated out.

Value of Pinball Machine - $1000 USD
Exchange rate at time of shipment ? 1.1725
(The exchange rate is not based on Bank rate, or Visa rate. I don?t think anyone really knows how it gets figured out, but it is always posted at Customs, or online)

Value For Duty $1172.50
(this is the value, of the goods, converted over to Canadian funds)

Duty 0%

Value for Tax (VFD + All Duties) $1172.50
GST (7%) $82.05
PST (8%) 93.80
Total Payable: $175.88

---
There are some conditions that customs puts on for low value goods.

Goods that are under $20 CANADIAN (not US, or EUR, but CANADIAN) where Canadian is defined as the price you paid, times the exchange rate applicable on that date, are allowed in the country Duty free, Tax (PST/GST) exempt.

So if you were to buy a pinball project machine, for $18 USD, it would NOT qualify. But if you bought it for $10 US (X 1.1725 = 17.25 CDN) it would be allowed in Duty Free, and Tax Exempt.

This is why sometimes your UPS shipments don?t have any COD tag on them to collect for duty and taxes, because there is none.

The other catch is Gifts.. Gifts are allowed to a maximum of $60 Canadian. If you receive a gift from someone, customs will deduct $60 off the price of the goods.

9816.00.00.00 - Gifts

So your KI2 for $75 (Canadian) that was a ?gift?, will be assessed duty/ taxes on $15.00 (Canadian)

Does this mean you should undervalue goods, and have that NOS tron cabinet declared at $15.50 to have it come in duty free and tax exempt?

- - -

AMPS ? Applied Monetary Penalty System

Customs has a new zero tolerance policy. Misdeclaring goods imposes a penalty of $1000 for the first offence, $5000 for second, $25,000 for the third. (for commercial), personal, they will assign you a fine, plus double duty and taxes, plus black list you everytime you come over the border you will get pulled over.

This is just the basics of international shipping, and customs. Many more requirements (and this is subject to change as I get around to it)

In a nut shell?

Under $20 ? Duty Free, Tax Exempt.
Items from the US are typically free for non commercial.
GST and PST is paid for non commercial goods.
Under $60 - can be a ?gift?, and be duty free, tax exempt
Don?t piss off Ocean Warehouses, or freight forwarders.

Common HS Numbers

Pinball Machine. 9504.30.00.19
Video Game : 9504.30.00.11
Gifts: 9816.00.00.00

Parts is a whole other topic. When is a Screw, not a Screw? You can?t say that a screw for your pinball machine is a pinball part. A part is something that is specific to the item, so a flipper assembly would be. But a screw for that flipper assembly is still a screw.
 

Chambahz

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If anyone knows a buddy who works in Customs, I'd love ot hear why an American is charged 5% (GST only) to bring a pinball machine across, but a Canadian is charged the full 13%.
When importing my SM, the Customs officer understood that the American was bringing the game across for me, so charged the full 13% on the game.
Doesn't make sense to me. Like, make up your rules and I'll abide by them but which one is it?
 

spiroagnew

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Since you, the purchaser, are a Canadian resident and the item's final destination and end use is here in Canada, a full 13% has to be applied. If the item was a gift, and no money was changing hands, ONLY THEN would 5% be charged. Next to impossible to say that a pinball machine of that value would be given as a gift. In your case, the US guy was acting as your "agent"...same as if you paid a delivery guy to bring the purchase over for you.

Think about it. If your logic were correct, no Canadian would ever import high value items into Canada themselves...they would instead pay a US friend or US seller or random US dude standing on a street corner a small delivery fee to bring the item into Canada for them and save them 8% in tax.
 

Chambahz

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Thanks for the info.
I agree with you -why would any Canadian import, and instead why not use a US citizen?
EXCEPT... when a US citizen brought my AFM into Canada, they were charged 5%. Same scenario and fees for another used on Pinside who brought a game into Canada to sell in Montreal.
Recently with the Spiderman (my US seller bringing it across the border), it sounded as though it was going to be 5%, until the agent understood that the sale was taking place right across the bridge on the Canada side. Then the conversation switched to 13%.
So I understand why 13% is charged, and would expect it to be that way 100% of the time. Out of 3 transactions that I'm aware of, it's only been 13% once.
 

REVOLUTION

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It REALLY depends on the agent you get at the time. Some let it slide, some don't..

