Streamlining Customs and Border Clearance Processes in Canada
April 29, 2024
In today’s hyperconnected and e-commerce-driven world, international consumer and business transactions are more common than ever. Global commerce and trade can undoubtedly be quite lucrative, but it can also be complex and time-consuming to navigate. Chief among such obstacles that international importers and exporters must endure are border and customs clearance processes.
Fortunately, organizations in Canada and elsewhere can significantly simplify and streamline customs and border clearance processes by approaching them with thorough preparation and strategic logic. Read on for some key guidelines for making Canadian customs clearance more straightforward and more efficient.
What Is Customs Clearance?
Briefly defined, customs clearance refers to the procedures one must follow and processes one must complete to import or export items and goods across international borders legally. Conducted under the authority of sanctioned government officers, it might involve anything from providing invoices and proof of insurance to passing pre-shipment inspection and other examinations.
Key Components of the Canadian Customs Clearance Process
For companies and individuals alike, the first step to importing or exporting goods over Canadian borders is to obtain a business number (BN) for an import/export account through the Canada Revenue Agency (CRA). There are no charges associated with securing a BN, and the entire application process takes just a few minutes.
To get a new BN or add an import/export account identifier to a current BN, call the CRA at 1-800-959-5525 or see the CRA Business Registration Online section of the official Government of Canada website. When you are appropriately registered with the federal government, you can then begin considering the following key components of the Canadian customs clearance process.
Documentation Requirements
The documentation required to import goods into Canada is substantially more extensive than the documentation required to export goods out of it. Importers must begin by identifying the specific type and amount of goods they want to bring into the country, gathering as much information about them as possible. “Obtain descriptive literature, product composition information and, whenever possible, product samples,” stresses the Canada Border Services Agency (CBSA). “This information will be crucial when it comes time to determine the tariff classification of the goods you wish to import.”
Tariffs are government fees imposed on imported items from various countries. Different items not only come with different tariffs but also require different documentation. While you should check with CBSA officials to ensure you have all the necessary documents to complete your intended import processes, the brokerage and trade consultancy Livingston identifies four documents that must accompany every shipment coming into Canada:
- Canada Customs Invoice (CCI), or commercial invoice – Primarily used to calculate tariffs, the Canada Customs Invoice identifies both the buyer and seller, the countries of origin and destination, and detailed information about the goods being shipped.
- Bill of lading (BOL) – Commonly known by the acronym BOL, this document is issued to the shipper of goods from the carrier of goods. BOLs allow importers to obtain merchandise and exporters to receive payment. Shipment tracking numbers are key elements of these documents.
- Manifest or cargo control document (CCD) – Cargo control documents CCDs (otherwise known as manifests) go beyond cargo content details and names of importers/exporters to include information such as the type of shipment transportation as well as the captains, pilots, crew, and passengers that this transportation carries.
- Shipper’s Export Declaration (SED): This document records every individual import shipment to its final domestic destination. One of its primary purposes is compiling international trade statistics.
Although exports leaving Canada typically require fewer and less stringent government barriers, many goods that are (in the words of the CBSA) “controlled, regulated or prohibited may require export permits, certificates or licenses from other government departments and agencies.” These goods range from bodies or body parts and human pathogens to explosives that include both fireworks and ammunition. For a complete list of these restricted exports, see the “Goods That May Require Export Permits” section of the CBSA website.
Tariffs, Duties, and Taxes
Beyond the tariffs discussed above, the CBSA may also levy duties that vary according to the type of goods imported and their country of origin. For example, the organization applies an excise duty on certain imported luxury items. CBSA duty calculations also reflect the overall value of the goods in Canadian funds.
The Canadian government levies a standard 5% Goods and Services Tax (GST) on all imported items, including those sent through the mail. However, goods sent by mail worth $20 (in Canadian dollars) or less are exempt from this tax. Gifts from friends or family members abroad can be worth as much as $60 before the GST applies. Individuals and organizations can also register for specific GST credits and rebates.
