HST, Canadian Imports and Customs Brokerage Fees
On July 1, 2010, the provinces of Ontario and British Columbia will replace their provincial sales taxes with a single harmonized sales tax (“HST”). It is important that Canadian importers take the time to understand how this change may apply to their importations into Canada and the associated customs brokerage fees.
In general, the provincial component of the HST will not apply to the importation of commercial goods into Canada. The importer will still be required to pay the federal component of the HST at the current rate of 5%. In some instances, importers may be required to “self-assess” the provincial portion of the HST on their commercial importations if the goods are used in manner outside of their commercial activities. Further information regarding the “self-assessment” requirements can be found at http://www.fin.gc.ca/n10/data/10-014_1-eng.asp#_Toc252889034.
For the most part, HST will apply to the importation of non-commercial goods into an HST participating province. The entire amount of HST will be collected by the CBSA at the time of importation.
Customs Brokerage Services
On April 30, 2010, draft regulations were released regarding the “Place of Supply Rules” for services performed by customs brokers. These place of supply rules help determine the applicability of HST to services performed by a customs broker.
Services such as the release, reporting or accounting of goods will be subject to HST if the physical location of the goods at the time of their release is in an HST participating province. For example, if a good enters Canada at an Ontario or BC border crossing, HST will be charged on the services for the release and the accounting for of these goods.
Brokerage services provided to the importer with respect to post-importation activities such as appeals, amendments and refunds will be subject to the HST only if it is determined that the service was supplied in an HST participating province. The General Place of supply rules for services must be consulted in order to determine the province in which the supply was made. The draft regulations in respect of The Place of Supply of Property and Services can be found at the following http://www.fin.gc.ca/drleg-apl/dregApr10-eng.htm
Please note, that these are draft regulations and are still subject to change.