In last week’s post about how the USMCA benefits small businesses, we touched on de minimis values. It’s been a while since we looked at this topic, and decided a revisit was in order.
De minimis is a Latin word meaning “lacking significance or importance: so minor as to merit disregard”. De minimis thresholds are minimum values over which customs duties and tax rates apply on imported goods. De minimis levels vary between countries, and duty and taxes can be avoided if the value of the shipment doesn’t exceed the de minimis value.
Imported goods shipped into Canada by courier with a total below CA$40 are both tax and duty exempt, under de minimis thresholds; for goods valued between CA$40 and CA$150, only tax will be collected. Goods over CA$150 are subject to both duty and taxes. The de minimis level for postal service shipments is CA$20, no tax or duty. (Regulatory outlines can be found in the Postal Imports Remission Order and the Courier Imports Remission Order. Procedures for express shipments are also outlined in United States-Mexico-Canada (USMCA) Agreement Article 7:8.)
The Courier Low Value Shipment (CLVS) program provides additional benefits for shipments valued at under CA$3,300. Designed for express shipment clearance, the CLVS streamlines the reporting, release, and accounting procedures for certain goods transported by courier. The courier company must be authorized by Canada Border Services Agency (CBSA) in order to participate. (Please note that a moratorium the CBSA placed on participation applications is still in effect, until further notice.)
Canada is the 11th largest ecommerce market (as per The Future Economy), with $50 million USD in revenue projected for this year (and exceeding $64 million USD in 2027). Online shopping grew by 68% between February 2020 and July 2022, and while global inflation and high levels of uncertainty may make shoppers anxious, ecommerce in Canada isn’t going anywhere. As ecommerce adoption accelerates, so too will the volume of goods shipped across border – and many will be low-value shipments that qualify for tax and duty exemptions. De minimis thresholds were increased under USMCA to allow for greater access to the Canadian market, facilitate clearance, and expedite the importation process. Higher de minimis levels are also a potential cost saving to the consumer. (Ecommerce businesses may also want to check out our post about selling to Canadians online.)
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