Entering the Canadian market can be a lucrative move for non-resident sellers, but it comes with its share of complexities. In particular, understanding how sales tax works across provinces and keeping up with evolving customs regulations is no small task. As of October 2024, things have shifted even further with the full rollout of the CBSA Assessment and Revenue Management (CARM) platform - a digital transformation that redefines how businesses import goods into Canada.
For new entrants, this means getting a handle not just on GST/HST and PST rules, but also navigating CARM’s new systems for customs declarations, financial security, and tax recovery. It's a steep learning curve, and getting it wrong can impact both compliance and profitability. That’s why having an expert partner to manage your Canadian tax obligations isn’t just a convenience, it’s a strategic advantage.
As a non-resident seller entering the Canadian market, navigating the tax and customs landscape is essential for maintaining a profitable and compliant business. With the full implementation of the CBSA Assessment and Revenue Management (CARM) platform in October 2024, the way businesses handle imports has fundamentally changed.
Here is a guide to help you understand Canada’s GST/PST system and the practical implications of the new CARM process.
Selling into Canada: A Guide to GST, PST, and the New CARM Platform
1. Understanding Canada’s Tax Landscape: GST, HST, and PST
When selling physical goods to Canadian customers, you encounter three main types of sales tax:
- Goods and Services Tax (GST): A 5% federal tax applied to most goods and services in Canada.
- Harmonized Sales Tax (HST): Some provinces (Ontario, Atlantic provinces) have combined their provincial tax with the federal GST, resulting in a single rate ranging from 13% to 15%.
- Provincial Sales Tax (PST): Provinces like British Columbia, Saskatchewan, and Manitoba collect their own PST separately from the GST.
Key Considerations for Non-Resident Sellers:
- Registration Threshold: Generally, if your worldwide taxable supplies exceed $30,000 CAD in a 12-month period, you must register for a GST/HST account with the Canada Revenue Agency (CRA).
- Non-Resident Importer (NRI) Program: You can act as the Importer of Record (IOR) without having a physical presence in Canada. This allows you to clear goods through customs yourself, making the process seamless for your Canadian customers who won’t be hit with unexpected "duties at the door".
2. The CARM Revolution: What Has Changed?
The CARM (CBSA Assessment and Revenue Management) platform is now the official system for managing all commercial imports into Canada. It has replaced legacy paper-based systems with a digital-first approach.
Practical Implications for Your Business:
- Mandatory Registration: All non-resident importers must register on the CARM Client Portal (CCP) to continue importing goods commercially.
- Financial Security & RPP: Previously, many sellers relied on their customs broker’s bond. Now, to benefit from Release Prior to Payment (RPP)—which allows goods to be released before duties are paid—importers must post their own financial security (usually a customs bond or cash deposit).
- The Shift to CAD (Commercial Accounting Declaration): The traditional B3 (Customs Coding) and B2 (Adjustment Request) forms have been retired. They are replaced by the Commercial Accounting Declaration (CAD).
3. GST Recovery: The Critical Role of the CAD
For businesses registered for GST/HST, the most important takeaway is how to recover the tax paid at the border.
- Proof of Payment: The CAD serves as the official proof that GST was paid at import.
- ITC Claims: You need this document to support Input Tax Credit (ITC) claims on your GST/HST return. Without a valid CAD, the CRA may deny your right to recover the GST you paid.
- Documentation Retention: You must retain the downloaded CAD document along with your commercial invoice and any other supporting documentation for at least six years. The CRA now officially accepts the digital CAD as the replacement for the old B3 form for ITC evidence.
How to Request a CAD Report
To stay organized and ensure you have all necessary evidence for your tax filings, you can generate custom reports directly through the CARM portal:
- Log in to the CARM Client Portal.
- Navigate to "Request declaration report" under the declarations section.
- Choose the CAD report type and specify your parameters.
- Download the completed report once its status changes from "Pending" to "Complete".
Note: Be aware that requesting a CAD report through CARM is subject to a service fee (typically a flat rate of $65.00 + GST per report).
Conclusions
As CARM reshapes the way goods enter Canada, the stakes for non-resident sellers have never been higher. From mandatory registration and new accounting declarations to ensuring proper documentation for tax recovery, the margin for error has narrowed. But with the right support, navigating this complexity becomes manageable - and even empowering.
By partnering with a specialist who understands Canada’s tax and customs landscape, you can focus on growth while staying fully compliant. Whether it's managing your GST filings, securing your own customs bond, or making sure your CADs are in order, expert guidance ensures your business avoids pitfalls and captures every available advantage. In a market as dynamic as Canada’s, that kind of peace of mind is priceless.
For a free analysis of your Canadian obligations, book a call with our GST experts.