While we'd all love to buy everything domestically in Canada, sometimes you don't have a choice. There's always excitement when purchasing goods online but then the dread sets in of whether you'll be dinged duties. Worse yet, if you've ever dealt with international shipments with UPS, you know about their ridiculous customs fees.
The good news is that there's a way to avoid paying UPS brokerage fees in Canada. In this article we're going to give a full rundown of what the fees actually are and a process called self clearance to get yourself out of paying those import fees.
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Here's what we're covering:
- Stop paying UPS Brokerage Fees
- Why are there import fees?
- How to avoid UPS brokerage fees
- Step-by-step instructions for self clearance of UPS packages
- Case Study
- Frequently Asked Questions
Stop paying UPS Brokerage Fees
We've gone through this in detail with DHL where they call it customs fees where we explained how to self-clear your own packages but having recently been slapped with a massive bill from UPS, we thought it'd be a great idea to answer those UPS-specific questions you might have.
The truth is, UPS is the worst when it comes to customs fees – not because the taxes and duty are different but because they charge something called “Brokerage Fee”.
So whether you've ordered that awesome gift for a travel lover, or an epic-sized world map with pins, or literally anything else you're buying online that comes from outside of Canada, we're going to explain what the heck is going on, how to give you step-by-step instructions for how to avoid it, and cover a few scenarios that you might be encountering.
Why are there import fees?
When you buy something internationally from say the United States, United Kingdom, or Hong Kong or a friend or family member ships you something, they have to declare what the item is and its value.
Like how we pay taxes on practically everything here in Canada, there are taxes on goods that you're importing through a courier like UPS. For shipments, there's more to it and it all sums up into what's called “Import Fees”.
Here's a breakdown of the common line items included in import fees and what they mean.
HST or GST + PST
This will depend on what province you're in but it's the baseline tax on goods that you're used to paying at home.
Can you avoid this: If you've been charge this, no.
Duty is a new variable that you're probably not used to seeing. I'll be honest, it's a bit complicated but it has to do with you importing goods into the country. Similar to how big companies have to pay extra duty when importing products to sell here, there's as similar charge at a small scale for individuals.
Figuring out the rates for duty is a bit more complicated but it very much has to do with the category of item that you're importing and where it was manufactured. This requires a good understanding of HS Codes and Trade Agreements.
Thankfully, there's a Canada Tariff Finder where you can find out whether there is duty on a specific type of item. It's not perfect but should give you an idea of what to expect if you're trying to figure out whether it's worth it to buy something or not.
As a generalization, if your item is from the US, the Free Trade Agreement (now called CUSMA) should apply and you won't be charged duty.
Can you avoid this: If you've been charge this, no.
TIP: Check out CBSA's basic calculator to give you an idea of the taxes and duties. You might have some trouble finding an exact category for the item you're shipping but try to find the closest one.
Then there's the infamous UPS brokerage fee. This is the name that they use and is synonymous with customs processing fee, broker fee, and clearance entry fee that other couriers will use.
Essentially, when a package is flagged for taxes and duty, UPS offers a convenience service to pay it for you so it's a seamless delivery process straight to your door.
In theory, this is great and for some the convenience factor is worth it but for some of us, it's shocking that service charge is as much as it is.
What's appalling is that out of all the primary couriers out there, UPS is the most expensive. It's honestly highway robbery.
Here's the current customs clearance rates (UPS calls these “entry preparation fees”) on shipments into Canada from international origins. All of these are in CAD and there's taxes on top of this fee.
- [$40.01 – $60] – $17.25
- [$60.01 – $100] – $20.55
- [$100.01 – $150] – $27.40
- [$150.01 – $200] – $31.30
- [$200.01 – $350] – $57.30
- [$350.01 to $500] – $63.75
- [500.01 to $750] – $85.85
- etc. etc.
Visit the UPS rate guide (go to Page 115) for the full chart.
Can you avoid this: Yes, keep reading.
To add insult to injury, there's something called a disbursement fee.
When UPS remits payment of duty/tax to the Canadian Border Services Agency (CBSA), on behalf of the customer, UPS invoices the customer. They charge a *insert expletive* fee for the invoice.
This is the greater of 2.7% of the duty/tax amount or $6 on UPS Standard Service or $10 on UPS Worldwide services.
Sneakily, UPS bundles the disbursement fee with the brokerage fee.
Can you avoid this: Yes, keep reading.
Import Collection on Delivery Fee
Fees on fees on fees.
UPS then has the audacity to then add something called an Import Collection on Delivery (ICOD) fee which is “assessed when collecting import charges on delivery”.
This is when somebody knocks at your door and gives you a package and tells you that you have to pay the fees in person. This is the fee they charge on top just to twist the knife after the initial stab.
NOTE: IN the e-mail you receive, it says the ICOD fee is $5. The official rate guide says it's $6 now.
