Importing Goods: Duties, Customs and Import GST

The import process, tariff classification, claiming import GST as an input tax credit

Scott Tang, CPAUpdated 2026-11-032026 rules5 min read

For many foreign companies that set up a subsidiary in Canada, the first order of business is to ship in the parent company's goods and sell them. When the goods reach customs, what do you have to pay, who pays it, and can you get it back?

CARM

Since October 21, 2024, imports are handled through the CBSA's CARM system

GST paid on importing most commercial goods; if you meet the eligibility, use and documentation requirements, you can claim it as an input tax credit

6 years

How long import documents and records generally have to be kept

The steps for importing a shipment

1
Open an RM account
Use your BN to register a Business Number import-export account (RM) in CARM
2
Classify the goods
The HS code determines the duty rate
3
Clear customs
Usually done through a customs broker
4
Pay duty and GST
Based on the value of the goods; release before payment requires financial security
5
Record and claim
Claim eligible import GST as an input tax credit

Three kinds of charges

Customs duty
The rate depends on the goods' HS code and country of origin. Many industrial goods are duty-free; consumer goods commonly range from a few percent to between 10% and 20%. If the code is wrong and you underpay, you have to pay the difference and may face penalties.
Import GST (5%)
Calculated on the value for duty + duty + any other applicable import taxes, and collected by the CBSA. If the subsidiary is the actual importer, is registered for GST/HST, uses the goods in its taxable commercial activities, and has complete customs and payment records, it can generally claim the GST as an input tax credit on its HST return.
Surtax
In recent years Canada has imposed surtaxes on certain Chinese-made goods (such as electric vehicles and steel and aluminum products). The lists change often, so check the latest rules against the import date and HS code.

How the goods are valued. Value for duty is generally based on the actual transaction price. Canada differs from many countries here: international freight and insurance from the place of direct shipment to Canada are generally not included in the value for duty, as long as they can be shown separately. Whether commissions, packing, royalties and similar costs must be added is decided item by item under the CBSA's valuation rules. When the subsidiary buys goods from its parent, the price is a related-party transaction, and the value customs looks at and the transfer pricing the CRA looks at follow two different sets of rules. They won't necessarily produce the same number, but they need to be coordinated and make sense together. If the price is set too low, customs may increase it; if it is set too high, the profit left in Canada shrinks. Plan the two together (see "Transactions with the Parent Company: What to Watch in Transfer Pricing" in this series).

Taking the goods first and paying later

Since CARM launched, an importer that wants release prior to payment (RPP) — getting the goods released first and paying later — must post its own financial security in CARM: either a cash deposit or a surety bond through a surety company. Since the transition period ended on May 20, 2025, an importer without security must pay duty and GST in full before the goods are released. The CBSA calculates the security amount based on the highest monthly amount owing (duty, GST, surtax and so on) in the past 12 months. A written surety bond through a surety company generally has to cover at least 50% of that calculated amount, with a minimum of C$5,000 per import account; different rules apply to cash deposits. The amount is reviewed every year.

Who should be the importer?

Item	Parent company as importer	Canadian subsidiary as importer
CARM registration	The parent must register as a non-resident importer	The subsidiary registers with its own BN
Import GST credit	The parent must register for GST/HST separately and can claim only if it qualifies	If it qualifies, the subsidiary claims it on its own HST return
Selling in Canada	The parent may have to file tax returns in Canada	The subsidiary sells and files its own returns, which keeps things clear

If the subsidiary buys the goods outright from the parent and sells them in Canada itself, having the subsidiary act as the importer is usually the clearest arrangement. Other models, such as the parent selling directly to Canadian customers or consignment, need to be looked at separately.

How Sheng Qian CPA can help

Accounts opened together
Incorporation through EasyU Incorporation (Express incorporation available); as soon as the BN is issued, we apply for the RM import-export account and the HST account together.
Import GST reconciled
We match customs declarations and CBSA payment records to the books, and claim eligible import GST as an input tax credit on your HST return.
Pricing that works on both sides
We look at the price the parent charges the subsidiary from both the customs and the transfer pricing angle. Customs clearance itself is handled by your customs broker; we support them by providing information.

Sources

Disclaimer

This article is general information only and is not tax or customs advice. Duty rates, surtaxes and customs procedures are as published by the CBSA at the time; please consult a customs broker or a CPA about your specific situation. Service fees are as set out in our written quote.