Save Time and Money on Goods Temporarily Imported into Canada
Goods imported into Canada for no more than 12 months are classified as temporary imports. Importers can apply for an extension of the 12 month period.
For example, Disney ships truckloads of equipment into Canada for its Disney on Ice shows. Even though the ice rink materials, costumes and props are not for sale in Canada, these show goods are treated as temporary imports for which a security deposit is payable.
The customs broker or importer must post security that covers the full amount of both duties and taxes payable for the temporary imports. Bonds, cash, certified cheques and travellers cheques can be used for used to pay the security deposit.
Depending on the type of temporary good, Canada Border Services Agency (CBSA) refunds all or part of the security deposit when temporary imports leave Canada.
Types of Temporary Imports
Duty and tax treatment for the security deposit depends on the type of temporary import. Below are examples of different types of temporary imports.
- Show goods
- Trial use goods
- Exhibit goods
- Musical instruments for a live show
- Lecture material, tapes, slides and videos
- Emergency use goods
- Goods to be repaired in Canada
- Commercial samples.
Bon Jovi Scenario for Temporarily Imported Goods
Before American rock star Bon Jovi plays in Calgary on July 14, his band’s musical instruments are subject to specific duty and tax treatment before temporary entry into Canada.
Each of Bon Jovi’s musical instruments will be assigned a harmonized system code (HSC) under Canada’s Customs Tariff. For example, the tariff classification for the multiple-keyboard electric organ played by band member David Bryan is HSC 9207.10.00.12. In addition to that original classification code, the first 4 digits for temporary imports (9993) must also be specified on import documentation.
Under the North American Free Trade Agreement (NAFTA), the 6% tariff for imported keyboards is waived. However, Bon Jovi enterprises will have to pay the 5% Goods and Services Tax (GST) as a security deposit. The GST deposit will be fully refunded after the musical instruments are re-exported to the U.S.
Temporary Admission Permit E29B
The security deposit is accompanied by CBSA form E29B, titled Temporary Admission Permit. This document records details about the importer, customs broker as well as the temporary import’s destination in Canada.
Another key E29B field to be completed is the temporary import’s use in Canada, such as “musical instrument for live show per D8-1-1” or “goods for repair per D8-1-1”. CBSA D Memo D8-1-1 defines rules for full or partial refund of taxes for goods temporarily imported into Canada.
To calculate the amount of security deposit, users can fill in up to 5 lines on the E29B form. Each line starts with the temporary import item’s quantity, weight, description (including model and serial numbers) and tariff classification code. The amount of any duty and tax required is calculated line by line, and then totaled.
To prove that the value of the temporary import is correct, a commercial invoice must accompany the E29B form.
Form E29B must be submitted to Canada Customs at the port of exit before a CBSA officer can:
- Complete the bottom acquittal portion of the form
- Refund the security deposit for the temporary import.
Admission Temporaire/Temporary Admission (A.T.A.) Carnet
Bon Jovi Enterprises may be using a multi-purpose temporary entry document called the A.T.A. Carnet. This international customs document can be used for goods that will be temporarily imported into a number of different countries before the carnet’s expiry date.
Bon Jovi’s touring company could use just one carnet to cover temporarily imported tour equipment and band musical instruments when the rock group visits several different countries in a short period of time.
The carnet serves two purposes. The document:
- Replaces the E29B
- Guarantees that duty and taxes will be paid.
Duty and taxes on temporary imports become payable if the items are not exported out of the host country by the carnet’s expiry date.
Canadian Rules for A.T.A. Carnet
Canada is a participating country where customs officials treat carnets as acceptable temporary import permits, and therefore the CBSA would accept a carnet when Bon Jovi’s concert supplies cross the border.
Often the issuing party for the carnet is the local chamber of commerce. Chambers of commerce in different countries may have unique requirements when users apply for A.T.A. carnets.
The Canadian Chamber of Commerce requires that a carnet is only issued after the exporter pays a security deposit equal to 40% of the temporary import item’s value.
A carnet does have some limitations. For one, Canadian customs officials will insist on an E29B form and not accept an A.T.A. carnet for goods temporarily exported to Canada for repair.