Written by: Irvin Schein

It is trite to say that there has been a renewed interest in cross-border shopping since the Canadian dollar began to gain strength against the US dollar some time ago.

Although I have not studied the statistics, I would bet that the recent increase in exemptions for Canadian travellers purchasing items outside of the country is resulting in further cross-border activity. 

Most people interested in the subject know, for example, that a Canadian traveller returning after an absence of 24 hours can now bring back $200 worth of goods exempt from duty.  That figure has been increased recently from the previous $50.

Travellers away for 48 hours can now bring back $800 worth of goods as opposed to the former $200.

All of this has been announced and repeated over and over again in the media.  What nobody seems to have reported, however, is what happens if you exceed the new exemptions. 

When the 48-hour exemption was $200, and a traveller brought back $300 worth of goods, the traveller would be obliged to pay HST and any duty on the $100 excess.  The traveller would be given credit for his or her $200 exemption. 

As matters stand today, the same principle applies.  A traveller away 48 hours can bring back up to $800 worth of goods without any additional payment.  If the traveller brings back $900 worth of goods, duty/HST is calculated on the excess of $100. 

One would have assumed, perhaps, that the same rule would apply to a traveller who is away only 24 hours.  Under the current regime, there is a $200 exemption.  Let’s say the traveller is away for 24 hours and brings back $300 worth of goods.  One might assume that he would be given credit for the $200 exemption and assessed duty/HST on only the excess of $100. 

Guess what.

That is not correct.  In the case of a traveller away only 24 hours, if the traveller exceeds the $200 exemption, duty/HST is calculated on the entire amount of the purchase.  There is no credit at all for the $200 exemption that otherwise would have applied.  Note that this is not the rule for a traveller away 48 hours or more.  It only applies to the traveller away only 24 hours.

So in essence, for someone away only one night, the fact that there has been a recent increase in the exemption is completely irrelevant if the exemption is exceeded. 

So for all you outlet mall shopaholics out there, take note – either stay away longer or watch your spending!

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