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Canada Temporary Entry: Samples

Information on temporary entry and travel to Canada. Also includes taxes and standards guides.

Canada Temporary Entry: Samples

Postby bridgat » Mon Nov 17, 2008 12:22 pm

The North American Free Trade Agreement (NAFTA) requires Canada, Mexico, and the United States to grant duty-free temporary admission to certain classes of goods imported from another NAFTA country. In addition, under the service provisions, NAFTA also provides "tools of the trade" provisions that allow companies to send their service personnel, along with their tools, to Canada and Mexico. NAFTA's temporary entry provisions for after-sales service providers and professionals facilitate expedited clearance through immigration.

Under NAFTA's temporary entry provisions, duty-free entry cannot be conditioned on whether directly competitive or substitutable goods are available in the importing country. Furthermore, goods do not have to originate (a product meeting NAFTA's rules of origin is said to originate) in a NAFTA country to qualify under the temporary entry provisions. Finally, it is important to note that since the implementation of NAFTA, many North American goods are now duty-free, thus eliminating the need for temporary entry in many cases. However, Canada's Goods and Services Tax (GST) is still applicable for duty-free goods.

There are 57 categories of goods for which Canada permits temporary entry under a special schedule used when completing a Temporary Admission Permit (Form E29B), and where required, a B3, Canada Customs Coding Form. Many imports, when made on a temporary basis fall under one of these 57 categories. Revenue Canada can provide the complete schedule of goods that qualify for temporary importation. Goods falling under the categories in the schedule can be imported free of tariff, but not necessarily free of the GST, currently 7%. Goods fall into one of two GST relief classes. For some goods, denoted in the schedule with a 1, GST relief is full and no tax must be paid. For goods belonging to Class 2, the GST is assessed on 1/60th of the value for duty of the shipment. There are also situations where full GST must be paid even though the goods are temporarily imported.

In addition to the special Canadian schedule, NAFTA provides for special Harmonized System (HS) classifications of goods imported temporarily. The HS numbers are all in chapter 98 of Canada's Harmonized System Code. Companies must use the correct HS number on export and import documents to ensure that customs authorities are aware that the products are being entered on a temporary basis. The various types of temporary imports are described generally below:

1. Commercial Samples (tariff item number 9823.70.00) and Advertising Films (tariff item number 9823.80.00).

Commercial samples and advertising films may also be imported temporarily without payment of customs duties. As a condition of duty-free entry, a NAFTA country may require that these goods:

- be imported solely for the solicitation of orders for goods or services from another country

- not be sold, leased or put to any use other than exhibition or demonstration while in its territory

- be capable of identification when exported (necessary paperwork to ensure re-entry of the product into the United States should be secured prior to entry into Canada or Mexico)

- be exported within such period as is reasonably related to the purpose of the temporary admission

- be imported in no greater quantity than is reasonable for its intended use.

- Under NAFTA, commercial samples of negligible value [less than $1] exported from the United States or Mexico may enter Canada free of duty under tariff item number 9824.00.00, regardless of the origin of the samples.

Canada may require that:

- the samples have a value, individually or in the aggregate as shipped, of not more than $1 U.S. or equivalent in Canadian dollars; or

- the samples be marked, torn, perforated or otherwise treated so that they are unsuitable for sale or for use except as commercial samples.

Advertising films are allowed duty-free entry under tariff item number 9823.80.00.

Advertising Material

Under NAFTA, printed advertising material of Chapter 49 (including brochures, pamphlets, leaflets, trade catalogues, yearbooks published by trade associations, tourist promotional materials and posters) that are exported from the United States or Mexico to Canada are duty free under tariff item number 9825.00.00, regardless of the country of origin of the material.

Canada requires that the advertising materials:

- be used to promote, publicize or advertise a good/service

- be supplied free of charge

- be imported in packets containing no more than one copy of such material and that the material/packets are not part of a larger consignment.

2. Repairs and Alterations Pursuant to a Warranty

None of the NAFTA countries may assess customs duties on goods that are exported for repair or alteration in another NAFTA country pursuant to a warranty and then re-imported. This is true regardless of the origin of the goods and regardless of whether the goods could have been repaired or altered in the exporting country. Goods repaired or to be repaired may enter the United States duty free under tariff numbers 9801.00.10 (products of the United States when returned after having been exported, without having been advanced in value or improved in condition by any process of manufacture or other means while abroad) and 9813.00.15 which includes articles to be repaired, altered or processed (including processes which result in articles manufactured or produced in the United States). Tariff item number 9820.00.00 provides for duty and GST-free entry of goods returned to Canada after having been exported for repair under warranty. If you are shipping a product to Canada for repair, all you must do is note the need for the repair on the commercial invoice. The importer in Canada who will be repairing the product is responsible for filing a temporary permit.

