If there's one thing consumers share the world over, it's a new and feverish propensity for shopping online. The trend is no different in Canada, with buyers from Ontario to Nunavut spending $15.1 billion on websites in 2009, an increase of nearly $3 billion in two years.
This new wave of virtual shoppers does regular business with sites south of the Canadian border. Buying from U.S.-based merchants is in vogue and, given the current strength of the loonie, more affordable than ever. Yet unspoken costs, from tariffs to shipping fees, can turn a syrupy-sweet deal into a splitting financial headache.
Most American sites don't go into detail about these fees because, to be honest, they aren't required to. In the past, this left you to navigate the murky waters alone -- but not anymore. Follow these 10 tips on how to prepare for and occasionally avoid the most dubious charges for cross-border commodities.
1. Be Sure the Site Offers International Shipping
Before all else, be positive the merchant has an international shipping option or at the least delivers to Canada. Check and double check. You'd be perturbed at the local supermarket to fill your cart and get in line, only to be told nothing could leave the store. Don't let the online equivalent catch you off guard.
2. Know the Shipping Charges
Once you're positive a site ships across the 49th parallel, quickly browse through its shipping details. These are most often found in a self-titled "Shipping" or "Delivery" section. Occasionally they're squirreled away under the "Customer Service" or "Help" link. If a site doesn't list shipping info, chances are you should ditch it. There are better places to spend your money.
Here's where things begin to get tricky. Most shipping tables don't include Canadian addresses, so you won't know the total cost of each order until checkout. Remember to factor the current exchange rate into all charges, including the subtotal and shipping. Most likely any tax estimates won't include the required fees to get goods across the border. These can include duties, Canadian taxes and custom brokerage fees (more on these to come).
As if all this weren't enough, be aware some credit card companies charge for currency conversion. Rates range from a flat fee to a percentage based on the order amount.
3. Learn Canadian Customs Duties
Your order is finally on its way. Thanks to a little provision called the North American Free Trade Agreement, Canadians pay no duties on most goods made in America or Mexico. However, many of the products sold through American sites are manufactured in other countries, particularly clothing, toys and shoes. If it was made outside North America, duties will likely be applied no matter where it was sold. Don't assume you won't pay extra to ship an item across the border. If ever in doubt, contact the retailer to find where a product was manufactured.
That said, duty charges vary widely. Unless Canada Customs is feeling picky, goods aren't charged a duty fee if less than $1 can be collected. In addition to normal duties, luxury items like liquor, jewelry and perfume are often charged an excise tax. The rate depends on the total price but is typically between 5 and 14 percent.
When ordering something large, obscure or difficult to asses, consider contacting the Canada Border Services Agency or the phone-based Border Information Service. They can answer your most detailed questions about duties, excise fees and other import-related shenanigans. As with many things, call before you run into problems to avoid frustration after cash has already been exchanged.
4. Order Items Exempt from Duties
A handful of products are exempt from all duty fees, no matter where they were manufactured. In general, sewing machines, televisions and other consumer electronics are all in the clear, subject only to standard Canadian taxes. Again, don't assume and contact the CBSA if unsure.
5. Understand Canadian Taxes: GST, PST and HST
A Goods and Services Tax (GST) is slapped on every item you import to Canada, regardless of where it came from or was made. The rate is five percent but, depending on where you live, a whole slew of other standard taxes apply. All are calculated after other duties and fees have been charged. That means a $100 item with $15 of duties is charged 5-percent GST on $115. Obviously, this can make already expensive items astronomical, so be prepared.
Each province is subject to one of three different taxes in addition to the GST: the Canadian Provincial Sales Tax (PST), Quebec Sales Tax (QST) or Harmonized Sales Tax (HST).
For goods shipped way, way north into the Yukon, Northwest Territories and Nunavut, only GST is collected, but outrageous delivery fees can quickly sap any tax relief.
