How to Calculate Duties and Taxes on Imports to Canada

How to Calculate Duties and Taxes on Imports to Canada involves a multi-step process based on the product's classification, value, and country of origin. Import duties and taxes are mandatory fees assessed by the Canada Border Services Agency (CBSA). The calculation depends heavily on the shipment method and origin, with de minimis thresholds varying from $20 CAD for most mail and non-CUSMA courier shipments to $150 CAD (duty) and $40 CAD (tax) for qualifying courier shipments from the US and Mexico. Understanding these rules is essential for accurate landed cost estimation.

Import duties are tariffs applied to goods entering Canada, while import taxes include the federal Goods and Services Tax (GST), Harmonized Sales Tax (HST), and Provincial Sales Tax (PST) [cite: 10, 13 (from previous search)]. The duty rate is determined by the product's 10-digit import classification code, known as the Canadian Customs Tariff code, and its country of origin [cite: 5 (from previous search)]. Canada’s extensive network of Free Trade Agreements (FTAs) allows goods originating from partner countries to qualify for preferential, often zero, duty rates, provided the goods meet the specific Rules of Origin requirements.

The process to calculate import tax in Canada and applicable customs duties begins with determining the Customs Valuation. Canada adheres to the World Trade Organization (WTO) valuation agreement, primarily using the Transaction Value Method [cite: 1 (from previous search), 2 (from previous search)]. This value for duty is generally the price paid or payable for the goods when sold for export to Canada, plus certain costs if not already included, such as freight and insurance (often referred to as a CIF basis) [cite: 1 (from previous search), 7 (from previous search)]. This dutiable value forms the base for calculating both the customs duties and the subsequent import taxes.

To determine how import duty is calculated in Canada, the CBSA first applies the appropriate tariff rate to the value for duty. The rate depends on the 10-digit import code and the country of origin. Once the duty amount is calculated, the Goods and Services Tax (GST) or Harmonized Sales Tax (HST) is applied to the sum of the value for duty plus the customs duty [cite: 10 (from previous search)]. This is the standard method for calculating the total customs duties in Canada and the final landed cost.

For commercial importers, all declarations and payments are managed through the CBSA Assessment and Revenue Management (CARM) system, which is the official system of record for the collection of duties and taxes. The Low-Value Shipment (LVS) threshold for commercial imports is $3,300 CAD, which allows for expedited release and waives the requirement for formal proof of origin documentation, though the importer must still maintain records. This LVS program is a key component for businesses seeking an efficient import tax calculator Canada solution for high-volume, low-value shipments.

Canada’s trade landscape includes several special provisions. The most significant is the tiered de minimis structure under the Courier Imports Remission Order, which grants higher duty and tax exemptions for goods shipped by courier from the US and Mexico under CUSMA. For commercial importers, the Low-Value Shipment (LVS) threshold of $3,300 CAD allows for simplified customs procedures. Furthermore, the CBSA has implemented the CARM system to modernize the collection and accounting of duties and taxes for all commercial imports. Importers should also be aware of temporary measures, such as the United States Surtax Remission Order (2025), which provides relief from certain retaliatory tariffs on eligible goods imported from the US until December 16, 2025.