When you are importing goods into Canada and paying GST to your freight forwarder, the question comes up often: Can I claim back the GST on the good?

Answer: Depends….on the way the importing agreement is structured.  Here are some common ways freight forwarding can be structured.

When importing goods into Canada and paying GST to your freight forwarder, the way GST is handled depends on the import structure you use. Here are the common structures and whether you can claim back the GST:

1. Delivered Duty Paid (DDP)

  • What It Means: The seller/exporter takes responsibility for all costs, including import duties, taxes (including GST), and customs clearance.
  • GST Handling: The seller/exporter usually pays the GST to CBSA (Canada Border Services Agency) and includes it in the price they charge you.
  • Can You Claim the GST Back?
    • No, in most cases. Since the foreign seller pays the GST at customs, the Canadian buyer does not get an official import declaration in their name, which is required to claim Input Tax Credits (ITCs) for GST.
    • You should ensure that your company is listed as the “importer of record” if you want to claim the GST.

2. Delivered at Place (DAP) / Delivered Duty Unpaid (DDU)

  • What It Means: The seller delivers the goods, but the buyer is responsible for paying duties, GST, and handling customs clearance.
  • GST Handling: The Canadian importer (you) pays the GST directly to CBSA (through your customs broker or freight forwarder).
  • Can You Claim the GST Back?
    • Yes, since the GST is paid by you (the importer), you can claim it as an Input Tax Credit (ITC) on your GST return.

3. Free on Board (FOB) / Ex Works (EXW)

  • What It Means: The seller is only responsible for getting the goods to the port of departure (FOB) or making them available for pickup (EXW). The buyer handles everything, including shipping, customs clearance, and GST.
  • GST Handling: The Canadian buyer pays GST directly to CBSA upon importation.
  • Can You Claim the GST Back?
    • Yes, since you are the one paying GST at customs, you can claim it as an Input Tax Credit (ITC).

4. Cost, Insurance, and Freight (CIF)

  • What It Means: The seller covers the cost of transport and insurance, but the buyer is responsible for import duties, taxes (including GST), and customs clearance.
  • GST Handling: The Canadian importer pays GST at customs.
  • Can You Claim the GST Back?
    • Yes, as long as you are listed as the importer of record and pay the GST to CBSA.

How to Ensure You Can Claim GST Back

To claim the GST as an Input Tax Credit (ITC), you must:

  1. Be the Importer of Record – Ensure the import documents list your business as the importer.
  2. Obtain a B3 Import Declaration Form – This is your proof of GST payment to CBSA.
  3. Have a GST Registration – You need to be registered for GST/HST to claim ITCs.
  4. Keep Proper Documentation – Ensure you retain invoices, customs paperwork, and any correspondence with your customs broker.

Best Practice for Claiming GST

  • Avoid DDP if you want to claim the GST back, unless you can ensure that the seller allows you to be the importer of record.
  • Use DAP, CIF, or FOB where you pay GST directly at customs to maximize your ability to claim ITCs.

If you are unsure double check with your freight forwarding company to make sure you are only making correct claims.  Depending on teh structure the cost of the importing can change to be sure to ask what options are and the pricing.

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