Landed cost: duty stays in your inventory, the border GST comes back

Summary

Landed cost means everything a shipment has cost you by the time it reaches your warehouse. The Canada Revenue Agency (CRA), the federal tax authority, calls the same idea laid-down cost. Four charges land on goods bought abroad for resale in Canada, and your books don’t treat them alike.

1. Customs duty, collected by the Canada Border Services Agency on a figure it works out itself, called the value for duty, which can differ from your supplier’s invoice total.
2. Surtax, an extra charge imposed by government order on particular goods from particular countries, calculated on the value for duty and sitting on top of any duty.
3. GST, the federal Goods and Services Tax, at 5%, charged on the value for duty with duty and surtax added on rather than on your supplier’s invoice. In the provinces that merged their own sales tax into it, the combined tax is called HST.
4. Fees from your customs broker, a private firm licensed to file import paperwork for you, and from whoever carried the freight.

Duty, surtax, freight and brokerage all become part of what the goods cost you. Those charges sit on your balance sheet inside the value of your inventory, and they only turn into a deduction against your corporation’s taxable income in the year you sell the goods.

The 5% GST behaves differently, because you claim it back on the GST/HST return you file, monthly, quarterly or annually depending on your size, where it either reduces what you owe or produces a refund. Four conditions have to hold. Your corporation is registered for GST/HST, which becomes mandatory under the $30,000 single-quarter or rolling-four-quarter tests.¹ The goods support taxable business sales, rather than exempt sales or personal use. Your corporation caused them to be imported. And you hold the border document proving the tax was paid before you file.

Being the importer of record, meaning the party answerable to the border agency for the customs declaration on each shipment, normally helps establish who imported the goods and secure the evidence, but registration and taxable business use still need checking. A declaration states what the goods are, where they were made and what they’re worth. We’d usually recommend taking that role once you’re bringing in more than four or five shipments a year, and leaving it with your supplier below that.

What the border charges, and what it charges it on

The border agency applies a duty rate to the value for duty, a figure that starts from the price payable to your vendor. Where that price already includes shipping to Canada, or a Canadian broker’s fee, those amounts come back out before duty is worked out, and where freight is billed to you separately there’s nothing to take out. Either way the ocean or air cost carries neither duty nor GST, provided your broker files it separately, which is worth asking them to confirm.²

The rate turns on two things. Classification is a ten-digit code from the Customs Tariff, the federal schedule listing every category of goods with a rate attached to each. Origin is where the goods were made, and it often matters more than what they are. Men’s cotton jeans carry Canada’s ordinary rate of 17% for 2026, while the identical jeans made in the United States enter free of duty if you hold a certification of origin (i.e. a signed statement from your supplier that the goods meet the origin rules of the Canada-United States-Mexico Agreement).³

Take a US$40,000 shipment of those jeans, converted at an illustrative 1.38 Canadian dollars to the US dollar.⁴ Duty at 17% on a value for duty of C$55,200 adds C$9,384, and the 5% GST then falls on C$64,584 rather than on C$55,200, because the Excise Tax Act, the federal law creating GST and HST, charges it on the value for duty plus every duty and surtax added to it.⁵ Origin changes what those jeans cost you by the C$9,384 of duty, not by the larger C$9,853.20 swing in the border bill, because the GST comes back either way.

What goes into inventory, and when it becomes a deduction

For income tax you value inventory at the lower of what it cost you and what it’s worth at your year-end.⁶ The CRA says that for goods bought for resale, cost means laid-down cost. Laid-down cost is the invoice cost, plus customs duty and any excise duty (e.g. the separate federal tax on alcohol, tobacco and fuel), plus freight and the other costs of getting the goods in, plus storage where it’s substantial, meaning months in a warehouse rather than days on a dock. As such duty, surtax, freight, insurance and your broker’s fees all belong in the carrying value of the goods, and so does provincial sales tax you can’t claim back, which turns on your province and is outside what this article covers. The 5% border GST stays out, because you recover it rather than bear it.

