"We'd need a Canadian entity to get our import GST back."
We hear this from brands shipping DDP into Canada more than any other single line. It isn't true, and for a business moving real volume it's an expensive thing to believe. Every commercial shipment that clears Canadian customs is charged 5% federal GST on the duty-paid value of the goods. A brand landing CAD $2 million of goods a year is paying roughly CAD $100,000 at the border, before duties. Whether that money comes back depends on one thing: whether the importer is registered for GST/HST when the tax is paid.
This post covers the actual rule, what changed with CARM, and the order to do things in so the reclaim works.
The 5% you pay at the border
When commercial goods enter Canada, the Canada Border Services Agency (CBSA) charges 5% GST under Division III of the Excise Tax Act. The tax is calculated on the duty-paid value: the value for duty of the goods plus any customs duty owed.
Two details matter here. First, this 5% is the federal GST only. The provincial portion of HST is generally not collected at the border on commercial imports; it follows separate rules once the goods are in Canada. Second, the tax is charged to the importer of record, the entity named on the customs declaration. Who that entity is determines who can get the money back.
The myth, and the actual rule
You do not need a Canadian subsidiary, branch, or fiscal representative to recover import GST. Canada's GST/HST system is open to non-resident businesses.
Here is how it works. A non-resident that registers for GST/HST and imports goods for use in its commercial activity can claim an input tax credit (ITC) for the Division III GST it paid at the border. The ITC is claimed on the GST/HST return and offsets the tax the business collects on its Canadian sales. The CRA's guidance for non-residents (RC4027) and its policy on ITC entitlement for imported goods (P-125) set this out.
Registration is mandatory once worldwide taxable supplies pass CAD $30,000 in a rolling 12 months, which most brands selling into Canada at any scale will exceed. Below that threshold, voluntary registration is available. Keep this in mind: the CRA can require non-resident registrants without a permanent establishment in Canada to post security as a condition of registration. The amount depends on your circumstances, so confirm it before you file.
What about staying unregistered? There is a fallback, section 180 of the Excise Tax Act, which lets an unregistered non-resident pass the ITC entitlement to its Canadian customer. In practice this hands your refund to someone else and adds paperwork for them. It is a workaround, not a strategy.
What CARM changed
The CBSA Assessment and Revenue Management system (CARM) became the official system of record for commercial imports on 21 October 2024. The transition measures that softened the change have now all expired:
Since 20 May 2025, every commercial importer needs its own financial security posted in CARM to get goods released before paying duties and taxes. Riding on a customs broker's security is no longer possible.
Since 31 December 2025, the measure that let brokers use their own business number at release for new non-resident importers has ended. A new non-resident importer now needs its own import-export business number (BN15) and CARM registration before shipping.
The direction of all of this is the same: Canada wants the importer itself registered, secured, and directly liable for duties, taxes, and penalties. For non-resident importers shipping DDP, that responsibility can no longer sit with an intermediary.
The order that makes reclaim work
The registrations are not difficult individually. Brands lose money on the timing. GST paid at the border before your GST/HST registration exists is generally not claimable as an ITC, because ITC entitlement depends on being a registrant when the tax became payable. The sequence, before goods move:
- Obtain a Canadian business number with an import-export (RM) account, the BN15 that appears on customs declarations.
- Register for GST/HST with the CRA, and post security if the CRA requires it.
- Register your business on the CARM Client Portal and enrol in release prior to payment with your own financial security.
- Only then ship, with your business named as importer of record.
Do it in this order and the 5% charged on each import becomes a recoverable ITC on your next GST/HST return, claimable for up to four years in most cases. Do it after the goods have shipped and you are paying tax under a setup that cannot claim it back.
Where STREAM fits
This is the work STREAM does. We handle the registrations, act on the compliance obligations before goods move, and run the VAT and GST reclaim process so import tax comes back to your business instead of staying at the border. That is one country in a platform covering 190+ markets, built on 5.4M+ transactions to date.
If Canada is one of several markets where you are paying import taxes with no reclaim process, it is worth a conversation. Book a demo at https://www.vatitstream.com/book-a-demo and we will walk through your shipping lanes.
