As Canadians, one of our favorite things to do is to go across the border into the United States to take advantage of their superior shopping. In fact, one of the primary attractions of buying Windsor, Ontario real estate is that from Windsor it's just a short drive across the bridge from Detroit, Michigan and all its shopping malls. But as you well know, anything you buy outside the country is subject to a fee called duty when you return to Canada. Many wonder: what is duty, and why do we have to pay it? We'll attempt to answer those questions for you here.
Duty is simply another word for tax. Taxes are how the government raises funds to pay for things like universal health care and education, so they're not likely to be done away with any time soon. While HST or harmonized sales tax is the type of tax you pay on everything you buy in Canada, from catering services in Toronto to seafood in Halifax, duty is the tax you pay for the privilege of being able to bring goods you bought in another country into Canada.
Most people's experience with duty comes from the customs and immigration checkpoints along the border roads between Canada and the United States or from the customs inspections at the airport. In both cases, you are asked to declare how much the stuff you bought while out of the country is worth. Customs officers will often take the word of upstanding citizens like Toronto naturopaths and yourself, but beware that if you get caught lying to Customs and Immigration you're looking at huge fees or even jail time.
The reason our government requires us to pay duty on the items we buy in the United States is that if you're spending your money outside the country, the government is missing out on the sales tax you would have paid had you made your table rental in Burlington instead. Duty is an attempt to make up for the loss. However, since Canada wishes to foster good trade relationships with other countries, they can't discourage their citizens from supporting their allies' economies too strenuously. Therefore, personal exemptions were introduced.
Personal exemptions are the dollar amount worth of goods a single individual is permitted to bring back with them from another country, a number which varies depending on the length of your stay. This allows people who are doing their personal shopping or buying vacation souvenirs to avoid paying duty while preventing businesses from filling their commercial real estate in Kitsilano with cheaper foreign goods without paying for the privilege. Diplomats and foreign ambassadors are often exempt from duty as well since their jobs require so much coming and going.
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