Repairs and Alterations Not Pursuant to a Warranty

A NAFTA country may, however, choose to assess customs duties on the value of the repairs or alterations performed in another NAFTA country that are not pursuant to a warranty. The rate of duty applied is the preferential NAFTA rate, regardless of whether the goods repaired or altered are originating. Canada will assess customs duties and GST on the value of such repairs or alterations performed in Mexico and the United State using the rate of duty applicable under the United States-Canada Free Trade Agreement, as incorporated into Annex 307.1 of the NAFTA, for goods from both countries. Mexico will not assess duties on repair or alterations performed in the United States or Canada. The United States will not assess duties on repairs or alterations not pursuant to a warranty performed in Mexico, but will assess duties on those performed in Canada. Goods entering Canada from the United States or Mexico after non-warranty repair or alteration are dutiable (tariff item number 9822.00.00) on the value of the repair/alteration only.

3. Certain Professional Equipment, Sports Goods, and Goods for Display.

A business traveler who qualifies under chapter 16 of the NAFTA may temporarily import certain goods duty-free. Goods which qualify are professional equipment (tools of the trade: for instance, a rock band would be allowed to bring its musical instruments, its on-stage wardrobe, and all the necessary equipment for setting up the concert at the arena; i.e.: lighting, cables, stage props, amplifiers, etc.), equipment for the press or for sound or television broadcasting, cinematographic equipment, goods for sports purposes, and goods for display or demonstration.

As a condition of duty-free entry, a NAFTA country may require that these goods:

- not be sold or leased while in its territory

- be accompanied by a bond if they are not originating goods as defined in Chapter 4 of the NAFTA

- only remain in the importing country until the departure of the person or within a reasonable time established by each country

- be capable of being identified when exported

- be imported in no greater quantity than is reasonable for its intended use

- be imported by a national or resident of another NAFTA country that seeks temporary entry

- be used solely by or under the personal supervision of the person importing the good in the exercise of the business activity, trade or profession

- be accompanied by a bond (or other security) no greater than 110% of the charges that would otherwise be owed on final importation. (A bond for customs duties will not be required for an "originating" good.)

Items in the above categories can be imported into Canada duty-free under the following tariff numbers: professional equipment (tools of the trade)-9823.10.00; equipment for the press-9823.20.00; equipment for sound or television broadcasting-9823.30.00; cinematographic equipment-9823.40.00; goods for sports purposes-9823.50.00; and goods intended for display or demonstration-9823.60.00; commercial samples-9823.70.00; advertising films-9823.80.00; conveyances or containers based in the United States or Mexico engaged in the international traffic of goods--9823.90.00; commercial samples of negligible value (less than $1 CDN) --9824.00.00. Articles such as tape recorders, typewriters, personal computers, and similar items commonly carried by travelers for their own use while on business trips are admissible as personal baggage.

Goods imported into Canada for a period not exceeding six months for the purpose of display at a convention or a public exhibition at which the goods of various manufacturers or producers are displayed, are allowed duty-free entry under tariff item number 9819.00.00.

The Temporary Admission Permit (Form E29B)

A Temporary Admission Permit, Form E29B is required to process goods entering Canada on a temporary basis when they are not accompanied by an ATA Carnet. A Canada Customs Coding Form (B3) is required under certain circumstances. There is no fee for the E29B form. Canada Customs does require a deposit equal to the full duties and taxes on the value of the shipment; however, this deposit is fully refundable upon re-exportation of the goods.

Each Form E29B is assigned a permit number by Canada Customs. Form E29B is available at all ports of entry and is completed by Canada Customs or by a broker at the time the goods enter Canada.

Information to Provide

- The importer/owner should be prepared to provide a detailed description of the goods entering (including any serial numbers or other markings) and an accurate value for duty and tariff classification purposes. Information relating to the intended use of the goods in Canada will be required as well as a reference on the permit to the specific Canadian Customs memorandum identified as the authority for the temporary importation, e.g. Memorandum D8-1-1, Temporary Importation Regulations, or Memorandum D8-1-7, Use of ATA Carnets for the Temporary Admission of Goods.