I had one scenario where the agent let what I was claiming slide through (I did declare everything, with receipts, but he only marked me down for half my stuff). I went in, paid my taxes... and got pulled to the side for a random inspection. That all went over REAL well.
 

luch

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Nov 18, 2012
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what's the difference if it's montreal or the parking lot of walmart across the border it's still the same , us citzen selling in Canada period. theses guys enforce rules anyway they see fit. not fair . problem is try arguing with a customs officer! be ready for your free prostate exam without the lube. wish there was independent non biased people you could talk to for a fair ruling
 

REVOLUTION

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In my experience it's best to "assume the worst" at the border, which would be paying 13% tax on everything you're bringing back (minus the allowable exempted amount depending on your time over there). Anything less than that is a pleasant surprise.
 

Chambahz

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Dec 15, 2012
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Absolutely agree with you -expect 13% and hope for the best.
Still, a 13% mark-up on pins makes nearly all imports too expensive to consider as there's not that much of a difference between US and CDN prices from what I've seen. (Not including the travel etc)
It would be nice to have a solid answer or know for sure how to get the 5% instead of the 13% tax rate.
 

spiroagnew

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Chambahz said:
It would be nice to have a solid answer or know for sure how to get the 5% instead of the 13% tax rate.

To rephrase it, the only way to, in your words, "get" the 5% is to 1) not tell the entire truth, 2) outright lie or 3) hope the customs guy/gal doesn't execute their job correctly. You should not embark on the first two, and the third is out of your control entirely. Its in the books that 13% MUST be collected in your situation, and in most cases always will be...however, if it doesn't get collected, go buy a lottery ticket, because its your lucky day.
 

Chambahz

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I was advised to declare much less than the actual purchase price of the game I purchased. In hindsight, this would have worked 100%. The customs person didn't give the game a second look, or question the purchase amount.
That's not what I'm about though. I'm not going to outright lie or commit fraud. It's not worth it to me.
Still, when 2 Americans come through the border and pay 5%, and the 3rd seemed to be headed in this direction until Customs understood the pin was for me, it seems as though we don't fully understand how they decide who pays what.
Guess it'll just be a matter of crossing my fingers and hoping if there's a next time.
Anyway, thanks for the advice and info guys!
 

Chambahz

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I decided to spend the time tracking down the right people to ask and after a little work spoke to a Customs Agent.
Even US citizens are supposed to pay the full 13% taxes unless they are a business and have some sort of registered number.
Canadians can request Import Account numbers and if the machines were for business use, you might not be charged any more than the 5%. Seems like too much work to me.

-For those who are interested.
 

tkaye

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So, if I have a receipt from a seller for $1000, for a game I actually paid more for, I can just drive across and declare what my receipt says correct?
I mean, who is going to question a machines value?
 

Vengeance

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Nov 14, 2012
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tkaye said:
So, if I have a receipt from a seller for $1000, for a game I actually paid more for, I can just drive across and declare what my receipt says correct?
I mean, who is going to question a machines value?

The boarder guard will

The only way to try and help sell a fake receipt would be to include the contact information of the seller and hope that they are ok with lying to the border guards if they call.

If you try and take a MM across the border with a $1000 receipt you better bring the KY with you.
 

frolic

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It just doesn't make sense to try a fast one at the border. No one is going to try bringing an MM through for $1k declared value, so really we're talking about shaving $1000 or $2000 off of a game, keeping it kind of realistic. Is the $130 or $260 saved on tax from shaving the declared price worth the risk of confiscation if they get wise to it?

Better off just accepting that tax is the price you pay for that deal, and if the deal makes sense or not factored in.
 

juandylan

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Nov 18, 2012
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You are nuts to think that the customs agents have the slightest clue what your machines true "collectable" value really is, whether it is MM or it is a beat up EM. These guys/gals that work these jobs are more concerned with much more serious offenses like importing firearms, illegal immigrants, drug trafficking, booze smuggling, etc..
 

Menace

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juandylan said:
You are nuts to think that the customs agents have the slightest clue what your machines true "collectable" value really is, whether it is MM or it is a beat up EM. These guys/gals that work these jobs are more concerned with much more serious offenses like importing firearms, illegal immigrants, drug trafficking, booze smuggling, etc..

I wouldn't be so sure of this... I've been in this hobby a long time, and I've heard PLENTY of stories. All I can say is don't be too naive when it comes to crossing the boarder.

D