What is actually recoverable on a customs broker's invoice

Duty is not a tax you can claim

This is the single most common misconception, and it is worth being blunt about. Customs duty is imposed under the Customs Tariff. Input tax credits exist under the Excise Tax Act and are available only for GST/HST. Duty is not GST/HST, so no amount of correct bookkeeping turns it into a credit.

Duty is a real cost, and it belongs in the cost of the goods, which usually means inventory and then cost of sales. Businesses that push duty into a tax account are not just misfiling a credit, they are also understating what their stock actually cost them, which quietly distorts margin on every subsequent report.

Duty makes your goods more expensive. It does not make your tax bill smaller.

It makes them more expensive twice over, in fact. Under subsection 215(1) of the Excise Tax Act, the value the 5% is calculated on is the value for duty plus the duty itself, and any other Customs Tariff, SIMA or excise amounts. That is why the GST figure on a customs document never equals 5% of your supplier's invoice, and why a reconciliation built on the assumption that it should will never balance.

The Ontario 8% nobody self-assesses

Commercial goods entering Canada are assessed the 5% federal GST at the border. Ontario's 8% provincial part is not collected there, which is where the trouble starts, because for some importers it is still owed.

Section 220.07 imposes the provincial part on goods brought into a participating province from outside Canada. Subsection 220.07(2) carves out goods brought in by a registrant for consumption, use or supply exclusively in the course of commercial activities, and that carve-out is why most importers never think about it. But exclusively is doing real work in that sentence.

The freight trap: zero-rated is not a credit

Freight transportation is where invented credits come from. The rules are specific and they mostly run in the importer's favour, which is the confusing part.

A freight transportation service is zero-rated when the movement is international: from a place in Canada to a place outside Canada where the charge is $5 or more, from outside Canada to a Canadian destination, or from a place outside Canada to another place outside Canada. Purely domestic movement, where origin and destination are both in Canada, is taxable at 5% GST or the relevant HST rate depending on the destination province.

So on an inbound shipment from Shenzhen or Rotterdam, the international carriage is zero-rated. The carrier charges nothing in tax, correctly. There is no credit to claim and there never was.

The domestic leg, which is where it gets interesting

Once the container lands, something still has to move it from the port to your warehouse. That leg looks purely domestic, so the instinct is to treat it as taxable and claim the GST.

Often that instinct is wrong, in your favour. Under section 10 of Part VII of Schedule VI, the domestic portion is also zero-rated where two conditions hold: the service is part of a continuous freight movement from an origin outside Canada to a destination in Canada, and the supplier maintains documentary evidence satisfactory to the Minister that this is so. The CRA gives an air waybill showing origin and destination as an example.

Everything then turns on the statutory definition, and it is longer than the phrase suggests. A continuous freight movement is the transportation of goods by one or more carriers to a destination specified by the shipper, where all the freight transportation services supplied by the carriers are supplied as a consequence of instructions given by the shipper. Two defined terms tighten it further: destination means the place the shipper specified at which possession passes to the consignee, and a shipper cannot be one of the carriers.

Two consequences follow, and they are the practical heart of this.

• If the shipper's specified destination was the port, the run from port to your warehouse is a new movement, not a continuation of the old one, and it is taxable.
• If you arranged the drayage yourself, that leg was not supplied as a consequence of the overseas shipper's instructions. You broke continuity, and no document the carrier holds can repair it.

So when a domestic drayage invoice on an inbound container arrives with tax on it, check your own booking before you call the carrier. The carrier can tell you what evidence it holds. It cannot tell you whether you severed the chain by booking that leg separately, and asking it to zero-rate something it cannot lawfully zero-rate helps nobody.

Outbound, the paperwork obligation reverses

Worth knowing if you also export. On the mirror case, a domestic leg feeding an export, section 7 requires you, as shipper, to give the carrier a declaration in prescribed form stating that the goods are being shipped for export and that the service forms part of a continuous outbound freight movement. The goods must actually be exported and the consideration must be $5 or more.

Inbound, the carrier carries the paperwork. Outbound, you do. An exporter who assumes the inbound rule runs both ways simply never files the declaration and pays 13% on pre-export domestic legs that did not have to bear it.

Reading the invoice line by line

That last row is the one to be careful with, because "disbursements" is a billing convention rather than a tax category. The line usually recovers duty and border GST the broker fronted for you. Those two amounts keep their own character: the duty stays non-recoverable, the GST stays recoverable on the strength of the customs accounting document. What matters is not to treat the disbursement total as though it were consideration for a service the broker supplied, and not to claim the GST twice, once from the customs document and once from this line.

Broker invoice formats vary more than they should. If yours does not clearly separate duty, border GST, fees, and the tax on those fees, that is a reasonable thing to ask them to itemise. Most will, and the request is a normal one.

The document behind the border GST is the Commercial Accounting Declaration, which replaced the old B3 when CARM became CBSA's system of record on 21 October 2024. If your 2026 invoices carry line items that were not there in 2023, that is usually why: since the transition period closed on 20 May 2025 importers post their own financial security in the CARM portal rather than relying on the broker's bond, and the administration of that shows up as a fee. It is a fee, so it is taxable and recoverable. It is not a disbursement.

One more case worth recognising: sometimes there is no GST line because none was owed. Schedule VII lists non-taxable importations, including goods whose supply would be zero-rated domestically and courier shipments from the United States or Mexico valued at $40 or less. A small courier entry with no tax on it is not necessarily a broker error.

Checking one invoice

• Take one recent inbound invoice and separate it into the six rows above. If you cannot, that is the finding.
• Find the duty. Trace where it landed in your accounts. If it is in a GST or tax account rather than the cost of the goods, both your credits and your margin are wrong.
• Find the international freight line and check whether any tax was actually charged on it. If your books claim tax the carrier never charged, fix that first, before anything else on this list.
• Find the border GST and confirm it appears exactly once in your recoverable tax, supported by the customs accounting document rather than the broker's summary.
• Check the rate on the brokerage fee against the rate on the goods. In Ontario they should differ, 13% against 5%. If a single blended tax code was applied to the whole invoice, nothing will reconcile.
• If a domestic leg was taxed, first ask who booked it. If you arranged that leg yourself, continuity was broken and the tax is correct. Only if it flowed from the overseas shipper's instructions is it worth asking the carrier what evidence it holds.
• If any part of your business is exempt — health services, residential rent, financial services — find out whether the Ontario 8% on imported goods has ever been self-assessed. It will not be on any document you hold.