GST/HST – Imports and exports

Find out how the GST/HST applies to imported goods

Goods you import into Canada are subject to the GST or the federal part of the HST, except for items specified as non-taxable importations. The GST/HST is calculated on the Canadian dollar value of the goods, including duty and excise tax, and is collected at the border at the same time as these duties and taxes.

The owner or importer of record is responsible for paying the GST/HST on imported goods. If you are registered for the GST/HST and you are the importer (the person who caused the goods to be imported into Canada), you may claim an input tax credit (ITC) for the tax you paid on the imported goods, as long as you meet the requirement for claiming ITCs. In this section:

• Non-taxable importations
• Imported goods into a participating province
• Self-assessment of the provincial part of the HST
• Recovery of the provincial part of the HST

Non-taxable importations

No tax applies to items specified as non-taxable importations.

See example - Non-taxable importations

Examples of non-taxable importations

• certain zero-rated goods (goods that are specifically taxed at 0% in Canada, such as prescription drugs)
• medals, trophies, and other prizes won outside Canada in competition (but not saleable goods, such as an automobile)
• tourist literature imported by governments or specified organizations for public distribution free of charge
• goods imported by a charity or public institution that have been donated to the charity or institution
• goods imported for the sole purpose of maintenance, overhaul, or repairs, if the title or use to those goods does not pass while they are in Canada, and the goods are exported as soon as the services are completed
• goods imported by manufacturing service companies where the goods are processed for non-residents and later exported without being used in Canada. Any parts to be used in or attached to, and materials directly consumed or expended in the processing of those goods, are also non-taxable. The manufacturing service companies must apply in writing for an import certificate to be able to import goods on a non-taxable basis
• warranty replacement property and replacement parts supplied by a non-resident at no charge other than for shipping and handling
• goods valued at $20 or less sent to a person by mail or courier at an address in Canada, except for the following prescribed goods:
  • excisable goods (such as beer, tobacco, and wine)
  • books, newspapers, magazines, periodicals, or other similar publications, where the vendor was required to register for the GST/HST, but did not do so
  • goods bought from a retailer in Canada and mailed or transported from outside Canada directly to the purchaser

Imported goods into a participating province

In most cases, the HST applies at the border to taxable importations of non-commercial goods imported by a resident of a participating province, regardless of the point of entry into Canada or customs clearance.

Taxable non-commercial goods imported into a participating province by a resident of such a province are subject to the HST on importation, except for motor vehicles required to be registered in a participating province, or a mobile home or floating home that has been used or occupied in Canada by an individual.

Although the provincial part of the HST is not payable when you import commercial goods that are destined for the participating provinces, the goods may be subject to the self-assessment. Generally, the value on which tax is required to be self-assessed is the lesser of the amount paid for the good and the fair-market value of the property.

The self-assessment rule for goods will also apply when goods are brought into a particular participating province from another participating province for which the provincial part of the HST is lower. If a person is required to self-assess under this rule, the amount of tax will be determined by multiplying the difference between the provincial part of the HST for the destination participating province and the provincial part of the HST for the origin province by either the amount paid for the property or the fair-market value of the good at the time of bringing it in.

See example

Example

During a business trip, a Prince Edward Island resident purchases a watch in Ontario for $10,000 plus $1,300 HST (5% is the federal part of the HST ($500) and 8% is the provincial part of the HST ($800)). When returning to Prince Edward Island, the Prince Edward Island resident would be required to self-assess tax on the $10,000 at the rate of 2% (the 10% Prince Edward Island provincial part of the HST less the 8% Ontario provincial part of the HST).

Self-assessment of the provincial part of the HST

If you are registered, the provincial part of the HST is payable when the goods are brought into a participating province. Enter this amount on line 405 of your GST/HST return. You may be entitled to claim an ITC for the tax you self-assess on the goods depending on the percentage of use in your commercial activities. For more details on ITCs, see Input tax credits.

