Taxes, Duties & Brokerage Fees: What are U.S. sites hiding?

You always appreciate a great deal, right? And often enough the great deal is available online, cross-border. But, remember… there are 2 sure ways to get a nasty surprise when shopping online. The first is to spend your money on a shady website, and the second is to get your bill spiked with taxes, duties and brokerage fees. You probably already know how to avoid fraud when buying auto parts online… But what about hidden fees? The majority of American sites don’t discuss the details of these elusive charges because, honestly, they don’t need to. And it’s bad for business. Duties, taxes, and brokerage fees can come out to an additional 100%+ of the original charge. Ouch! So if you want to avoid a shopping horror story, ask yourself… What is the real cost of checking out your cart cross-border? …Plus Shipping & Handling If you live north of the 49^th parallel but want to shop in the States, you can forget about free shipping. Your shipping chargers will be based on the number of items you buy, their weight and dimensions, as well as the shipping distance and shipping method. Yes, it’s kind of complicated. So read the fine print carefully. Most websites offer a shipping estimate before check-out. But it’s only that – an estimate. You need to factor in the currency exchange rate for the price of your merchandise, as well as for the shipping charges. Don’t gloat if the exchange rate is in your favour. Credit card companies will use an inflated rate instead of the market rate. And they will charge an additional fee for the automatic currency conversion made during payment. Keep this in mind: opting for the cheapest delivery method to save a few bucks may cost you. UPS and FedEx standard shipping will be subject to the most brokerage fees once your package gets to the border. FedEx Priority or UPS Expedited might make more sense. Brokerage Fees Once your package gets to the border, special employees hired by your courier company will fill out all the paperwork required to get your packaged processed by Canada Customs. The hefty fees for this service, the brokerage fees, will be passed onto you. A brokerage fee can really catch you by surprise because it’s not administered by the Canadian government. It can run as high as $50 dollars on a $20 item. For larger times it can often go up to $500 or more. Even products that are not subject to any duty or tax can be quoted at $50 or higher. Brokerage fees vary. So if you’re set on shopping in the States read your courier’s service guide or call their local number for more information on their policies. Customs & Duties The products you’re importing may be subject to customs and duties. The amount of duty depends on the type of item, its value, and its country of origin. Duties are hard to estimate accurately. But if you want to have a go, you can reference the cryptic Canadian Customs Tariff. Or you can contact the Canadian Border Information Service during business hours and speak to an officer. Be ready to provide exact information on your purchase, including country of origin, manufacturer, composition, intended use, and pricing and payment information. From my own research, the applicable duty on imported automotive parts is around 14%. But here is something to smile about: NAFTA and other trade agreements decree that products manufactured in the U.S., Canada, Mexico, or Chile are subject to lower duty or no duty. To qualify, your imported goods must be for personal use and must be marked as made in a NAFTA country. If the value of your package is over $1,000 you may be asked to provide a formal statement of NAFTA compliance. Canada Customs agents may decide to be particular. It’s a good idea to get a written document confirming your product’s country of origin. The online store should be willing to provide this for you. Canadian Taxes on Imported Goods Tax is inevitable. You cannot evade Canadian taxes by shopping online in the States. Every purchase will include additional tax charges. Some sites will charge these taxes directly, but it’s definitely not a set standard. Most times, Canadian taxes will be charged by your courier, once your package is delivered to you. And they will be calculated on the value of your purchased goods including the applicable customs and duties! Don’t be tempted to evade your taxes! Some merchants will offer to mark down the dollar value of your purchase, or label it as a gift. This may work in saving you some money, but it’s illegal and considered fraud. And if fraud doesn’t scare you, consider that your courier will insure your parcel up to its declared dollar value. If your packaged is damaged or lost, you will end up holding the short end of the stick. So, what’s my official advice? Save yourself a headache. Shop locally and support your own economy. It’s actually cheaper. What do you think? Let me know in the comments below!