In a final "gotcha" measure by the Canada Revenue Agency, all taxes can be separately applied to shipping and handling charges. Never underestimate the unhinged power of taxation.
6. Know Carriers Inside and Out
Despite all the ranting about duties and tariffs, Ben Franklin was sublime when he noted death and taxes are the only certainties in life. While bloated courier charges may seem equally inescapable, there are ways to save mounds of cash on shipping itself. Understanding the pros and cons of the most common services makes it simple to pick one best suited for your needs. Keep in mind the "best" may change with every order -- even if UPS was cheapest last month, it may not be now.
7. Skirt Customs Brokers Fees
Like shipping charges, fees for customs brokers can hit you like a sledgehammer. Carriers hire employees solely to fill out the paperwork needed to clear customs, then charge outrageously for the service. Like government-imposed taxes at the border, most folks assume these fees are unavoidable. But -- surprise, surprise -- they aren't.
Like any middleman, customs brokers can be cut out completely. It takes a bit of extra effort and you'll need to remember and file the information with your taxes, but you stand to save an enormous amount. Large items like appliances and furniture often rack up $500 or more in brokerage fees. Even products with no duty, like TVs, can be quoted at $50 or higher.
The process differs slightly from company to company, but you always need a printed invoice from the carrier (including tracking number), proof of purchase and a photo ID. For a thorough run-down, read the helpful guide on RedFlagDeals.com for how to self-clear with UPS in Montreal.
FedEx makes it a bit easier than UPS to select your own broker or clear items yourself. Most of the footwork can be handled upfront before the package is even shipped. Read through the FedEx brokerage options for specifics on how to opt out of brokerage fees, including instructions tailored to Canadian customers.
A final word of warning: You'll always be told a customs broker is needed but hold your ground. No tax, law or divine right says one is required. If a package arrives and you were never warned about the service, refuse to sign for it. No carrier has the right to act as your customs broker without approval.
8. Remember Gift Exemptions
Let's say you buy a present for your son's 5th birthday and ship it from the United States. Duties and taxes can't be applied if it's worth $60 or less. Remember these rules are gauged in Canadian dollars, so remember to convert before celebrating your cost-conscious buy. Also, the item must be clearly labeled as gift, whether this takes the form of an actual card or a simple note made on the invoice. Almost all companies allow you to leave notes or reminders.
Now, you obviously won't be getting your little one booze or tobacco, but such gifts aren't eligible for tax relief. Neither are corporate gifts sent by a business or association.
Even if the gift is well over $60, don't forget to label it as a present. In some cases, taxes and duties can be applied to the price minus $60. Example: A dresser priced at $300 may only be charged for $240.
A final exemption applies to any purchase, gift or not, with a total of $20 or less. Good luck finding anything worth it's weight in shipping for that tiny price tag.
9. Protect Yourself from Rip-Offs
With these tips, you're already taking proactive steps to save cash. What happens, then, if you do everything the right way and still get ripped off? Industry Canada put together a comprehensive guide for all things related to online shopping, including how to read your invoice at checkout, what to expect when buying internationally, and how to protect your private info.
Plenty of other tips float through the Internet, but the best tool you have is yourself. If a site feels less than professional, avoid it. If a merchant isn't upfront with all fees, don't hand over money. More often than not, common sense is the best defense.
10. Order Through Canadian-Based Stores
Until recently, the selection of online-only merchants based in Canada was pitiful. Around the same time the e-commerce market spiked, Canadian stores got the clue and hit the web en masse. Ordering from inside the country obviously avoids import taxes and duties, but high delivery costs are practically a given these days. Luckily, so are free shipping promotions. Visit our sister site, FreeShipping.ca, for a list of over 220 merchants with free shipping codes.
Major online outlets like Amazon also have comprehensive online stores made just for Canadian shoppers. The Amazon site has been around for nearly a decade but, as of only three years ago, it didn't even include basic (and sought-after) categories like electronics. The site now hosts a respectable variety worthy of the Amazon name.
Photo by clkohan