In preparation for gift giving season, we would like to share with you a cross-border holiday tale about one tablet's journey to the Canadian border.
A U.S. supplier of produce wanted to say thank you to its Canadian purchaser by way of a gift. A few days before Christmas, the supplier slipped in a popular tablet with the purchaser's order. Although this was a very nice gesture, it came with a very large consequence for the unknowing purchaser who was the importer of record.
Upon random inspection at Canada Customs, the Border Services Officers were surprised to find the tablet nestled all snug in a box of turnips. Even more surprising was it was not included in the Canadian customs invoice. The tablet quickly went from a grand gift to a lousy lump of coal.
The shipment of turnips (and the tablet) was seized by customs and the importer was inadvertently 'gifted' a $2,000 penalty. To top it off they did not get to keep the tablet and it was returned to the sender.
Moral of the story is, know before you go!
With the holiday season upon us, many businesses and individuals send and receive gifts that cross borders. Whether you are sending corporate gifts, shopping online or sending gifts by mail, being aware of cross-border clearance can make you feel like a modern day Santa.
Part A. Sending Holiday Gifts From A Business To A Business
1. Don't Let A Customs Clearance Catch Your Recipient By Surprise
When sending a business gift, the receiver of the gift should not have to be responsible for customs clearance charges. Especially since they will not have the required information to complete the customs entry. Arrange for customs clearance through your customs broker. Even though these are free, non-solicited gifts, they will require clearing customs and payment of all applicable duties and taxes.
Customs clearance requirements:
The gift will need to be accompanied by a pro-forma invoice, and the same information required as a commercial import. Furthermore, you must also declare an accurate commercial value for the product. The Canada Border Services Agency (CBSA) does not accept inaccurate valuation.
2. Alcohol And Spirits Can Be More Expensive When Shipping Internationally
If you want to import alcohol into Canada it is subject to high duty and excise tax rates. All alcohol imports are routed through a board, commission, officer, or governmental agency legally authorized to sell intoxicating liquor. If you want to give liquor as a gift, try contacting a winery or liquor store in Canada. They can ship on your behalf and save you the headache of clearing alcohol over the border.
3. Select The Right Gift Basket
If purchasing prepackaged gift baskets, be aware of its contents. Certain items such as meats, cheeses, fish and plant products require additional certificates, licenses, permits, and often carry high levels of applicable duties. These gifts prove extremely difficult to process because of the small quantities. It is important to avoid anything made from animal or animal products. We suggest giving gift baskets made up of cookies, chocolates, coffee, crackers, oils, and candles.
The Bottom Line
If your organization is sending gifts across the border, be prepared to treat them like every other export moved across international borders.
Part B. Shopping For Holiday Gifts Online
Many shoppers are choosing to stay away from the crowds, and are turning to online shopping. The majority of online purchases are shipped internationally and are required to clear through customs.
Check The Seller's Terms Of Sale And Delivery
You should confirm who needs to pay for the customs clearance - the seller or purchaser. If the purchaser is responsible for the customs clearance, you will need to pay all applicable duties and taxes when the item moves across the border. If you want to send your shipment by mail and the value is under $60 CAD, you may not have to pay any duties or taxes.
Customs clearance requirements:
For a personal, non-commercial entry, you will require an invoice. Also, you will need the product's country of origin, the currency, and a complete description of the product.
Part C. Mailing Personal Gifts To Family And Friends
If you have friends or relatives who live abroad and are mailing gifts to you, please ensure they properly qualify the item as a gift and include a customs declaration. Here are some things to keep in mind:
- For an item to qualify as a "gift", a friend or relative must send it to you personally and include it is a gift.
- If you receive an imported gift by mail that is worth $60 CAD or less, you do not have to pay duty or tax.
- For gifts over $60 CAD, you will have to pay duties and taxes on the difference over $60 CAD. For example: If a relative sends you a gift worth $200 CAD, you will pay any applicable duty, GST or HST and PST on $140 CAD.
Consequently, certain items do not qualify for the $60 CAD gift exemption:
- Alcoholic beverages
- Advertising material
- Items sent by a business
The $60 CAD gift exemption cannot be combined with the $20 CAD exemption available on most items valued at $20 CAD or less.
*These guidelines are applicable all year round, and are not specific to the holiday season.