What Do I Need to Import Products to Canada?

Bringing new products to the Canadian market can be a rewarding venture for your business. Canada offers a strong economy and a diverse consumer base eager for new goods. However, the process to import products involves several critical steps and strict regulations set by the Canada Border Services Agency (CBSA). Understanding these requirements is the key to a smooth and successful import experience.

This guide will walk you through everything you need to know, from getting the right business numbers to clearing your shipment at the border. We will cover the essential documentation, how to classify your goods, calculate costs, and ensure you remain compliant with Canadian law. Following these steps will help you avoid costly delays and penalties, making your next import a seamless one.

Getting Started: Your Business Number and Import Account

Before you can import anything into Canada commercially, you need to register with the government.

1. Obtain a Business Number (BN)

Your first step is to get a Business Number (BN) from the Canada Revenue Agency (CRA). The BN is a nine-digit number that uniquely identifies your business to federal, provincial, and municipal governments. If you already have a BN for GST/HST or payroll, you will use the same number.

2. Register for an Import/Export (RM) Account

Once you have a BN, you must register for an import-export program account, also known as an RM account. This account is linked to your BN and specifically identifies you as an importer or exporter to the CBSA. Your RM account number will be your nine-digit BN followed by “RM” and a four-digit reference number (e.g., 123456789RM0001).

Classifying Your Goods: The Harmonized System (HS)

Every product you import must be classified using a Harmonized System (HS) code. This is a globally standardized system of names and numbers used to classify traded products.

• What it is: The HS code is a 10-digit number in Canada. The first six digits are internationally recognized, while the last four are specific to Canada for statistical purposes and tariff collection.
• Why it’s important: The HS code determines the rate of duty you will pay, whether any permits are required, and if your goods are subject to any specific regulations from Other Government Departments (OGDs).
• How to find it: You can find the correct classification for your goods in the Canadian Customs Tariff schedule, available on the CBSA website. Misclassifying goods is a common mistake that can lead to paying the wrong duty rate and potential penalties.

Calculating Costs: Duties, Taxes, and Landed Cost

A crucial part of planning your import is understanding the total cost. This goes beyond the price you pay your supplier.

Duties and Taxes

• Customs Duties: Based on the HS code and the country of origin, your goods may be subject to customs duties. Free trade agreements, like the Canada-United States-Mexico Agreement (CUSMA), can reduce or eliminate duties on qualifying goods.
• Goods and Services Tax (GST): Most goods imported into Canada are subject to the 5% GST, calculated on the duty-paid value of the goods.
• Provincial Sales Tax (PST) / Harmonized Sales Tax (HST): Depending on the destination province, you may also pay HST, which combines the GST and provincial tax into one.
• Excise Duties and Taxes: Certain goods like alcohol, tobacco, and fuel are subject to additional excise duties or taxes.

Valuation and Landed Cost

The value of your shipment, or “value for duty,” must be declared correctly. The most common method is the “transaction value”—the price you paid for the goods.

Understanding your landed cost is essential for pricing your product. This is the total cost of getting your product from the supplier to your warehouse, including:

• Product cost
• Shipping and freight (Incoterms define who pays for what)
• Insurance
• Customs duties and taxes
• Brokerage fees

Permits, Licences, and Other Government Departments (OGDs)

Certain goods are regulated by OGDs and may require special permits, certificates, or licences before you can import them. It is your responsibility to secure these permissions in advance. Key OGDs include:

• Canadian Food Inspection Agency (CFIA): For food, plants, and animal products.
• Health Canada: For pharmaceuticals, medical devices, cosmetics, and consumer products.
• Natural Resources Canada (NRCan): For energy-using products.
• Global Affairs Canada: For goods subject to import controls, such as steel, textiles, and agricultural products.

Failure to meet OGD requirements will result in your shipment being refused entry into Canada.

Essential Shipping and Customs Documents

Accurate and complete documentation is non-negotiable for a successful import. You will typically need:

• Commercial Invoice: This is the primary document. It must include the seller’s and buyer’s information, a detailed description of the goods, quantity, unit price, total value, currency, country of origin, and the HS code.
• Packing List: Details the contents, weight, and dimensions of each package in the shipment.
• Bill of Lading (B/L) or Air Waybill (AWB): The contract between you and the carrier. It acts as a receipt for the goods and a title document.
• Certificate of Origin: Required for goods to qualify for preferential tariff treatment under a free trade agreement.

Releasing Your Shipment

Once your goods arrive at the Canadian border, you must have them released by the CBSA. There are two main release options:

1. Release on Minimum Documentation (RMD): This allows for the release of goods before duties and taxes are paid. You must present interim accounting documents, and final accounting and payment are due within a specific timeframe.
2. Interim Import Declaration (IID): An electronic release option available to authorized importers, allowing for quick release with minimal paperwork at the border.

Customs Compliance and Record Keeping

Compliance is an ongoing responsibility. The CBSA can audit your imports for up to six years after the fact.

• AMPS (Administrative Monetary Penalty System): The CBSA uses the AMPS program to issue monetary penalties for non-compliance with customs regulations. Penalties can range from minor fines for clerical errors to substantial sums for more serious infractions.
• Record Keeping: You are legally required to keep all records related to your imports (invoices, shipping documents, proof of origin, etc.) for six years. These records must be made available to the CBSA upon request.

Common Import Mistakes to Avoid

• Incorrect HS Classification: Leads to wrong duty rates and potential penalties.
• Improper Valuation: Under-valuing goods to save on duties is illegal and can result in severe fines.
• Missing OGD Permits: Results in your shipment being detained or refused entry.
• Incomplete Commercial Invoice: Causes delays as customs seeks more information.

When to Use a Customs Broker

Navigating the complexities of the import process can be overwhelming, especially for new importers. A licensed customs broker is a professional who acts as your agent to clear goods through customs.

A broker helps you:

• Correctly classify your goods and determine duties.
• Prepare and submit all necessary customs documentation.
• Liaise with the CBSA and OGDs on your behalf.
• Ensure full compliance with all regulations.
• Handle the accounting and payment of duties and taxes.

Using a broker minimizes the risk of errors, saves you time, and helps you avoid costly delays and penalties, making the entire import process smoother.

Frequently Asked Questions (FAQ)

1. How do I get an import number in Canada?
   You get an import number (an RM account) by registering with the Canada Revenue Agency (CRA). If you already have a Business Number (BN), you can add the import/export program account to it online through the CRA’s Business Registration Online service, by phone, or by mail.
2. How do I find the correct HS code for my product?
   The official source is the Canadian Customs Tariff document on the CBSA website. You can search by keyword or browse the chapters. Because classification can be complex, many businesses rely on a customs broker to ensure they use the correct code for their import shipment.
3. What happens if my supplier under-invoices the goods to help me save on duty?
   This is considered customs fraud and is a serious offence. If the CBSA discovers the undervaluation during an audit, you, the importer, will be held responsible. You will face significant AMPS penalties, be required to pay the correct duties and taxes plus interest, and may face further legal action. Always declare the true transaction value.
4. Do I need a broker to import goods into Canada?
   While it’s not legally mandatory for a business to use a customs broker, it is highly recommended. The import process is complex, and errors can be costly. A broker’s expertise ensures compliance and efficiency, letting you focus on your business.

Let an Expert Handle Your Imports

The Canadian import landscape is full of rules and regulations. Getting it wrong can cost you time, money, and your business’s reputation. Don’t leave your success to chance.

Our team of licensed customs brokers is here to provide the expertise and support you need. We handle the complexities of customs clearance so you can focus on growing your business. Contact us today to learn how we can make your next import simple and stress-free.