Canadian Duty Drawback + Duty Deferral
Billions of dollars in duty drawback refunds go unclaimed in Canada each year. Could your company be eligible?
The Duty Drawback Program
The Duty Drawback Program is a valuable initiative implemented by the Canadian government to support businesses engaged in international trade. It offers the opportunity to recover duties paid on imported goods that are subsequently re-exported or used in the production of goods for export.
Here's how the program works:
To participate in the Duty Drawback Program, your business must be registered in Canada, and you should have paid duties on imported goods that qualify for drawback.
What Goods Qualify?
The duty drawback process is designed as a comprehensive solution, accommodating a wide range of goods without significant limitations. Whether it's textiles, glass products, or even vehicles like aircraft and automobiles, almost all categories of goods can qualify for some level of drawback.
What Goods Do Not Qualify?
The duty drawback program has specific exclusions for certain goods. The following products do not qualify for duty drawback:
- Spirits, wine, and beer
- Plant equipment
Additionally, duty refunds will not be granted if duties have already been refunded under any other Act of Parliament, or if the goods were damaged before being exported.
Types of Drawbacks
There are two types of drawbacks available:
- Manufacturing Drawback: This applies when imported goods are used as inputs in the production of exported goods. By demonstrating that the imported goods were used in manufacturing processes for export, businesses can claim a refund of the duties paid.
- Unused Goods Drawback: This applies when imported goods are re-exported without undergoing any significant processing. Businesses can claim a refund of the duties paid on such goods.
To initiate a duty drawback claim, Strader Ferris will submit an application to the Canada Border Services Agency (CBSA). The application will include supporting documentation, such as import and export documentation, invoices, and other relevant records.
It's crucial to be aware of the time limits for filing drawback claims. Generally, both manufacturing drawback claims and Unused goods must be filed within four years from the date of importation of the imported goods.
Compliance and Audits
The CBSA may conduct audits to ensure compliance with program requirements. Therefore, it's essential to maintain accurate records and documentation related to your imports, exports, and production processes. At SFI we keep most of if not all this information on behalf of our customers to make the application process as streamlined as possible.
Navigating the Duty Drawback Program can be complex, with various regulations and procedures to follow. Working with a knowledgeable customs broker like Strader Ferris can streamline the process and help maximize your potential drawback benefits.
Our team of experienced professionals who specialize in duty drawback services can assist you in determining your eligibility, preparing and submitting your drawback claims, and ensuring compliance with program requirements. Our goal is to help you recover eligible duties and taxes, optimizing your business's cash flow, and enhancing your competitiveness in the global marketplace.
Please feel free to reach out to us for more information on Canada's Duty Drawback Program and how we can assist you in utilizing this valuable trade facilitation tool.
The Duty Deferral Program
Under this program, Canada Border Services Agency can waive import duties you usually have to pay on imported goods.
The program offers Canadian businesses many of the same duty and tax incentives as those found in free trade zones around the world.
For example, you don’t have to pay duties on imported goods that you plan to export, even if these goods undergo a wide range of processing and manufacturing activities while you have them and you can bring goods into Canada and store them tax- and duty-free until they are sold into the Canadian market.
If you have already paid duties and taxes on imported goods, you can use the drawback option to ask for a refund for goods imported within the last four years.
For example, you import an ocean container of shoes into Canada from China and are going to be using that inventory to fulfill orders going to the U.S.
The Canada Border Services Agency will allow your company to defer all Canadian import duties because the inventory is not going to be staying in Canada, as your primary business is exporting the goods internationally.
This frees up cash flow because duties are not paid on the original import from China to Canada. Under the Duty Drawback program you would usually pay import duties on the China to Canada import then file a duty drawback after the goods have left Canada, which ties up money for many months unnecessarily.
What Is Section 321?
Section 321 is a US Customs import regulation that provides an excellent opportunity for US-based companies to fulfill their E-Commerce orders from a Canadian warehouse to save a significant amount of money.
The Section 321 US Customs Clearance regulation exempts goods worth $800 or less from US import duties and taxes, making it easier and more affordable for businesses to ship small packages to their US customers from a Canadian warehouse.
Strader Ferris International's (SFI) cross-border warehouses can help you manage these shipments, and take advantage of Section 321.
Want to Know More?
Clearly, participation in the Duty Deferral or Drawback Program is a sound business move. It will lower your costs and at the same time improve your cash flow. To learn more about how you can use the programs, contact Strader Ferris today!