It’s Halloween night, and rain pounds on the glass of your quiet office. “We’ve never had these issues at customs before,” you say to no one in particular. Your voice is low and shaky, your fingers tapping a hasty tune on your desk, a bit more frantic than perhaps you intend. You knew you should have gone with a reputable broker, but you took a chance, and now here you are. 

You peer out the window. Out of the corner of your eye, you catch a glimpse of something in the parking lot. A hunched figure lurks among the street lights below. You blink, and it's gone. A trick of the light, you resolve, wiping the sweat from your brow. This CARM business has you spooked.

Suddenly, the phone rings. 

You feel your hands shake as you move towards the ringing device, praying it stops before you reach it. It’s ringing still as you press the glowing green button. The voice on the other line is a deep vein of ice straight to your heart. You drop it, standing from your chair in a panic. “No…it can’t be!” Suddenly, there’s movement just out of view. Your eyes snap up in horror - the figure! Despite yourself, you scream. 

Now, in your doorway, dripping from the rain, gaunt, and draped in threadbare rags, this figure stumbles into the light - it is your accountant gripping a revised budget! 

His jaw unhinges, releasing a whispered rasp:

“...we’ve incurred some penalties…” 

Night of the Overpaid Duty

Of course, like most horror stories, all of this could have been avoided with a bit of additional care and diligence. Among the most common extra charges our importer's face are related to unknowingly overpaying their duties and taxes. Which makes sense - it’s an incredibly complicated process, and there are many ways for it to get ghoulish, even for those with the good sense not to go into the basement. However, with some knowledge and friendly expertise, you can avoid your bottom line entering the horror house. 

In addition to reading on to find some of the more common ways this can happen, we encourage you to have a look at our guide on not overpaying for imports and then get in touch with our Trade Advisory Services team unless you’d prefer to share half your candy with the government this Halloween.

“Flee” Trade Agreements

Always check the closet and under the bed before doing any international trade because free trade agreements might apply to your imports. If that 10-foot-tall skeleton was entirely manufactured in a country with an agreement in place, you might be able to reduce your duties significantly, if not completely. For more information on FTAs and what they can mean for you, our article on FTAs and Certificate of Origins is a great place to start.  

Canada’s Duty “Draw-Bat” Program

Like a true creature of the night, there’s always a chance to get back up, even after it seems like you’re down for the count. Many products qualify for a Duty Drawback, which allows you to refund some or all of the duties you incurred in the importing process. These drawbacks typically fall into the following categories: 

1. Goods that are imported and later exported as-is.
2. Imported goods that are used to produce other goods for export, such as parts used to manufacture a product for export.
3. Imported goods that become obsolete, surplus, or are manufactured into an item that is obsolete or surplus.

For a full breakdown of everything involved in that program, please check out our “Canadian Duty Drawback” guide. 

“Tariff-eying” Classifications

Saying the wrong words to the incantation is a surefire way to spoil your witch's potion, just like how misclassifying your goods is a common way to pay more at the border. To learn how to weave more potent and accurate classification magic, we offer an entire on-demand course on the matter, but for those who just want to trust an expert’s well-used and updated grimoire, be sure to call upon your loyal familiars in our Trade Advisory Services Team. 

“Entropy” Types

If the creepy old gas station owner warns you about the road ahead, maybe you should listen because the wrong sort of entry type can significantly up your import costs before you ever arrive at your cousin’s cabin in the woods. Getting your entry type wrong can be a stumble that your business can ill afford, and it may not even be your fault. Different brokers can interpret things differently, leading to a litany of additional charges, so working with a team that hangs their hat on compliance as an area of expertise, like the friendly faces here at PCB, is so important. Have a look at this article from our Cost of Customs Compliance series for a particularly frightening tale of how we saved a company potentially hundreds of thousands of dollars. 

The Borders Have Eyes

Nobody blames the young couple who bought a haunted house. How could they know why the house was so cheap? Just like those newly haunted homeowners - even innocent errors and mistakes can carry consequences. For importers, these can include a barrage of additional penalties and fees, and depending on the severity, they can become quite the thriller all on their own. Add to that customs becoming more effective at identifying and cracking down on slip-ups and slip-throughs, and your bottom line could be due for a jump scare. 

New Verification “Ghouls”

As the months go on, and systems like CARM continue to grow in sophistication and application, rules that were once regularly missed are now like bedsheet-covered adults trying to get free candy - easily caught. This surge in technology means you must be even more vigilant in your compliance and declarations before attempting to import or export goods. The other option, of course, is to let us handle it for you. For a full suite of what we can offer you under this new CARM regime, contact our Trade Advisory Team or go directly to our CARM specialists for all your CBSA Assessment and Revenue Management needs. 

Compliance “Hiscary”

There is no need for a Halloween metaphor here. There is nothing more terrifying than an audit, and your history of complying with the rules and regulations of the CBSA absolutely contributes to how often you are audited for infractions of those rules. It stands to reason that repeat offenders are common, and regular rule-breakers are easy pickings for auditors looking for targets. To avoid this kind of reputation, there are specific steps you can take - some of which have already been discussed in this article - but the best thing you can do is choose a broker you trust and let them handle the entire affair. A regular pitfall is having multiple brokers managing the same freight, which can cause no end of issues for your international trade business. 

We here at PCB want to be your one-stop brokerage resource, and we are compliance-focused! That means you can rest easy knowing that your imports are safely crossing within the rules, your business is earning a reputation for easy crossings, and you are doing everything you can to avoid a monster mash with an auditor.   

“Unearthing” Hidden Upcharges

Like trying to remember if garlic or silver wards off vampires, choosing the right Incoterms® is crucial to your business’s ongoing success. Some businesses select garlic every time because it’s easy and what they’ve always done, but it leaves them woefully unprepared when the werewolves come. For example, DDP is one of the more popular Incoterms® businesses default to, but there is a strong case against its reactive, broad-brush use. After all, there are 11 Incoterms® to choose from, and they each offer a unique arrangement that can treat you to otherwise unattainable savings or trick you into unforeseen upcharges. 

For bespoke advice about which Incoterms® make sense for your business, download our helpful Incoterm Guide or contact our Trade Advisory Services team for hands-on advice. 

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With these helpful reminders, you should be in good shape to handle the ghouls and goblins lurking in the often dark woods surrounding international trade. Still, stay vigilant because if there is one lesson we can learn from horror movies, it’s that just because you made it through this time doesn’t mean you’ll survive…the sequel!