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How de minimis thresholds apply to transactions in Canada

This article applies to:AvaTax

A country's de minimis threshold determines whether or not customs duties, value-added taxes (VAT), or goods and services taxes (GST) apply to an international shipment. AvaTax applies customs duties or import taxes if a transaction amount exceeds the destination country's de minimis threshold. Canada has a unique de minimis threshold for goods imported from the United States or Mexico.

Changes to how AvaTax applies thresholds in Canada

As of September 2021, AvaTax applies a de minimis threshold to all cross border transactions, including goods imported to Canada from the United States and Mexico. Previously, VAT de minimis thresholds were only applied for customers using specific transaction codes and customers with the "Landed Cost" service entitlement.

Overriding this de minimis logic:

  • Companies that meet one or more of the exceptions to Canada’s Courier Imports Remission Order (CIRO) may add a service attribute to override this behavior 
  • When this attribute is set to Yes, cross-border transactions into Canada will not be evaluated against a de minimis threshold for tax and duty purposes

Canada's de minimis thresholds

As a result of the Canada-United-States-Mexico Trade Agreement, Canada increased the de minimis thresholds for products imported from the United States or Mexico and established a de minimis range where only tax applies.

If amounts exceed a threshold or fall within a specific threshold range, a combination of duty and/or tax is applied.

  Customs Duty threshold VAT / GST threshold
Goods imported from the US or Mexico 150.01 40.01
Goods imported from all other countries 20.01 20.01

 

When your amount meets one threshold but not the other:

  • Importing from the US or Mexico and the amount is between CAD 40.01 and 150.00
    • Customs duty is not applied
    • Tax is applied
  • Importing from the US or Mexico and the amount is between CAD 0.00 and 40.00
    • Customs duty is not applied
    • Tax is not applied

When you product is imported from a country that isn't the US or Mexico:

  • Customs duty and VAT thresholds are the same for these countries. If the amount is between CAD 0.00 and 20.00:
    • Customs duty is not applied
    • Tax is not applied

 

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