Reclaiming Canada GST

Canadian Import -> Canadian Sales

In Canada, let’s say you import a container with 1000 units inside, each with an FOB of $50 USD. The total container value is $50k, and you would pay 5% GST at time of import to the government, so $2500.

Then, for simplicity, let's say during that month, you sell all 1000 units for $300 each. You would be generating $300k in sales, and collecting an additional 5% GST from the customer, which would total $15k.

The CRA, depending on your business size, will ask you to file a GST return either monthly, quarterly, or annually.

< $1.5 million Annually (default, but can opt in for more often)

$1.5M – $6M Quarterly

> $6 million Monthly

Here’s the formula to understand what you will pay the Canadian Government:

GST collected at sale - GST paid at import = GST owed

$15,000 - $2,500 = $12,500 owed

Canadian Import -> USA Sales (321 De Minimus)

Imagine the same import scenario, where you pay $2500 at the time of importation.

Then, instead of selling the goods to Canadian consumers, you sell all of the units to American consumers via 321 de-minimus.

Section 321 exports (under $800 USD per U.S. customer per day) are zero-rated under Canadian GST rules.

So, you would have collected $0 in GST from Canadian consumers, and therefore you are eligible to reclaim the entire $2500 from the CRA if you are registered.

Reclaiming GST

To reclaim GST, you need to ask your shipper for a B3 form, which proves GST payment at the time of import.

Then, at the time of your GST filing, make sure your share the B3 forms so that your GST payment is deducted.

I hope this is helpful. If you questions about your specific situation, email me at keyan@ironmargin.com