Those amounts reduce your taxable income only as cost of goods sold, in the year the goods leave the shelf. A container released in December and still unsold at a December 31 year-end normally produces no deduction that year, because the cash you paid the border was recorded as part of the value of goods you still own.

Who gets the 5% back

A business registered for GST/HST recovers the tax it pays on its purchases through an input tax credit, claimed on its GST/HST return. On an import the credit belongs to the de facto importer, meaning whoever actually caused the goods to be brought into Canada, and that isn’t always the party named on the declaration as importer of record.⁷ In practice the de facto importer is the one that ordered the goods and bears their cost. If your supplier’s broker cleared the shipment while you placed and paid for the order, the two roles have split, and which of you claims the 5% is worth settling in writing.

Your evidence for the border GST is the Commercial Accounting Declaration, the electronic filing your broker makes for each shipment. Ask your broker to send you a copy every time, and claim the figure shown on it rather than working from the broker’s invoice total, which also carries the broker’s own fees.

Whose name goes on the declaration

Being the importer of record normally makes you the de facto importer too, it puts the accounting document proving the border GST in your hands, and you see the classification and origin declared in your name. What it costs you is the apparatus: an import-export account on your business number (i.e. your corporation’s account number with the CRA), an account in CARM, the border agency’s online portal for importers, a fixed monthly date for settling duty and taxes on the statement of account there, and six years of record-keeping. Releasing goods before you’ve paid for them needs financial security as well, either a bond from an insurer covering at least half of the amount the system calculates for you, with a $5,000 minimum, or a cash deposit covering all of it.⁸

Buying delivered duty paid instead means your supplier quotes one all-in price with duty, taxes and shipping already inside it, and you set nothing up at the border. Owners often assume the 5% goes with the supplier, which it doesn’t. The credit still belongs to whoever caused the goods to be imported, and a foreign supplier that isn’t registered here can’t claim it at all. What you lose is the evidence, so ask the importer of record for its accounting document, or sign a joint election, meaning a short written agreement the Excise Tax Act allows in which a registered supplier gives up its claim so you can make yours.⁹ You also lose sight of what’s being declared, and the duty risk stays with you, because under the Customs Act the owner of the goods at release is jointly liable alongside the importer of record.¹⁰

In our view an owner buying regularly should be the importer of record, delegate the filing to a broker, and post the security as a bond rather than tying up cash. We’d go the other way where you import occasionally and in small amounts, so long as the supplier sends its accounting document each time.

How often this changes

Surtax orders are the volatile part of all this. A surtax bites where the tariff classification of your goods appears on the schedule to a government order, and, for the orders aimed at the United States, where the goods originate there as well. Containing steel doesn’t trigger one on its own. Canada’s broad 25% surtax on US consumer goods was repealed effective September 1 2025, though a 25% surtax on listed US-origin steel and aluminum goods stayed. As at August 2026, a surtax of 25% of the value for duty had applied to certain wood cabinets and vanities since July 31 2026, provisionally, for up to 200 days while a trade tribunal decides whether a definitive measure should replace it. The orders named here are examples rather than a list of what’s in force, and whether your product is named in any of them is a question for your broker.¹¹

Orders arrive with roughly a week’s notice, and remission orders, which cancel a surtax for named goods or importers, each run to a fixed expiry date. As such any pricing spreadsheet you built during 2025 to work out what imported goods really cost you is out of date now. We’d re-run the duty and surtax position on each product line once a year before your buying season, and again whenever an order is announced or a remission you’re relying on nears its end.

Closing thoughts

Importing rewards attention paid before the goods move rather than after they arrive. Classification, origin paperwork and whose name goes on the declaration are all settled when you place the order, and all three are expensive to unwind afterwards. The bookkeeping side, by contrast, is a set of rules you configure once and mostly leave alone.

How we handle it

We set up the coding in your books so duty, surtax, freight, insurance and brokerage land in the value of your inventory while the border GST doesn’t, then reconcile the tax you claim back to your Commercial Accounting Declarations rather than to your broker’s invoices. We prepare the GST/HST return, and we check what a late shipment does to your closing inventory before year-end.