- The importer must be identified on the permit by his/her full name, address, and telephone number. When a customs broker is involved in the transaction, his/her name and address must also appear on the permit.

Security Requirements

When goods are imported for a temporary period of time on form E29B, the Customs office of importation may require a refundable security deposit. This security may be in the form of cash, travellers checks, a certified check, or a bond acceptable to Customs. It does not matter whether it is the resident importer or the non-resident exporter who pays the security deposit, so long as it is paid.

The amount of security shall not exceed the duties that would be payable if the goods imported for a temporary period were accounted for under the provisions of Section 32 of the Customs Act (i.e., the duty to be paid for a permanent importation).

In cases where goods are imported for temporary purposes throughout the year, importers or brokers may wish to deposit standing security with Customs in the following manner in lieu of posting individual security for each importation:

(a) if the importations will be made at one Customs office only, security must be posted with that office;

(b) if the importations will be made at more than one Customs office within the same region, security must be posted with the Regional Collector for that region; and

(c) if the importations will be made in more than one region, application for headquarters security is to be submitted to the following address for approval:

Department of National Revenue
Customs and Excise
Tariff Programs
555 Mackenzie Avenue
Ottawa, Ontario
K1A Ol5
Attention: Duties Relief Projects Unit

Once all the goods have been exported from Canada, or otherwise accounted for within the time limits specified on the permit, the security deposit will be refunded in full.

NOTE: Refunds of deposits will not be made in instances where goods which have been temporarily imported for commercial purposes have been lost or stolen in Canada. Where the security deposit is less than the duties payable on the goods, the difference will be collected by Customs. However, a refund claim may be accepted after a security deposit has been taken into account, provided the importer or broker can supply satisfactory proof that the goods have been exported, duty paid, destroyed, or abandoned in accordance with Customs regulations and within the authorized time limits. Canadian Customs Form B2 must be used for claiming refunds in these instances.

While the vast majority of exporters to Canada use the E29B form, it is not the only method available besides the ATA Carnet. There is a method called the 1/60th method that is sometimes used with items that are otherwise unavailable in Canada. Customs duties will be payable only on 1/60th of the value for duty of the goods multiplied by the number of months that the goods remain in Canada.

There are no forms necessary for this procedure. However, it must be done at a regional office (addresses listed at the end of this document) and the item and its receipt must be available for inspection. Items used for work cannot qualify for the 1\60th method.

For both the E29B and the 1\60th method (as well as the ATA Carnet), the exporter can opt to use a broker and have him or her pay any necessary deposits or pay them him or herself.

NOTE: For both these methods, exporters must also register their goods with U.S. Customs by filling out U.S. Customs Form 4455 prior to the exportation of their goods. Exporters can register ahead of time or at the time of departure.

ATA CARNETS

The ATA (Admission Temporaire--Temporary admission) Carnet System was provided for in the "Customs Convention on the ATA Carnet for the Temporary Admission of Goods" which was adopted in Brussels in the early 1960s. ATA Carnets are international customs documents issued by various authorized bodies in the countries that are contracting parties to the ATA Convention. Canada acceded to the ATA Convention on July 10, 1972. The United States joined the ATA Carnet system in 1968.

Carnets are not issued by customs authorities. Each signatory country has only one guaranteeing association. In Canada, that association is the Canadian Chamber of Commerce. In the United States, that association is the United States Council for International Business, which makes ATA carnets available at numerous locations throughout the country. (Carnet Application Hotline: 1-800-5-DUTYFREE). Exporters should allow five working days for the processing of a carnet application, although expedited service is available. The use of an ATA Carnet is not mandatory.

ATA Carnets are used to facilitate the temporary importation of goods and are not directly related to NAFTA. They eliminate the need for completing a customs declaration on a national entry form (i.e., Form E29B). Carnets also provide on-the-spot security for recovery of any duties and taxes should goods not be accounted for within the period specified. Goods intended for processing or repairs as well as consumable products are not allowed entry on an ATA Carnet. The carnet allows the temporary exporter to make customs arrangements in advance, make the arrangements at a predetermined cost, and use a single document for customs transactions within a single (e.g., Canada) or multiple (e.g. the European Economic Community) market.
bridgat
 
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