The internet has opened up exciting possibilities for anyone with entrepreneurial curiosity. According to Statista, Canada imported approximately 14.38 billion Canadian dollars worth of apparel in 2019, an increase from around 13.47 billion the previous year. Whether you are considering a brick and mortar shop or a strictly online business, you can use platforms like Amazon, Shopify, and so many others to get your product exposure and build up a business, and judging by the statistics, apparel is a great business to be in.
If you’ve thought about importing apparel and textiles into Canada, you will need an understanding of the process, including what regulations must be followed and, of course–as with anything involving importing and exporting–know your acronyms!
An overview of regulations:
All garments imported into Canada have specific labeling requirements. Some textiles can be imported under Tariff Preference Level (TPL) at a reduced rate of duty.
What is TPL?
Tariff Preference Level allows for specific quantities of certain yarns, fabrics, apparel, and textile articles traded among parties in certain free trade arrangements as a preferential tariff rate so long as they meet the modified FTA rules of origin under the agreement. Under TPL most rates of duty will be reduced. Read more on the government website.
Import Fundamentals:
Duty and tax must be paid upon importation into Canada. If you are acting as the Importer of Record, you are responsible for the completion and accuracy of the import declaration, and you must pay the applicable taxes and duties to the government.
How much are taxes and duties?
The rate of duty is determined by the tariff of the commodity being imported, the value of the goods, and the origin of the goods.
As a general rule, with a few exceptions, fabrics are duty-free. Clothing is usually dutiable at 17% or 18%, but most baby clothing is duty-free. In addition, it is possible to avoid paying customs duties for clothing if certain conditions are met.
The “tax payable when importing goods” refers to GST, excise tax, and excise duty (which may or may not apply to the goods you wish to import). Note that for imported goods you only pay the federal portion (GST) of taxes even if you reside in a province that charges HST. For more information about HST and GST please refer to our learn page.
What documentation is required?
The documents required by the border services officer at the port of entry will vary.
Your import may be subject to a customs review, inspection or audit prior to, or after the importation. Additional fees may be levied by the government for these services.
Should you ever be audited by customs, you need to keep your import records for 6 years following the date of import.
What is the difference between the country of origin, country of acquisition, and shipping country?
The country of origin is the country where the goods were actually manufactured and/or produced, or where the last substantial transformation occurred, regardless of where it was purchased or from where it was exported.
The country of acquisition is considered the country where the goods were when they were acquired by the importer to be exported.
The shipping country is where the merchandise was at the time of its acquisition and from where it left to the final destination.
In short, the country of origin is where the merchandise was manufactured, the country of acquisition is where the goods were purchased and the shipping country is where the goods went to their destination independent of the point of shipment.
What are the labeling requirements for garments sold in Canada?
All garments sold in Canada must have the following information appearing on the label:
- English and French labeling
- List fiber content
- Appears in Dealer identity (CA#)
How must the garment label be formatted in Canada?
The garment label must:
- Appear on disclosure label
- Be able to withstand 10 washings
- Be accurate if size and care instructions are used (this particular information itself is not mandatory but if disclosed must be accurate)
Are some goods used in apparel restricted from import into Canada?
Yes. Some goods require permits or a license to import them into Canada. For example, animal skins or furs could be subject to these extra requirements. Importers are encouraged to refer to the Convention on International Trade in Endangered Species (CITES) to determine if an animal fur or skin they would like to import into Canada is admissible.
Cow leather is not on the CITES list.
Choose a Carrier to Transport Your Goods
The carrier is responsible for preparing a Cargo Control Document. This document (also known as a manifest or waybill) is prepared from the exporter’s bill of lading and is used to report the shipment to the CBSA. Cargo may also be reported through the Electronic Data Interchange (EDI) system.
If the value of your shipment is less than CA$2,500, you will be notified by Canada Post or by the courier company that has forwarded the shipment when your shipment arrives. If the value of your shipment is over CA$2,500, you will be notified by your carrier, CBSA, or the courier company. CBSA may choose to inspect your shipment.
Obtain the Release of Your Goods
The B3-3 Canada Customs Coding Form is the main accounting document you need to fill out. See Memorandum D17-1-10 for more information about this documentation.
You will also need:
- Two copies of the Cargo Control Document (CCD), which will be provided by your carrier.
- Two copies of the Canada Customs Invoice (or the commercial invoice that contains the data).
- A paper copy of all import permits, certificates, licenses, or required documents from other government departments and agencies or an electronic copy for EDI participants with other government departments.
For information on how to get your goods released prior to the payment of duties, see the CBSA’s Memorandum D17-1-4: Release Procedures.
How BorderBuddy can help
Are the acronyms stressing you out? Many small businesses find it convenient to hire a customs broker like BorderBuddy to facilitate the import process. We can prepare the appropriate customs release documents needed by the CBSA, arrange payment of customs duties and taxes, secure the release of imported goods, and generally make the whole process seamless, while you focus on building your budding business.