Customs Duty Drawback Guide

Duty Drawback is a refund of duties, fees and taxes paid on certain categories of goods imported into Canada that are

• import commercial goods that are later exported in the same condition
• import goods to produce other goods for export
• destroyed imported goods that are obsolete or surplus, or that are manufactured into goods that are obsolete or surplus

Similar to how sales tax is refunded when you return an item to a store, you can claim a duty refund when you export an item that was previously imported.

What are the Different Categories of Customs Duty Drawback?

There are several different categories of Duty Drawback, but the two most common categories are manufacturing and unused merchandise.

If you import into and export goods from Canada, then there’s a good chance you qualify for Duty Drawback. Even if you don’t do both, if importing and exporting happen along your supply chain, you may still be able to qualify.

The driving factor for qualification is the exportation or destruction of goods that were imported. Companies across different industry sectors have taken advantage of drawback as long as they (or their suppliers or customers) import and export in sufficient amounts to sustain a drawback program.

What Duties and Fees are Eligible for Duty Drawback?

This step-by-step process will show you how to file a duty drawback claim, after your goods have been cleared through Customs.

Send an application to Canada Border Services Agency

Claims can be made directly in the CBSA Assessment and Revenue Management (CARM) Client Portal.

Gather Documents

When you are ready to file, you will be required to gather documentation for CBSA. Some of the required documents include but are not limited to :

• a copy of export sales invoice
• bill of landing or other shipping document
• other proof of export as requested by Canada Border Services Agency
• if you are not the importer, a waiver on commercial documentation or original and copy of any: Form K-32A, Certificate of Importation, Sale or Transfer
• if you are not the exporter, waiver on commercial documentation or original and copy of any: Form K-32B, Drawback Certificate of Sale for Exportation
• evidence if your exports are affected by the Canadian-US-Mexico Agreement (CUSMA)

Keep Record of Your Claims

Accurate and diligent record-keeping is a key component when filing for drawback. After filing, you must maintain all submitted records for an additional six years from the date of drawback claim liquidation. CBSA might also contact you for additional documentation, clarifications, or questions about documents that were submitted.

The Duty Drawback program has the potential to provide companies with significant duty savings, but it might not be suitable for everyone since it is a time-consuming process that requires extensive resources. Having access to the right historical data is key to performing a cost-benefit analysis and ultimately filing for drawback where the return is worthwhile. Although you can self-file, working with an experienced customs broker or trade attorney can ensure information is filed correctly and accurately and help you navigate through the complexities.

How to Get Started

The Duty Drawback program is often underutilized due to the lack of awareness or not knowing where to start. It is a complex process, but UPS® Trade Management Services is here to guide you through the filing process.

Duty Drawback FAQs

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