What tax and duties apply when selling from the US to Canada?
When a US business sells goods to a Canadian customer, the shipment may be subject to Canadian GST/HST, provincial tax rules, customs duty and carrier charges. The final cost depends on the goods, their value and origin, the destination province, the shipping method and who acts as the importer of record.
For customers, the most important distinction is whether the seller offers a tax-paid delivery service or leaves the buyer to settle charges at the border.
The taxes at import
Goods entering Canada are generally subject to the 5% federal GST or the federal part of the HST, unless a specific exemption applies. The tax is calculated on the Canadian-dollar value of the goods, including applicable customs duty and excise tax, and is normally collected at importation.
The destination may also affect the provincial component:
- Alberta, British Columbia, Manitoba, the Northwest Territories, Nunavut, Quebec, Saskatchewan and Yukon generally apply 5% GST.
- Ontario applies 13% HST.
- Nova Scotia applies 14% HST.
- New Brunswick, Newfoundland and Labrador, Prince Edward Island apply 15% HST.
Tax treatment can differ for particular products, provinces and types of import. The CRA states that imported goods are assessed under specific GST/HST import rules, while the owner or importer of record is responsible for paying the tax at the border.
Provincial sales tax may also be relevant. In non-participating provinces, a separate provincial sales tax can apply under provincial legislation. The seller should therefore assess both federal GST/HST and any applicable provincial obligation rather than treating “Canadian sales tax” as a single uniform charge.
Customs duty and origin
Customs duty is separate from GST/HST. It depends mainly on:
- The product’s HS classification.
- The declared customs value.
- The country of origin.
- The Canadian tariff treatment.
- Any applicable trade agreement.
- The type and terms of importation.
A product shipped from the US is not automatically a US-origin product. For example, goods manufactured in another country and merely dispatched from a US warehouse may not qualify for preferential treatment under the Canada–US–Mexico trade framework.
Accurate HS codes, origin information, product descriptions and commercial invoices are essential. Errors can lead to reassessments, delays, penalties or an incorrect customer charge.
Low-value relief is limited. Shopify’s customs guidance identifies Canada’s general de minimis values as CAD 20 for duty and tax, although specific relief rules and exceptions can apply. For shipments from the US or Mexico, Shopify also notes a CAD 150 duty threshold and a CAD 40 tax threshold in certain calculations. Sellers should confirm the applicable treatment with the Canada Border Services Agency, carrier or customs broker before relying on a threshold.
Who pays at delivery?
The shipping arrangement determines whether the buyer or seller pays border charges.
Under Delivered at Place (DAP), the seller typically pays for transport to the destination, while the Canadian customer pays import GST/HST, customs duty and possible brokerage or disbursement fees when the carrier requests payment.
Under Delivered Duty Paid (DDP), the seller assumes responsibility for import costs and arranges payment before delivery. The seller can include estimated duties and taxes at checkout, giving the buyer a clearer total price. Shopify notes that DDP can help avoid additional charges and delivery delays, while DAP may result in extra customer charges on arrival.
The commercial risk is significant. According to surveys carried out by DHL, around 70% of online consumers will not complete a purchase if they do not trust the delivery provider. For US sellers, unexpected Canadian border charges can undermine that trust even when the product and headline price appear attractive.
A checkout should therefore state clearly:
- Whether prices include Canadian GST/HST.
- Whether customs duty is included.
- Whether brokerage fees may arise.
- Who is the importer of record.
- Whether the shipment is DDP or DAP.
- What happens if the customer refuses delivery.
Does the US seller need to register?
A US business may need to register for Canadian GST/HST if it is carrying on business in Canada and makes taxable supplies in Canada. The CRA assesses this using facts such as the place of delivery, where transactions are solicited, the location of inventory, the place of payment, Canadian agents or employees and where contracts are made.
The small-supplier exception can remove the normal registration requirement. For most businesses, the threshold is CAD 30,000 of worldwide taxable supplies in a single calendar quarter or over the previous four consecutive calendar quarters, subject to the detailed statutory rules and associated-person calculations.
Being below the threshold does not answer every question. A business may still choose voluntary registration, may have obligations because of Canadian inventory or fulfilment arrangements, or may fall under special rules for digital-economy supplies. The CRA distinguishes the normal GST/HST regime from simplified measures for certain non-resident digital businesses.
A seller should also separate two issues:
- Import tax at the border, paid by the importer of record.
- GST/HST on a taxable supply in Canada, which may need to be charged and remitted by the registered seller.
The answer depends on the transaction structure. A US seller should not assume that paying import GST through a courier automatically satisfies every Canadian sales-tax obligation.
A practical compliance checklist
Before launching Canadian sales, a US business should:
- Classify each product and assign an accurate HS code.
- Confirm the country of origin and any preferential tariff eligibility.
- Determine the customs value and applicable Canadian duty.
- Identify the destination province and relevant GST/HST or provincial tax.
- Decide whether the seller or buyer will act as importer of record.
- Choose DDP or DAP and disclose the consequences at checkout.
- Confirm whether Canadian GST/HST registration is required.
- Align invoices, customs declarations, tax settings and carrier data.
- Test refunds, refused deliveries and brokerage-fee disputes.
- Reconcile taxes collected at checkout with carrier and customs documentation.
Key takeaway
Selling from the US to Canada can involve more than shipping across a nearby border. Canadian GST/HST, provincial tax rules, customs duty and brokerage charges may all affect the landed cost.
The most reliable customer experience combines correct product classification, a documented importer-of-record model and transparent checkout pricing. Where commercially appropriate, DDP can prevent buyers from receiving an unexpected bill at delivery; where DAP is used, the seller should disclose the likely charges before payment.
