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Hi Folks,

I am located in Canada and want to start a small online retail business and want to try drop shipping for the first time. I'd like to drop ship from China, to Canada (Canada wide) and have only two questions about Business registration and Customs

I called and asked 3 different People who (I thought) should know everything about it and guess what,.... 3 different answers. If this is not confusing,... I don't know.

However,... Now I ask one of you , who is dealing with it on his/her daily basis, hoping that there is someone from Canada out there who knows a little about it.

OK, here are my 2 questions

1. since I'm going to sell online (inside Canada only) I was been told I have to register my Business in all Provinces and Territories.

Bullshitt or truth ?

2. Since I'm planning on doing drop shipping (mainly from China for now) , do I have to have an Import permit for this and have to clear and pay the duties for the Items coming into Canada or is the purchaser responsible for this ?

I don't know if I will have the time, to clear all these (most times) single Items, I don't mind at all paying the duties and fees and so on, I just like to know, what is the best way to get a product to the client with as less inconvenience as possible. Hiring a Customs Broker would make a single Item or even a small amount of Items of lower value exorbitant expensive.

So, what do I have to do ?

Thank you in advance for your answers.

Greetings

Roy

Hi Roy, let me start by saying I'm not a Canadian, so I'm just guessing half of this.

Let me start with the half I do know and that relates to who npays any import duties on arrival. As a Dropshipper, the product is sent directly to your customer and they are the ones that will get the import duty notification, iff applicable. Now I'm not sure what the import duty rules are in Canada, however I'm sure there will be some threshold limit in place.

Best place to find out what your free import limit is, is to speak directly with Customs and they are the ones who implement any and all applicable duties.

Now for the part I have no clue about and to be honest, I can't even hazard a guess. Best advice I can give is to contact your local business registration office and they are going to be able to give you all the relevent information you need. If you're unsure as to what office handles those affairs, just contact your local government office and they will most certianly be able to send you in the right direction.

Sorry I couldn't be more help :)

Hi Mark,

Thank you very much for taking your Time answering my questions.

At least "the half you do know" was helpful.

At least for the drop ship and import duty part, because when ever I ordered something from abroad for myself, I was the one who had to deal

with the import duties.

This is also the info I've got from one of the people I asked this question.

It was probably a mistake asking multiple people, then you will get most likely several different opinions.

BTW , any help, no matter how small, is still considered help, right ?

thanks

Roy

Cheers Roy, happy to help as much as I can :)

5 months later

"1. since I'm going to sell online (inside Canada only) I was been told I have to register my Business in all Provinces and Territories.

Bullshitt or truth?"

NOT TRUE You just have to register in your own Province/Territory

In Saskatchewan, I have to have at least a PST Number when I want to run any type of Business! That's It!

And I do not collect any taxes on my sales when selling product directly from abroad.

Because this is the responsibility of my customer who has to pay all this when the product arrives at the Canadian border.

As a Dropshipper, the product is sent directly to your customer and they are the ones that will get the import duty notification, if applicable.

"2. Since I'm planning on doing drop shipping (mainly from China for now), do I have to have an Import permit for this and have to clear and pay the duties for the Items coming into Canada or is the purchaser responsible for this?"

I don't need any Import Permit if I drop ship from China or most other countries, this is only applicable if I want to buy inventory and if I want to do this I have to register for GST/HST in order to apply for any Import Permits.

It's that simple.

Hi Roy,

How customs are paid depends on the way the items are shipped. It is possible with UPS or FedEx for whoever is paying for shipping to pay the customs duties, as an option. You have to set this up with the shipping service. If your supplier is shipping it themselves from China it is unlikely they will be set up to do this. By default the transportation company will bill the customer at the door, which many customers find upsetting and infuriating. If you go this route you MUST warn customers clearly there will be customs charged at the door or they won't be happy with you.

Note that in Canada if the declared value of a package is less than $20 then there will be no duties required.

Technically you are expected to collect GST from your own customers anywhere in Canada, and PST from your customers in any province you have a significant presence (office, warehouse, etc.). The customer is then entitled to request a rebate on the GST they are charged when they receive the package. Which sucks.

Basically, drop-shipping into Canada from an international location sucks for the customer because of the way taxes/duties are set up here.

In the USA you can receive a package with a declared value up to $800 duty free. So, drop shipping into the USA is much better.

If you really want to focus on drop-shipping from overseas, and your packages are likely to be worth more than $20, I would suggest that you do not focus on Canadian customers. Sell to the US instead, in US Dollars. If you don't label or advertise yourself as Canadian then your Canadian customers won't be as surprised if they get a tax bill along with their package, since they will think it came from a US company.

Cheers,

Dobes

How customs are paid depends on the way the items are shipped. If your supplier is shipping it themselves from China it is unlikely they will be set up to do this. By default, the transportation company will bill the customer at the door, which many customers find upsetting and infuriating.

