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Tricky Tariff Customs Tax Bills

 

For example, a Canadian company can export a new type of wind turbine to New York University to test the new invention’s features. As long as NYU only tests, Canada Border Services Agency (CBSA) will treat returned equipment as duty free and non-taxable when re-imported back to Canada. Goods must be returned within 5 years of export from Canada.

CBSA D8 memorandums detail the different conditions that legally qualify returned equipment for customs duty savings and tax relief under the Canadian Goods Abroad Program.

CBSA will consider goods exported outside Canada for the declared purpose of repair as duty free and non-taxable. However, the duty free and non-taxable portion is limited to the value of the items when they were exported out of Canada for repair purposes.

Applicable duties and taxes must be paid on the cost of actual repairs outside Canada. Customs duty savings exclude the following cost components:

Aircraft, ocean vessels or vehicles that have undergone emergency repairs outside Canada are treated as duty free tax exemptions on both the:

Emergency must be specified on the repair invoice. Otherwise, the prior rule above will apply and the CBSA will impose tariff duties and taxes on non-emergency returned goods repaired in foreign countries.

For example, a Canadian tourist drives to New York where their car battery dies. When the Canadian buys a replacement car battery, the visitor must be careful that emergency is specified on the receipt or invoice for the new battery.

Otherwise, customs officials will charge tariff duty and taxes on the new battery purchase when the driver declares the purchase on return to Canada.

Goods returned to Canada after equipment was added to the goods in a foreign country are allowed duty free tax exemptions on the goods only.

However, applicable tariff duties and taxes will be assessed on the:

Value of equipment added

Costs of installing the new equipment including labor.

Consider a vehicle exported from Windsor to Michigan to add car air conditioning. On return to Canada from the U.S., the car would be duty free but the value of the added air conditioning equipment plus incurred installation expenses would be assessed applicable tariff duties and taxes.

Goods returned to Canada after their value has been increased in or their condition was altered in another country are allowed a full remission of tariff duties and taxes on the original items before such changes.

However, applicable duties and taxes must be paid on the value of any improvement or change to the goods performed outside Canada.

How far can this rule go? This rule can even apply to gold teeth, in an attempt to stop smugglers who travel to foreign countries for the sole purpose of smuggling gold crowns and dental implants in to Canada without paying duties and taxes.

While that example may seem extreme, the best advice is to declare the value of goods before those items are exported and also after they are returned to Canada.



Goods returned to the US for repairs under warranty may re-enter Canada duty free under tariff classification code prefix 9820.00.00.

Any customs duty savings will not apply to repairs under warranty performed in countries other than the U.S.

Repairs must have been done under the terms of the warranty, or else duties and taxes will apply to the value of the repairs including parts and labor costs.

 

 

UNIT III.


Date: 2016-01-14; view: 708


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