On March 29, 2012, Canada’s Minister of Finance tabled the 2012 Budget and 2012 Economic Action Plan and announced increases in the traveller exemption limits for returning Canadians and residents of Canada. The following statement is on page 108 of the 2012 Economic Action Plan:
Increasing Travellers’ Exemptions
Economic Action Plan 2012 proposes to increase the value of goods that may be imported duty- and tax-free by Canadian residents returning from abroad after a 24-hour and 48-hour absence to $200 and $800, respectively.
Starting on June 1, 2012, the exemption limits will be increased as follows:
- The exemption limit for travellers who have been away for more than 24 hours and less than 48 hours will increase to $200 from $50; and
- The exemption limit for travellers who have been away for more than 48 hours will increase to $800 from $250.
The current limit of $50 for a trip that is less than 24 hours will remain as is. This means that if a Canadian travels to the United States on a day trip of cross border shopping (away less than 24 hours), the exemption limit remains unchanged at $50. If the trveller goes over the exemption limit (e.g, they purchase or receive $100 worth of goods), they must make a declaration to the CBSA when returning, and must pay applicable duties and HST on the $100 value for duty. This will help retailers in Canadian border cities because it keeps the lower limit for the shortest trips and forces Canadians and Canadian residents to stay one night outside Canada in order to qualify for the over 24 hour exemption of $200. Since the HST on $199 is 29.85 in Nova Scotia (15%) and 25.87 in Ontario (13%) and 23.88 in British Columbia (12% until April 2013), it may not make financial sense to an individual to stay outside Canada long enough to take advantage of the higher exemption limit.
The current 7 day exemption of $750 for trips 7 days or longer will be captured by the $800 category for trips exceeding 48 hours.
This change will allow the Canada Border Services Agency (“CBSA”) to spend less time looking at receipts in wallets and going through bags and luggage. The CBSA will be able to use their limited resources more efficiently and focus more on border security (instead of being a duty and GST/HST collector from passengers/travellers).