Yes.

I try to avoid transportation companies like UPS, DHL, Purolator and Fed Ex delivering to Canada because they let the customer pay through the nose for their Services at the border.

All Products get shipped by Air Mail for free or very low costs to assure that there will be less stress at customs (costs and processing) and faster shipping. That actually seems to work pretty well.

If you go this route you MUST warn customers clearly there will be customs charged at the door or they won't be happy with you.

This is what everybody can read on my website from day one, Nobody can say he/she wasn't aware of this.

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Note that in Canada if the declared value of a package is less than $20 then there will be no duties required.

Correct

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Technically you are expected to collect GST from your own customers anywhere in Canada, and PST from your customers in any province you have a significant presence (office, warehouse, etc.).

No Office, No Warehouse. My Computer is located in my kitchen, many things I manage from mobile devices from home or on the go.

I am just registered under my home address and my cell phone number and other mandatory information, that's it.

According to GST and PST Offices, in Saskatchewan I have to have a PST number for any kind of business I do!!! and a business number here in Saskatchewan, and if I do not make more than $30.000/Year I don't even have to register for and/or collect (if applicable) any GST.

Collecting PST in SK is (if applicable) when you make $10.000/ Year and more.

Also, after talking to CBSA, GST and local PST offices, Since I am Not the Owner and Sender of the goods (all Products get shipped from abroad directly to the purchaser). I am ONLY a Middle Man and do not collect Taxes. I only have to pay Income Tax for the service I offer.

The Purchaser is 100% responsible for all importing costs.

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Basically, drop-shipping into Canada from an international location sucks for the customer because of the way taxes/duties are set up here.

agreed !

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In the USA you can receive a package with a declared value up to $800 duty-free. So, drop shipping into the USA is much better.

If you really want to focus on drop-shipping from overseas, and your packages are likely to be worth more than $20, I would suggest that you do not focus on Canadian customers. Sell to the US instead, in US Dollars. If you don't label or advertise yourself as Canadian then your Canadian customers won't be as surprised if they get a tax bill along with their package, since they will think it came from a US company.

I think this is not a bad advice at all !

Thanks

Roy

9 days later

Hi Roy,

I know this is not what you wanna hear.

I myself called GST office for Saskatchewan, CRA and CBSA. I agree that selling to Canadian customers suck.

I spoke to 3 individuals at the GST office, 1 at the CRA and 1 at the CBSA.

The one at the CRA told exactly what you posted. You do not collect GST or HST. Customers pay duties and taxes imposed by the CBSA which is collected from them by the Canada Post.

When I called GST office, one repeated same as above. The 2nd agent spoke to me for around 35 minutes explaining the whole dropshipping situation for taxes. He was explaining about the general rules for taxing in case of dropship situation rather than directly telling me the rules set out for dropship business. It seemed there is no written regulations in Canada for the dropship business.

However, he told me that I must collect GST/HST for other provinces and PST for Saskatchewan residents. Customers should not pay taxes imposed by the CBSA as they will end up with paying taxes twice. My broker agent should release the package on my behalf and my business should pay import duties and taxes.

The 3rd agent at the GST office told me that I do not collect any GST or HST but the PST only for the Saskatchewan residents. My broker agent should release the package on my behalf and my business should pay import duties and taxes.

I called CBSA and the agent told me that I must collect GST or HST from other provincial residents and the GST, PST for the Saskatchewan residents. My broker agent should release the package on my behalf and my business should pay import duties and taxes. Now, the taxes imposed by the CBSA will be credited back to me when I file taxes.

Another friend of mine also called and different agents told him different rulings.

At this point, at least one thing I am certain that as long as your total sales revenue do not hit $30,000, you do not need to collect any GST or HST. Once you hit that mark at any given time (even in one month), you must register for GST, HST immediately and start collecting them and when your shipments arrive at the borders and CBSA charges duties and taxes on the same item for the 2nd time and your customers freak out since they are paying taxes twice for the same item.

Whatever you do, don’t get caught by these guys when you file your taxes. Failing in collecting and remittance of taxes has a huge penalty.

I have to do little more research on this and I am already very confused. I do not know if I have to approach to an account or not and it is costly. If I find out, I will definitely post it. If you figure out before I do, please post.

Thanks!

Steve

The one at the CRA told exactly what you posted. You do not collect GST or HST. Customers pay duties and taxes imposed by the CBSA which is collected from them by the Canada Post.

This is exactly how it is!

Since I am not the importing entity, and I do not buy or own and not even store any Stock at all, at any time, I am only a Person in the middle who makes/provides a connection between the Customer and the Wholesaler/Manufacturer from overseas who drop ships the item to the customer.

