Canada import duty and GST are calculated on the value for duty of the goods. Duty equals value for duty times the duty rate, and GST (or HST) is then charged on the value for duty plus duty. Brokerage and freight sit on top, so the true landed cost is higher than the supplier’s price.
What is the formula for duty and GST on imports?
Duty applies first, and GST or HST applies to the duty-paid value. This is the same sequence the calculator uses.
- Duty = value for duty x duty rate + other duties
- GST/HST = (value for duty + duty) x tax rate
- Due at the border = duty + GST/HST (brokerage is billed separately)
- Landed cost = value for duty + freight and insurance outside the customs value + duty + brokerage, plus the GST/HST if it cannot be recovered
- Landed cost per unit = landed cost / quantity
Value for duty is the customs value of the goods in Canadian dollars. Other duties cover items such as anti-dumping or countervailing duties, surtaxes and excise. To try your own numbers, use the Canada import duty and GST calculator.
Worked example in Canadian dollars
This is an illustration with round numbers, not a customs assessment. A shipment of 1,000 units has a value for duty of $50,000. The duty rate is 6%, GST is 5%, freight outside the customs value is $3,000, brokerage is $200, and the GST is recoverable.
- Duty = 6% x $50,000 = $3,000.
- GST = 5% x ($50,000 + $3,000) = 5% x $53,000 = $2,650.
- Due at the border = $3,000 + $2,650 = $5,650.
- Landed cost = $50,000 + $3,000 freight + $3,000 duty + $200 brokerage = $56,200, or $56.20 per unit.
The GST is left out of landed cost because it is recoverable. If it were not, add $2,650 for a landed cost of $58,850, or $58.85 per unit. Note how the supplier’s $50 unit price becomes $56.20 before the goods reach your door.
What is value for duty?
Value for duty is the customs value on which duty is calculated, generally based on the price paid or payable for the goods with certain adjustments, converted to Canadian dollars. Rules decide which costs are included and which are not.
That is why the calculator asks for freight and insurance separately: depending on the terms of sale and how the shipment moves, some transport costs fall inside the customs value and some outside. Do not guess. Your customs broker or the Canada Border Services Agency can confirm how value for duty is determined for your shipment, and the answer can change the duty by a meaningful amount.
How does the duty rate get decided?
The duty rate depends on the goods’ tariff classification and country of origin. Classification is a code assigned to the product, and different codes carry different rates, some of them zero.
Because the same product can be classified in more than one plausible way, classification is the step most worth getting a professional opinion on. Enter the rate you have been given, then test how the result changes at a higher rate to see how sensitive your margin is.
How does CUSMA origin affect the cost?
Goods that qualify for preferential treatment under the Canada-United States-Mexico Agreement (CUSMA) can enter duty-free. Qualifying is not automatic: it turns on where the goods were made and the rules for that product, and you need documentation to support the claim.
Shipping from the United States or Mexico does not by itself make goods qualify. A product made elsewhere and merely exported from a CUSMA country can still attract duty. In the calculator, enter 0 as the duty rate only when you are confident the origin rules are met. Duty-free origin can change which supplier is cheapest, so ask for origin documentation early in sourcing. The Government of Canada CUSMA page gives the background.
Which GST or HST rate applies, and can you claim it back?
The federal GST rate is 5%. Participating provinces apply a combined HST instead, so confirm the rate for the province where the goods are delivered. Provincial taxes outside the HST, such as PST or QST, are handled separately and are not in this calculation.
GST/HST registrants can usually recover the tax paid at the border as an input tax credit, which is why it is treated as a timing cost rather than a permanent one. It still ties up cash between payment at the border and the credit. If the business is not registered or the goods are not used in commercial activity, treat it as a real cost. Confirm with an accountant.
What costs do people forget?
The landed cost is more than duty and tax. Gather the whole list before comparing suppliers.
- Freight and insurance not already in the customs value, including inland transport in Canada.
- Brokerage, handling and inspection fees.
- Anti-dumping, countervailing duties or surtaxes that may apply to certain goods and origins.
- Currency conversion, since value for duty is in Canadian dollars.
- Delay costs such as storage or demurrage when paperwork is incomplete.
Compare quotes on landed cost per unit, not on supplier price. A small difference in unit price is often swamped by a difference in freight or duty. For imports from any origin, the landed cost calculator is a good companion, and the logistics and transportation guides cover the surrounding process.
Where does the estimate stop being reliable?
An estimate like this is for planning and pricing. Final amounts come from the customs assessment, which depends on the actual classification, valuation and origin accepted for the shipment.
Rates, surtaxes and trade rules change, so a figure that was right last season may not be today. Treat the result as a range, confirm the details with a customs broker before committing, and keep records that support your classification, value and origin claims. Software can speed up classification suggestions and flag missing documents, but a person responsible for the import should still verify the outcome.
Common questions
How is GST calculated on imported goods in Canada?
GST is charged on the value for duty plus any customs duty. With a value for duty of $50,000, duty of $3,000 and a 5% rate, GST is 5% of $53,000, which is $2,650. Duty is part of the tax base.
Is brokerage included in duty and GST?
No. Brokerage is a service fee billed separately by the customs broker and does not form part of the amount due at the border. It does belong in landed cost, because it is a real cost of bringing goods into Canada.
Can I claim back GST paid on imports?
Often yes. GST/HST registrants can usually recover the tax as an input tax credit when the goods are used in commercial activity. If the tax cannot be recovered, treat it as part of landed cost. Confirm your situation with an accountant.
Do goods from the United States always enter duty-free?
No. Duty-free entry under CUSMA depends on whether the goods meet the origin rules for that product, not just on where they were shipped from. You need supporting documentation to claim it. Check with a customs broker before assuming a zero rate.
What is the difference between value for duty and invoice price?
Invoice price is what the supplier charges. Value for duty is the customs value in Canadian dollars after the applicable additions and exclusions. The two can differ, so use your broker’s figure when calculating duty rather than the invoice total.
Sources and further reading
- Canada-United States-Mexico Agreement (CUSMA) (Government of Canada)
- Council of Supply Chain Management Professionals (CSCMP)