The North American Free Trade Agreement (NAFTA) between Canada, the U.S. and Mexico has led to a significant increase in trade between the three countries. Among other things, NAFTA allows goods and services to be imported and exported between the three countries at a low duty rate. Additionally, certain products can even be imported and exported between the three countries at a duty-free rate. To further encourage this ongoing trade, the Canadian government also allows U.S. entities to use the “Non-Resident Importer (NRI)” program when supplying goods to Canadian consumers.
The corporate tax professionals at AG Tax have prepared a summary of the Non-Resident Importer Program. This overview may prove useful to U.S. entities that are considering exporting products into Canada, as well as to all Canadians who are interested in buying goods from the U.S.
Non-Resident Importer (NRI) Program
The NRI program allows non-resident companies or individuals in the U.S. to import goods into Canada in a manner that resembles a domestic transaction. Through the program, non-resident companies or individuals in the U.S. are able to sell goods to their Canadian consumers, without having a physical presence in Canada.
The NRI program allows a U.S. based exporter to simplify and manage the import process and gain a competitive advantage in the Canadian market. Through the NRI program, Canadian customers are relieved of importation responsibilities, making it much easier for Canadian customers to purchase goods from the U.S.
GST/HST
•Non-resident importers may be required to collect GST or HST when doing business in Canada, depending on the province they are doing business in and whether or not certain thresholds are met. Depending on circumstances, it may also be advisable for non-resident importers to voluntarily register for the Goods & Services Tax (GST) or Harmonized Sales Tax (HST) if they do not meet the normal filing requirements.
•Different invoicing methods may apply depending on circumstances. GST/HST remitted to the Canada Revenue Agency may be recoverable by utilizing “income tax credits” and/or “flow through credits”.
•A GST non-registered NRI must pay GST or HST on taxable goods at time of import.
Business Numbers
Non-resident importers are required to obtain a business number in order to import commercially into Canada. In addition to this, all commercial records and documentation must be kept for up to six years.
Declaration and Disclosures
Non-resident importers are responsible for the fair, accurate, and complete declaration of all import entries into Canada. Full disclosure of any relevant changes (for example, value or origin) must be provided to the government. Failure to complete accurate and complete declaration, and/or failure to fully disclose any relevant changes may result in reassessment and penalties from customs.
It is highly advisable to appoint an experienced tax professional as your “Customs Broker” to ensure that all regulatory and taxation requirements are met with full compliance.
AG Tax LLP Can Help
If you have any tax-related queries, need assistance with tax planning or filing your tax returns please contact us. Our team comprises of highly experienced tax professionals with extensive knowledge of U.S. and Canadian tax laws as well as cross-border compliance
Furthermore, as a full service accounting firm, AG Tax assures complete assistance with even your most complex tax needs.
We can assist with:
- Canadian Personal and corporate tax returns
- Cross Border Taxation and Business Planning
- U.S. Personal and Corporate Taxation
- Disclosure of Foreign Assets and other information filings
- Retirement planning
- State Sales Tax & E-commerce Taxation
- Estate Planning, Inheritance tax advice
To obtain a quote or to arrange for a consultation to discuss your tax related queries, please contact us at:
- 416-238-5920 (Greater Toronto Area, ON)
- 604-538-8735 (Greater Vancouver Area, BC)
- 780-702-2732 (Greater Edmonton Area, AB)
Disclaimer: The information in this publication is accurate as of the time of its publication. AG Tax assumes no responsibility for changes to tax legislation subsequent to the publication of this document. The information provided is for general information purposes only and should not be acted upon without seeking professional advice. If you would like to engage our services, please contact our staff and obtain authorization to send our firm confidential information. A client relationship is not created by the transmission of information. A client relationship is only formed with our firm when a scope and engagement letter signed by the firm and the potential client detailing the terms of engagement is present.
