If You Are Assessed Customs Duties, Remember to Claim ITCs For Assessed GST
I see a lot of determinations by the Canada Border Services Agency (let's just call them assessments) relating to Harmonized System (H.S.) tariff classifications and valuations relating to imported goods. When the CBSA decides you used the wrong H.S. tariff classification number and, therefore, the applicable duty rate is actually higher than the duty rate used at the time of importation, the CBSA assesses GST on the new customs duty included value for duty. Similarly, if the CBSA disagrees with the valuation method that you used such that the value for duty was too low, the CBSA will assess GST on the new customs duty included value for duty. This often means that the GST portion of the assessment is equal to or greater than the customs assessment.
In many cases, importers do not realize that they are paying GST (instead of customs duties). Some do not review the details. Some just pay the bill of a customs broker without even receiving the CBSA documentation. In some cases, the documentation goes to the purchasing department and never gets to the person in charge of GST.
I have seen many cases where the importer of record does not claim input tax credits (ITCs) to recover the GST paid to the CBSA in respect of the imported goods. If the importer of record in a business, they may be entitled to claim ITCs. If the goods are imported by a consumer, they are not entitled to recover the additional GST/HST paid to the CBSA.
Anyone who has been assessed by the CBSA in the past few years should determine whether they have claimed their ITCs. I would be happy to help you determine what you are entitled to claim as an ITC.
Cyndee Todgham Cherniak is counsel to and in affiliation with the International Trade Law and the Tax Law (Commodity Tax