If you are not registered for the GST/HST and have to self-assess the provincial part of the HST, use Form GST489, Return for Self-assessment of the Provincial Part of Harmonized Sales Tax (HST).

Recovery of the provincial part of the HST

You may be eligible to recover the provincial part of the HST on goods imported in a non-participating province, or imported in a participating province with a lower HST rate. For more information, see Reason code 12 - Goods imported at a place in a non-participating province, or imported at a place in a participating province with a lower HST rate.

Find out how the GST/HST apply to imported services and intangible personal property

If you buy services (such as architectural services for a building in Canada) or intangible personal property (IPP) (such as the right to use a patent in Canada) from an unregistered non-resident person outside Canada, you do not pay the GST or the federal part of the HST if you acquire them to use at least 90% in your commercial activities (100% in the case of a financial institution).

If you do not use the imported services or IPP at least 90% in your commercial activities, you have to report the GST or the federal part of the HST on line 405 of your GST/HST return and remit the tax directly to us.

The tax is calculated on the amount you were charged for the service or IPP in Canadian dollars, and the tax is payable in the reporting period in which the amount for the service or the IPP was paid or became payable.

If you are not registered for the GST/HST, you still have to pay tax on imported services or IPP. Use Form GST59, GST/HST Return for Imported Taxable Supplies, Qualifying Consideration, and Internal and External Changes, to remit the tax. The tax is due by the end of the month following the calendar month in which the amount for the services or IPP was paid or became payable. In this section:

• Imported services and IPP into a participating province
• Self-assessment of the provincial part of the HST

Imported services and IPP into a participating province

If you are a resident in a participating province, you may have to pay the provincial part of the HST if you buy services or IPP in a non-participating province and the following conditions apply:

• the imported services or IPP are not used at least 90% in your commercial activities; and
• the services or IPP are for consumption, use, or supply more than 10% in the participating provinces.

You may also have to self-assess the provincial part of the HST if you use, consume, or supply goods, services or IPP in a participating province with a higher HST rate than the participating province where you acquired them.

You do not have to self-assess the provincial part of the HST if the tax payable from all amounts to be self-assessed in a calendar month is less than $25.

You do not have to self-assess the provincial part of the HST if you are a registrant and the service or IPP is consumed, used, or supplied at least 90% in your commercial activities.

For more information on the rules, and the formula for self-assessment for services and IPP, see Guide RC4022, General Information for GST/HST Registrants.

Self-assessment of the provincial part of the HST

If you are registered, the provincial part of the HST is payable when the services or IPP are brought into a participating province. Enter this amount on line 405 of your GST/HST return.

If you are not registered for GST/HST and have to self-assess the provincial part of the HST, use Form GST489, Return for Self-assessment of the Provincial Part of Harmonized Sales Tax (HST).

Find out how the GST/HST applies to exported goods

Generally, there are two ways for exported goods supplied in Canada to be zero-rated (taxed at 0%).

The first is if the following conditions are met when the purchaser takes delivery of the goods in Canada:

• the goods are not excisable goods, such as beer and tobacco
• the purchaser is not a consumer (a consumer is usually an individual who is buying the goods for his or her personal use)
• the purchaser exports the goods as soon as is reasonable in the circumstance after you deliver them
• the purchaser does not buy the goods to consume, use, or supply in Canada before exporting them
• after buying the goods and before exporting them, the purchaser does not further process, transform, or alter the goods in Canada, unless it is reasonably necessary or incidental to transport them
• you keep satisfactory evidence, for audit purposes, that the purchaser has exported the goods
• if the property being exported is electricity, crude oil, natural gas, or any good that can be transported by means of a wire, pipeline, or other conduit, the purchaser is not registered for GST/HST purposes

The second is if the goods are not a continuous transmission commodity that is being transported by means of a wire, pipeline, or other conduit, and the supplier:

• ships the goods to a destination outside Canada that is specified in the contract for carriage of the goods
• transfers possession of the goods to a common carrier or consignee that:
  • is retained to ship the property to a destination outside Canada
  • is retained either by the supplier on the recipient’s behalf or by the recipient’s employer
• sends the goods by mail or courier to an address outside Canada

If the conditions for zero-rating are not met, you have to charge and the purchaser has to pay the GST/HST on taxable supplies.

