Buying From Outside Canada

This guide will show Canadian Buyers how to compute total cost after shipping, taxes, and duty, and to help Canadian Buyers understand what taxes and duties they will end up paying when their parcel is imported into Canada. This guide does not apply to items shipped within Canada, as no taxes are charge on these unless the seller runs runs a store.

1) Taxes:

For any item valued at more than $20 Canadian, you must pay 6% GST and whatever PST applies to where you live. (Lucky Albertans!) This will be collected by Canada Post when you pick up your item, or when a Courier Drops the item off at your house. Gifts are generally not taxed. You are supposed to pay tax on the part of the item that is more than $60. If you receive a gift for $150, you are supposed to pay tax on the $90, since that is the part of $150 that is more than $60.

2) Duties / Brokerage Fees:

For any item valued at more than $20 Canadian, you will also be charged a fee by the shipping company. This pays for the fact that they have to collect taxes from you, then pay them to Canada Customs.

USPS through Canada Post: Charges a flat rate of $5.00.

UPS: They charge on a sliding scale based on the value of the item.   http://www.ups.com/content/ca/en/shipping/cost/zones/customs_clearance.html

DHL: They charge 2.5% of the item value, with a minimum of $7.00.  http://www.dhl.ca/ratetariff/        http://www.dhl.ca/news/index.asp?page=1&id=33

FedEx: They make it extremely hard to find out how much it will cost you to import something into Canada. Want a challenge? Go to www.fedex.ca and look for it! I couldn't find it, but you might need a paid account on a different website to get access to this data. If you have found this data, please let me know!

3) Summary:

If you are buying from the US, you probably want your seller to ship through U.S.P.S (United States Postal Service). This results in your item going through Canada Post, which only charges the flat $5.00 plus tax on your item (and sometimes they won't charge anything, including taxes).

If the seller ships through a courier, you will pay a hefty brokerage fee, plus tax on your item.

4) Calculations:

The following instructions help you figure out your maximum bid amount. Say you are willing to pay $200 Canadian, but with shipping, exchange rates, taxes, and fees, you don't know how much it will end up costing you. The following two step-by-step processes will help you. This assumes you are bidding in US Dollars on something worth more than $20, paying with Paypal, and shipping through USPS.

Computing Total Cost From Bid Amount:

Suppose you bid $85.00, and the shipping cost is $18.00

1. Add the shipping cost. ($85.00 + $18.00 = $103.00). This is your U.S. Subtotal.
   
2. Find the exchange rate. Go to http://www.bankofcanada.ca/en/rates/exchange.html, and use Can/US closing on the top right. Example: 1.1739
   
3. Find your effective exchange rate. Add 0.025 to the exchange rate (1.1739 + 0.025 = 1.1989). This is the effective exchange rate. Paypal charges 2.5% to convert your money from CDN to US.
   
4. Multiply the U.S. Subtotal by the effective exchange rate. ($103.00 * $1.1989 = $123.49). This is your Canadian Subtotal.
5. Add tax. In BC this is 13%, so we will multiply the Canadian Subtotal by 1.13. Multiply by 1.06 if you only pay 6% GST. ($123.49 * 1.13 = $139.54).
6. Add $5.00 that is charged by Canada Post. ($139.54 + $5.00 = $144.54)
7. You now have your total Cost in Canadian Dollars. Scary isn't it?

Computing Bid Amount from Total Cost:

1. Suppose you are willing to pay $200.00 Canadian for an item that has a shipping charge of $15.00 U.S.
2. Subtract $5.00 that Canada Post Charges. ($200.00 - $5.00 = $195.00)
3. Divide by your tax amount. For BC this is 1.13 (13% Tax), for Alberta 1.06 (6% Tax). ($195 / 1.13 = $172.57). This is your Canadian Subtotal.
   
4. Find the exchange rate. Go to http://www.bankofcanada.ca/en/rates/exchange.html, and use Can/US closing on the top right. Example: 1.1739
5. Find your effective exchange rate. Subtract 0.025 from the exchange rate (1.1739 - 0.025 = 1.1489). This is the effective exchange rate. Paypal charges 2.5% to convert your money from CDN to US.
6. Convert the Canadian Subtotal to the U.S. Subtotal by dividing by your effective exchange rate. ($172.57 / 1.1489 = $150.20). This is the U.S. Subtotal.
   
7. Subtract the shipping charge from the U.S. Subtotal. ($150.20 - $15.00 = $135.20)
8. This is your Bid Amount. Bidding $135.20 on the item will result in you paying a total of $200.00 Canadian.