Upgrade time! Custom duties questions (in Canada)

[BoubaFris]

Hi dear PS friends!

I purchased some diamonds online from the US and I am looking to upgrade now. Have anyone have previous experience on how the cross border custom duties work in this instance? I had already paid duties in Canada when I got the stones.

Is there a special way to declare them at the customs so that I don't need to pay duties again? I would pay custom duties only on the top up amount.
I asked several vendors but they all are not too sure about this. Canada customs said that I would need to pay full amount and then ask for refunds. Seems very troublesome. So I was wondering if anybody has done it before? And how it was declared?

Many thanks in advance!

 

[canuk-gal]

HI:

There is no duty or excise tax. Excise tax was eradicated in Canada 20 years ago unless "new" government has brought it back.

Only other named taxes, such as GST and PST apply. While it has been a few years, I recall a standard form with original receipts with the GST (and PST). The dollar exchange has to be calculated into this.

FWIW, I found the Customs department easy to deal with. You have your original Customs records and they have a copy.

cheers--Sharon

 

[flyingpig]

First to be clear, you did not pay any custom/import duty as loose diamonds or jewellery pieces made in USA are exempt from this. You paid GST/PST/HST.
So essentially, what you are asking is a sale tax refund.

My question is if your case qualifies for a sale tax refund.
You are not returning your diamonds to cancel the original transactions. The previous transactions are still valid. You are just getting credit toward the next purchase.

When a car dealership buys back your car and honor some credit toward the next car purchase, do you get a sale tax refund for the original car?? I don't think so.

For more information.
http://www.cbsa-asfc.gc.ca/import/courier/crp-prio-eng.html

But I am not a import broker.. I am curious to know.

 

[BoubaFris]

Sorry my bad. I am referring to the HST.

Thank you for the replies. Just to clarify my query. I had already paid HST on the original diamond, hence I should be paying taxes on the difference/top up amount. When I upgrade the stones, the vendor will declare the full value on the form for insurance purposes. I don't want to pay taxes on the full declared value of the jewelry, which would essentially be paying twice the HST on the original value of the stone.

 

[flyingpig]

Sorry. I don't think that is how it works.
It is not like you trying an item and returning it for an exchange for a higher priced item within 30 days.

There is big difference here between exchange vs trade-in/buy back.

If CRA or the border services agency allows this, I would be very surprised. It would be a serious tax loop hole, I think CRA is smarter than that.

Say you bought a diamond for 5k.
Your new diamond is 8k.
What you are proposing is you should pay taxes on 3k (8k-5k), which is going to be
(8k-5k) + (8k-5k)*12% HST
However, this is not how such transaction normally works. It works more like
8k + 8k*12% HST - (8k-5k)

In most cases, you use the credit from trade-in toward the entire purchase, not to reduce the original purchase price.

In order for what you propose to happen,
1. the vendor reduces the declared value of the new stone, based on the trade-in value of the original stone.
or
2. the vendor gives you a full refund for the original stone You file a claim for a full HST refund for the original stone. And you buy a new stone.
I don't think either will happen.

 

[BoubaFris]

Sorry. I don't think that is how it works.
It is not like you trying an item and returning it for an exchange for a higher priced item within 30 days.

There is big difference here between exchange vs trade-in/buy back.

If CRA or the border services agency allows this, I would be very surprised. It would be a serious tax loop hole, I think CRA is smarter than that.

Say you bought a diamond for 5k.
Your new diamond is 8k.
What you are proposing is you should pay taxes on 3k (8k-5k), which is going to be
(8k-5k) + (8k-5k)*12% HST
However, this is not how such transaction normally works. It works more like
8k + 8k*12% HST - (8k-5k)

In most cases, you use the credit from trade-in toward the entire purchase, not to reduce the original purchase price.

In order for what you propose to happen,
1. the vendor reduces the declared value of the new stone, based on the trade-in value of the original stone.
or
2. the vendor gives you a full refund for the original stone You file a claim for a full HST refund for the original stone. And you buy a new stone.
I don't think either will happen.

Thanks. I understand your point. Guess the same rationale goes for bringing back the stones to change their settings

 

[Suspenders83]

Hmmm... I've wondered about this as well.

Perhaps you could give the CRA a call and explain the situation to find out what the best course of action is?

 

[flyingpig]

When I trade in my car, computer game, or camera, I do not get any sale tax refund. The ratinale should be the same, which is they rip you each and everytime you make a purchase.

 

[BoubaFris]

Lol!!