I only add (some sort of) a commission to the product I arbitrate.

When I called GST office, one repeated same as above. The 2nd agent spoke to me for around 35 minutes explaining the whole dropshipping situation for taxes. He was explaining about the general rules for taxing in case of drop ship situation rather than directly telling me the rules set out for dropship business. It seemed there is no written regulations in Canada for the dropship business.

Those people I had enough on the phone last year. confusing ,... they just talk about taxation in general but don't have a clue what YOU actually want.

It is important to explain exactly what you do and how you make money with your business.

However, he told me that I must collect GST/HST for other provinces and PST for Saskatchewan residents. Customers should not pay taxes imposed by the CBSA as they will end up with paying taxes twice. My broker agent should release the package on my behalf and my business should pay import duties and taxes.

I do not have to collect SK PST until $10K and not Register and collect GST/HST until $30K ( I can, but I don't have to)

and as soon as you hit the $30K you have 28 or 29 days to register for GST.

I DO HAVE TO REGISTER FOR SK PST FOR ANY TYPE OF BUSINESS I DO, LOCATED HERE IN SK.

The 3rd agent at the GST office told me that I do not collect any GST or HST but the PST only for the Saskatchewan residents. My broker agent should release the package on my behalf and my business should pay import duties and taxes.

A broker-agent? Who wants to pay this Guy for every single Item, try to imagine the price you have to put on the (single) item you are trying to sell. Let the customer pay for it, that keeps the costs low for both, you and the customer.

Unless you buy/own stock then it does make more sense.

I called CBSA and the agent told me that I must collect GST or HST from other provincial residents and the GST, PST for the Saskatchewan residents. My broker agent should release the package on my behalf and my business should pay import duties and taxes. Now, the taxes imposed by the CBSA will be credited back to me when I file taxes.

We are still talking about drop shipping, right? And again, I am not the person importing the Product.

I just provide a connection and take care of those things like, when the customer has a problem with the product etc.

Another friend of mine also called and different agents told him different rulings.

LOL !!! isn't it ridiculous? You think these people should be all on the same page and the answers you'll get will be the same at all times.

It is like cutting off your finger, going to a doctor and he tells you that can happen during flu season.

My 5 cents to this: these people just do not know what drop shipping really is and what the rules and regulations are for this type of

business. If there are any,... The more people you call, the more confusing it will be for you, as you found out yourself if you ask 10 people you'll get 10 different answers. I've been through this too.

If you want to be on the safe side, buy stock, even if YOU have to import the goods, pay for all this and ship it from your warehouse or so, collect all the applicable taxes.

Roy

a month later

Hi Folks,

I am located in Canada and want to start a small online retail business and want to try drop shipping for the first time. I'd like to drop ship from China, to Canada (Canada wide) and have only two questions about Business registration and Customs

I called and asked 3 different People who (I thought) should know everything about it and guess what,.... 3 different answers. If this is not confusing,... I don't know.

However,... Now I ask one of you , who is dealing with it on his/her daily basis, hoping that there is someone from Canada out there who knows a little about it.

OK, here are my 2 questions

1. since I'm going to sell online (inside Canada only) I was been told I have to register my Business in all Provinces and Territories.

Bullshitt or truth ?

2. Since I'm planning on doing drop shipping (mainly from China for now) , do I have to have an Import permit for this and have to clear and pay the duties for the Items coming into Canada or is the purchaser responsible for this ?

I don't know if I will have the time, to clear all these (most times) single Items, I don't mind at all paying the duties and fees and so on, I just like to know, what is the best way to get a product to the client with as less inconvenience as possible. Hiring a Customs Broker would make a single Item or even a small amount of Items of lower value exorbitant expensive.

So, what do I have to do ?

Thank you in advance for your answers.

Greetings

Roy

Hey Roy, we based here in US and we do got a lot of customers from Canada, so 3 of them are bs.

1. Register locally, charge only tax if your customer and you are in same providence.

2. You don't need an import license since your customer are the one who making a purchase, therefore, this will be linked to no.3 which is bs also. You don't need a custom broker to make anything easier, by selecting "gift" as what you are shipping in bill of lading will avoid such fee. But there will be a very slight of a chance that the custom put a hold on some random product at an unknown rate, which you can't help them since the address and name is appeared with their information, custom will send them a letter regarding paying taxes on that product. (This doesn't happen so far for us shipping from US to Canada) You have to put up a disclaimer on this matter on your website.

If that ever happens, you can ask your customer about how much tax they paid and send out a gift at a similar price or simply just give your customer a discount code or credit to incentivize more sale.

Hope these information will help you, if you are interested in selling cellphone accessories. here is our salehoo topic link:

sale/start-dropshipping-with-reiko-wireless-today-t18612.html

And this is our company's drop ship page:

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