How GST Works on Imports
When goods enter Canada, GST (and sometimes provincial sales tax) is charged at the border by the Canada Border Services Agency (CBSA). This is separate from the GST/HST that gets charged on domestic purchases. The import GST is typically collected by your customs broker or freight forwarder and shows up on your customs documents.
The key document is the B3 customs entry form. This is your proof that GST was paid on importation, and it's what you need to claim the input tax credit.
Three Common Import Structures
How your freight forwarding is set up determines whether you can claim the GST back:
Structure 1: You Are the Importer of Record
This is the most common setup for Amazon FBA sellers. You're listed as the importer of record on the B3 customs entry. The freight forwarder acts as your customs broker and pays the import GST on your behalf, then invoices you for it.
Can you claim the GST back? Yes. Since you're the importer of record, the import GST is your expense. You claim it as an ITC on your GST/HST return. You need:
- The B3 customs entry showing your business name and import account number
- The freight forwarder's invoice showing the GST paid
- Proof of payment
Structure 2: the Freight Forwarder is the Importer of Record
Some freight forwarders import goods under their own account and then "sell" them to you domestically. In this case, the freight forwarder is the importer of record on the B3, not you.
Can you claim the import GST? Not directly. The import GST belongs to the freight forwarder. However, when they invoice you for the goods (including their markup), they should be charging you GST/HST on that invoice. You claim the GST/HST from their invoice as a regular ITC, not the import GST.
Watch out for freight forwarders who charge you for the import GST they paid AND also charge GST/HST on their invoice. You could be double-paying. Review your invoices carefully.
Structure 3: Drop Shipping / Third-party Import
If a third party (like your supplier's agent) imports the goods and ships them directly to Amazon's warehouse, the import structure gets complicated. Who's the importer of record? Who paid the GST? Sometimes it's unclear, and that ambiguity means you might not have the documentation to claim ITCs.
Can you claim the GST? Only if you can prove you're the importer of record or that the GST was paid on your behalf with proper documentation. If the B3 isn't in your name, you're going to have trouble.
What About the Freight Forwarder's Service Fees?
Separate from the import GST, your freight forwarder charges fees for their services (customs brokerage, handling, delivery, warehousing). These fees are domestic services and are subject to regular GST/HST.
Can you claim ITCs on these fees? Yes, always. As long as you're registered for GST/HST and the services are for your business, the GST/HST on freight forwarding service fees is claimable as a regular ITC.
Documentation You Need
For import GST claims, CRA requires:
- B3 Customs Entry: Proves import GST was paid, and you're the importer of record.
- Freight forwarder invoice: Amount of GST paid on your behalf, plus service fees.
- Commercial invoice: Value of the goods imported.
- Bill of lading / airway bill: Shipping documentation connecting the shipment to your business.
- Proof of payment: Bank statement or cancelled cheque showing payment to freight forwarder.
Keep all of these for at least 6 years. If CRA audits your GST/HST return and you can't produce the B3, they'll deny the ITC.
Common Mistakes
- Claiming import GST when you're not the importer of record. If the B3 isn't in your name or your business's import account, you can't claim the ITC. Get your freight forwarder to set up imports under your account.
- Not separating import GST from service fees. Your freight forwarder's invoice typically includes both the import duties/GST they paid on your behalf AND their own service fees (with their own GST/HST). These are two different ITC claims. Make sure your bookkeeping separates them.
- Missing the B3 entirely. Some sellers don't even ask their freight forwarder for the B3 customs entry. Without it, you're leaving money on the table. Always request a copy.
- Confusing duties with GST. Customs duties are NOT the same as import GST. Duties are a cost of the product (included in COGS). Im