A purchaser who is registered for GST/HST purposes can apply for authorization to issue an export certificate, which, when provided to the supplier, will cause the goods to be zero-rated. For more information, see GST/HST Memoranda Series Chapter 4-5-2, Exports - Tangible Personal Property.

Find out how the GST/HST applies to exported services

You do not charge the GST/HST on services you perform totally outside Canada, or on services that relate to real property situated outside Canada.

Services, other than transportation services, that you perform on temporarily imported goods are zero-rated. The goods must be brought into Canada for the sole purpose of having the service performed on them and must be exported as soon as possible. Any parts supplied along with these services are also zero-rated.

Certain services provided to a non-resident person, but not to an individual while the individual is in Canada, that are performed all or partly in Canada may be zero-rated, such as:

• certain advisory, professional, or consulting services;
• advertising services to an unregistered non-resident person;
• advisory, consulting, or research services to help a non-resident person establish a residence or business in Canada;
• services and parts for goods or real property acquired to fulfill an obligation under warranty for an unregistered non-resident person;
• custodial or nominee services for the non-resident person's securities or precious metals;
• training services to an unregistered non-resident person (other than an individual) to teach non-resident individuals or to give examinations for courses leading to certificates, diplomas, licences, or similar documents, or classes or licence ratings that attest to the individuals' competence or to give an exam to practise or perform a trade or vocation;
• services to an unregistered non-resident person of destroying or discarding goods, or the services of dismantling goods for the purpose of exporting them;
• services to an unregistered non-resident person of testing or inspecting goods acquired or brought into Canada for this service and the goods are to be destroyed or discarded in the course of providing the service or on its completion;
• services of acting as an agent for a non-resident person or services of arranging for, procuring, or soliciting orders for supplies by or to the person when the service relates to a zero-rated property or service, or if the supply to or by the non-resident person is made outside Canada; and
• services made in Canada to a non-resident person by electronic means, may be zero-rated. For more information, see GST/HST Technical Information Bulletin B-090, GST/HST and Electronic commerce.

Remember that you can claim input tax credits to recover the GST/HST you paid or owe on purchases and expenses related to your zero-rated goods and services. See Input tax credits for more information.

Find out how the GST/HST applies to exports of intangible personal property

Supplies of intangible personal property (IPP) that may not be used in Canada are considered to be made outside Canada, and are therefore not subject to the GST/HST.

Also, supplies of intellectual property (such as a patent or trademark) and rights to use such property are zero-rated if they are made to non-registered non-residents.

Most supplies of IPP (other than intellectual property) made to persons who are non-registered non-residents are zero-rated except for the following:

• a supply made to an individual unless the individual is outside Canada when the supply is made;
• a supply of IPP that relates to real property that is situated in Canada or to tangible personal property that is ordinarily situated in Canada;
• a supply of IPP that relates to a supply of a service that is made in Canada and is not zero-rated as an export, a transportation service or a financial service;
• a supply of IPP that may only be used in Canada; or
• a supply of making a telecommunications facility that is IPP available for use in providing a telecommunication service.

For supplies of IPP to qualify for zero-rating, suppliers must verify and maintain satisfactory evidence of the registration status and residency of their customers at the time the supply is made. In addition, for supplies of IPP other than intellectual property, suppliers must verify and maintain satisfactory evidence of the physical location of their customers at the time the supply is made.

If you are a GST/HST registrant, you have to charge and the purchaser has to pay GST/HST on taxable supplies of IPP unless they are zero-rated or made outside Canada.