By requesting this package, your company has expressed an interest in learning more about exporting goods to Canada on a delivered basis. This concept, known as Non-Resident Importing (NRI), means that your company, as a foreign vendor, will assume responsibility for a portion or all of the costs involved in the transportation and customs clearance of those goods, i.e. Duty, Goods and Services Tax (GST), Brokerage and Freight.

These costs are identified as:

1. Transportation from the foreign point of lading to the customer’s door in Canada.

2. Canadian Import Duties which are assessed according to the Canadian Customs Tariff.

3. The Goods and Services Tax (GST) which is a federal sales tax assessed on the domestic supply of goods and services within Canada, the GST also applies to most imported goods with few exceptions, i.e. certain food products, medical devices, etc.

4. The Harmonized Sales Tax (HST) which is a combination of federal and provincial sales tax is assessed on the domestic supply of goods and services within the provinces of New Brunswick, Nova Scotia and Newfoundland. Although the HST is not applied to commercial goods at time of import, certain non-resident importers (registered) will be required to collect HST on supplies made within these same provinces.

5. Brokerage Fees which are assessed by the Canadian customs broker for providing the service as the border agent handling all customs formalities and payment of Customs duty and G.S.T. on behalf of the Non-Resident Importer.

Income Tax Information for Non-Resident Corporations

New legislation, enacted in 1999, clarifies that a non-resident corporation must file a T-2 return with the Canada Customs and Revenue Agency (CCRA) if the corporation carried on business in Canada (section 253 of the Income Tax Act) or disposed of a taxable Canadian property at any time in the tax year.

The T-2 form must be filed by all non-resident corporations on an annual basis. The U.S.-Canada Tax Treaty restricts the ability of the CCRA to impose income tax on corporations who do not have a permanent establishment in Canada. Tax treaty exemptions are restricted by Canadian interpretation.

We recommend all firms to seek the advice of an expert in the international tax field prior to carrying on business in Canada.