Though the definitions of tariffs, duties, and taxes tend to overlap and blur together, they also have their distinct attributes. Tariffs apply to specific products from certain countries at particular times, duties are primarily based on cargo characteristics, and taxes are generally fixed and calculated on total cargo value.
Customs Procedures and Compliance in Canada
Eager to move through all necessary import and export customs procedures in full compliance with Canadian law? The CBSA presents the importation of goods into Canada as a comprehensive six-step process:
- Preparing to import by compiling all necessary shipper, receiver, cargo, and transportation information
- Classifying your goods according to relevant government regulations
- Determining all applicable tariffs, duties, and taxes
- Physically shipping and officially reporting your goods
- Seeking the official release of your goods
- Taking key steps after your goods are released
Your primary imperative after the release of your goods will be to double-check your import/export records to immediately report any errors in the accounting information you have submitted to the Canadian government. Then, you should safely and securely store all documents pertaining to your import for at least six years. During this period, your import may be subject to verification and adjustment by the CBSA.
Leveraging Technology for Streamlined Clearance
Although the import and export customs process can be complicated, modern technology has made it much simpler by automating routine tasks, reducing manual paperwork, enhancing supply chain security, and providing real-time shipment tracking and transparency. Industry experts recommend the following forms of technology for import/export professionals who can benefit from them:
- Electronic Data Interchange (EDI) and Automated Broker Interface (ABI) – Facilitates data transmission between customs brokers and relevant government agencies.
- Automated Commercial Environment (ACE) – Facilitates the reporting of imports and exports between Canada and the United States.
- Automated Customs Declarations Processing (ACDP) – Facilitates cargo valuation, origin declaration, tariff classification, and duty calculation.
Global Supply Chain Management and Customs in Canada
If you are an existing or aspiring supply chain manager who deals with international shipments, you should keep a few “big picture” factors in mind when approaching the role of import/export customs in your chosen profession.
The Role of Logistics Management
The pace, cost, and dependability of the customs clearance process will impact the pace, cost, and reliability of your international supply chain. Faster and more efficient customs clearance will give you a distinct competitive advantage as a supply chain manager.
Coordinating With Canadian Suppliers and Distributors
Choosing your partners wisely is a big part of supply chain success. Consider working with Canadian suppliers and distributors that thoroughly understand domestic customs procedures and processes.
Compliance With Canadian and International Regulations
Planning and preparation are essential to facilitate full regulatory compliance. Carefully research all pertinent regulations and requirements for Canada and any other country involved in your import and export operations. Be sure to obtain and complete all necessary documents in a timely manner.
Strategies for Effective Customs Clearance in Canada
Whether you are a supply chain professional, an importer/exporter, or another interested party, you can optimize your customs clearance knowledge and skill by:
Staying Informed
The logistics and transportation news source Inbound Logistics acknowledges the complexity of the customs clearance process but insists that it can be a smooth experience if you know what you are doing: “Because regulations and best practices are constantly changing, staying current on the latest developments in the customs world is an absolute must.”
Following Accurate Documentation Practices for Canadian Imports
After ensuring you are up to date on all current information and practices, you must use this information to fill out all required forms precisely, accurately, and completely well in advance of your scheduled import/export shipment date.
Practicing Proactive Compliance Management in the Canadian Market
It is crucial to anticipate bumps in the road—such as multiple customs clearance checks and unexpected tariffs, duties, and taxes. In addition to following best practices, taking thorough stock of the goods you are shipping can help you navigate the process.
Earning a Global Supply Chain Management Diploma
In Canada and elsewhere, you need a strong command of import and export customs clearance fundamentals if you wish to thrive as a supply chain manager or another international business professional. You can gain the many tools that lead to success through a high-quality global supply chain management program like the Global Supply Chain & Logistics Management diploma at North American Trade Schools (NATS). For more information, complete our short “Connect With NATS” form online today.
