Sean Beckett is a Cross Border Tax Cheat

Currency: Q. What has changed since the 80s? A. the GST.

"I shop mainly in the U.S., due to our high taxes. With no sales tax on clothing in many states, and a moderate sales tax, huge savings to be had! Plus, better retail service and selection ."

Sean Beckett, Toronto

(letter to the Editor, Toronto Star).

Well Sean, as almost everything sold in the USA is made in China, you have to pay duty when you cross the border back into Canada. Worse, you have to pay the GST. Or, if you live in New Brunswick and Nova Scotia, the HST (GST plus provincial tax). This also applies when you buy online, except you also have to pay a processing fee and, if you order with UPS, an outrageous company fee.

But lets stick to taxes. China may be in the WTO, but it by no means enjoys free trade with the USA. So there is American duty included in the price you pay down there. Duty is almost nothing, but it is not nothing (a few percentages).

Sales taxes are low in the USA, but in most places, they do exist. There is even a municipal sales tax in New York City.

When your item crosses the Canadian border, unless you have been in the USA a couple of days (24hrs, $50 exemption(1), 48hrs, $400 exemption, 7 days, $750) , you have to pay Canadian duty calculated based on the price you paid, including taxes. Then, you have to pay GST on that total.

Depending on the price you paid in the USA, it might still be worth it. But don't forget the price you paid for those American dollars. Many credit cards will charge you a 3% foreign currency charge. You will pay similar charges at the bank. Thankfully, the duty and the GST you pay at the Canadian border is payed in Canadian dollars.

For us New Brunswickers, forgetaboutit. Maine has a 5% sales tax, and we have to pay the 14% HST on the total paid when crossing the Canadian border (even if we cross in Ontario or Quebec!).

The chances of getting caught bringing back goods are relatively slim. However, if you shop in a border town, and if you are trying to save money on a day trip, presumably you are, be forewarned that Revenu Canada will financially reward people who tell them about cross border shoppers (you can check their web site).

THAT might be the only way to save money, write down the license plate numbers of a few dozen Canadian plates you see at the mall and hand it to the border official. Just don't forget to pay income taxes on any money you "earn" from Revenu Canada...

(1) If the goods you bring in are worth more than CAN$50 in total, you cannot claim this exemption. Instead you have to pay full duties on all goods you bring in.
According to A and A Contract Brokers, non-North American clothing has a duty of 20%. Try their nifty online calculator.

US sales tax table.
The ones we care about:
*New York (plus municipal*, where applicable*): 4%*
Maine: 5%
+Vermont: 6%+
-New Hamshire: 0%-
Michigan: 6%
Minnesota: 6.5%
North Dakota: 5%
Montana: 0%
Idaho: 6%
Washington: 6.5%
Florida: 6%. (According to Wikipedia: A "discretionary sales surtax" (...) is 1% in most counties.)

*(From Wikipedia) New York has a 4% state sales tax. All counties and some cities add local taxes ranging from 3% to 5.5%. The combined sales tax in Utica, New York, for example, is 9.5%. In New York City, total sales tax is 8.375%, which includes 0.375% charged for the benefit of the Metropolitan Transportation Authority (New York). As of January 4, 2006, New York State has again eliminated sales tax on all clothing and shoes up to $110.00 per item. Most counties and cities have not eliminated their local sales taxes on clothing and shoes. There are however, 11 counties and 5 cities (most notably New York City) that have done so. The counties where the year-round exemption will apply include: Chautauqua, Chenango, Columbia, Delaware, Dutchess, Greene, Hamilton, Madison (outside the City of Oneida), Rensselaer, Tioga, Broome, and Wayne. The cities where the year-round exemption will apply include: Gloversville, New York City, Norwich, Olean, Binghamton, and Sherrill.

+(From Wikipedia) Vermont has a 6% state sales tax. Purchases of clothing and footwear are not taxed. 10% rooms, meals and alcohol tax. The City of Rutland adds 1% local sales tax on rooms, meals and alcohol. The towns of Williston, Manchester, Burlington and Stratton add a 1% local optional sales tax.[44]

-(According to Wikipedia: New Hampshire does, however, levy a tax on meals, room occupancies, motor vehicle rentals, cigarettes, beer, wine, gasoline, and use of electricity (55 cents per megawatt-hour) and phone services (7 percent).


Jane Bateman said...

Isn't there somewhere that Canadian's can apply to have the tax paid in the States refunded, based on the fact that we pay gst/pst on goods upon returning to Canada?

Altavistagoogle said...

Well, I suppose it would depend on the state, county and city (if local taxes apply). I looked around for Maine and found nothing in terms of reimbursment program.

Canada CANCELED its reimbursment of the GST program last summer!


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