• by admin
• December 14, 2024

Do you know if you have to pay customs duty or import duty on products you import into Canada? The next important question is what the rate of duty is. It would be best to have an answer before you import, particularly when you resell these items. The decision to pay import duty on a product solely depends on the tariff classification of the product.

The Government of Canada charges tariffs on importing goods into the country to protect local industry and earn revenue. To guide importers on the tariff classification, the (CBSA – Canada Border Service Agency) issues advance rulings to clarify and confirm particular tax provisions.

In this article, we shall discuss the advance ruling for importing goods in Canada. These rulings are issued under customs act paragraph 43.1(1)(c).

Why advance ruling is issued

It’s often challenging for import businesses to correctly classify the tariff code. So, rulings are issued by CBSA to confirm particular tax provisions. These rulings are specifically helpful as business needs to get clearance of goods on borders, and misinterpretation of the wrong classification can cause excessive delays.

So, the advance ruling clarifies the importers and their representatives about tax code classification. Further, rulings are binding and cannot be amended/revoked.

Application of the advance ruling

Following associates can apply for the advance ruling.

• Canadian importers – that bring goods to Canada from another country.
• Exporters – that sell goods from Canada.
• The person authorized to treat goods under subsection 32(7) and paragraph 32(6) of the customer Act.

How to obtain advance ruling for the product

To obtain a ruling, you need to follow the following procedure.

·       Submit a request for the advance ruling

Request for advance ruling can be made in English and French. Following details need to be filed for advance ruling request.

• Your name
• Your address
• Business number (only if applicable)
• A clear statement shows whether you are an exporter, importer, or authorized representative/producer.
• Contact details and name of a person to whom authority can make contact (this person is expected to have a full understanding of the request processing.
• Details for the principal ports – the point of goods entry in the country.
• A statement describing a particular item under consideration is subject to appeal/administrative review, including judicial or quasi-judicial review and national customs ruling, etc.
• Details if the same product has been imported into the country.
• A statement describes the features of the goods – including trade name, commercial and technical designation, etc.
• Goods manufacturing process.
• Details of the composition of the good.
• Details for the goods usage.
• You’re rational for tariff calculation.

You are encouraged to submit the following additional requirements.

• Product literature issued by manufacture/producers.
• Product’s schematics.
• Photographs/drawings of the product.

Request submission for the advance ruling

Before submitting following details need to be checked to ensure requirements are fulfilled.

• The request has been signed by the client/authorized representative of a client.
• For attention purposes, the request is marked as ”Tariff classification advance ruling request.”
• It can be sent via email/mail and sent to an appropriate regional CBSA office.

It’s important to note that one request should be limited to ruling for one product only. However, multiple requests can be at a time. So, if you need to get rulings on multiple products, there is a need to file multiple rulings requests.

What’s next?

CBSA aims to resolve all the rulings within 120 calendar days of application received. However, the standard processing time for the request is 120 calendar days. Further, if there are gaps in the provided information, additional information will be requested by CBSA in writing, and you will be given 30 days to submit the same.

Once all procedural formalities are fulfilled, CBSA will issue an advance ruling with the following components.

• Advance ruling number
• Classification number for tariff along with a reason to classify.

Once you have received an advance ruling, there is a need to enter the ruling number in the following documents. It helps in the smooth import process for the particular product.

• Canada customs invoice – Form CI1
• Commercial invoices
• Customs coding form – B3
• Input ruling reference field – (K160), provided for CADEX (Customs Automated Data Exchange) participants.

It’s equally important to note that CBSA may not issue an advance ruling in the following cases.

• The matter related to tariff classification is before a court of law.
• Material facts cannot be determined.
• The request made is hypothetical.
• More than one product is mentioned in a single advance ruling request.
• Goods were already imported in Canada.
• Goods require further verification.
• The request is for the redetermination of identical goods.

However, if CBSA does not issue an advanced ruling on your request, you’ll be notified of the reason in writing. Further, these rulings remain applicable from the date of issuance to the date of ruling cancellation/reversal, etc.

Once an advanced ruling is obtained, it can be used for all relevant imports.

Potential disputes on advance rulings

Suppose advance ruling allocates a certain classification number to your goods. However, if you disagree with the classification number, it can be challenged with the following steps.

• Write your letter with arguments to support why you think classification was not correct.
• The letter should be dispatched within 90 days of the advance ruling date.
• The letter is sent to the regional recourse office.

 

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Disclaimer: Information in the post has been presented for a broad and straightforward understanding. This is not a legal advice. RKB Accounting & Tax Services does not accept any liability for its application in any real situation. You need to contact your accountant or RKB Accounting for further information.