Now this is interesting. Currently, because of the pandemic, UPS drivers are not allowed to take payment. So even if you're home to receive the delivery with import fees (including brokerage fee), the driver can't release the package to you unless you've paid online. In essence the ICOD fee can't be charged to you anyways right now. This will change of course when drivers can take payment again.
Can you avoid this: Yes, if you pay UPS online, they remove this fee but keep reading to find out how to avoid paying ICOD, brokerage fee, and disbursement fee completely.
How to avoid UPS brokerage fees
This is why you've come here and so there are 3 basic ways to avoid these import fees.
1) Don't use UPS
We're not trying to be snarky but seriously UPS is the worst. Avoid them at all costs unless you can buy from a vendor that is using a version of UPS where duties, taxes, and fees are all pre-paid.
Companies like B&H for camera and gear offer this which makes it so much easier.
If you're not using UPS, who should you use? We recommend USPS, Royal Mail, or any other local post office. They don't charge any type of customs or brokerage fees. Instead, they charge taxes and duties. Normally, I've found them to be much more lenient when it crosses the border and is given to Canada Post to deliver. I feel like you can get away with much more with them.
2) Declare the shipment under $20 CAD
The Canadian rule is that if the shipment is $20 CAD or less, it's not subject to taxes and duties.
In some cases, you can ask a vendor to declare the item for less value than its worth.
There are of course insurance implications here so if an item is declared as less value, if it goes missing or is damaged, the coverage (if purchased or built-in to the courier) will be according to the declared value. This is why most companies won't do this.
If it's friends or family, this shouldn't be an issue.
NOTE: Remember that Canada cares about the Canadian dollar value and not the foreign currency.
3) Declare the shipment as a gift and under $60 CAD
The other exception are gifts. Any gifts that are $60 CAD or less are also exempt from taxes and duties.
Again, either convince the vendor to declare it this way or get your friend/family to write the import slip that's stuck on the package accordingly.
For more details, make sure to check out CBSA's Determining duty and taxes owed clarification.
BONUS: There are also rules around samples and warranty returns but as an individual, that's a bit harder to pull off and we don't know what the tax-exempt value is.
Step-by-step instructions for self clearance of UPS packages
Most pages we've seen that cover the topic of how to avoid extra fees for international delivery services just list out the instructions at a high level with no explanation.
In our guide, we'll go through each step for Canadians in detail.
Step 1: Import charges are accessed
After the package is picked up from the country of origin, it'll make its way into Canada and cross a port of entry. It's in this processing facility that your package will clear customs and ultimately accessed taxes and duties.
There's a few likely ways you get notified:
- Your e-mail is attached to the shipment – You will receive an e-mail with the subject “UPS Update: Import Charges are Due”.
- If you already have a UPS My Choice account – You get notified of any packages delivered to a specific address and as a result, you'll get an e-mail with the subject “UPS Update: Import Charges are Due”.
- By phone – It's mandatory for the shipper to at a minimum to put the receiver's phone number so if they don't have an e-mail on file, they'll be calling to let you know. At that point, in theory you could let them know that you'd like to self-clear the package.
- You've been following the tracking number – There's always the UPS tracking page which will display that there's an import fee.
Important: Whatever you do, do not pay the import fees online. Once you pay, you've essentially accepted the UPS brokerage fees and there's no turning back.
Step 2: Call UPS to initiate self clearance
Once you either receive the e-mail or you see in the UPS tracking website with the line “Import charges are due for this package. Select Pay Now (where available) or pay at delivery.”, immediately call UPS.
Go to the UPS Contact Us page, scroll to the bottom and you'll see the customer service 1-800 number.
Call this number and explain that you'd like to self-clear this package. Have the tracking number in-hand.
The good thing is that the customer service representatives are well-versed in how this process works and will make the necessary changes in the system. There are no pressure tactics or anything. This might be a change from before where they've tried to play coy with this.
Don't bother with e-mailing UPS. Calling is the fastest and most direct way.
Another name UPS uses for self-clearance or self-clearing is “clears own”.
GOOD TO KNOW: According to UPS, you can still initiate self-clearance as late as the driver making their first failed attempted delivery. We were surprised to hear this when we asked UPS this question.
Step 3: Await UPS documentation via e-mail
Even though the UPS customer service agent has set the package to be reconsigned to you for self clearance, the document you need doesn't come into your inbox right away.
In our case, it took 36 hours for the e-mail with subject line “Shipment (insert tracking number)” to arrive. This is a highly manual process and comes straight from the office admin at the port of entry. In our case, this came from Windsor. In our case, the admin that responded worked the night shift (11PM – 5AM) and received a response at 12:56AM.
The document is two pages and comes in the form of a PDF.
The admin was nice enough to also link to the directory of CBSA offices.
Step 4: Look for your closest CBSA Inland Office
One of the biggest tricks of this whole process is knowing where to go in Canada to pay the tax and duty yourself as part of self clearance of packages.
The CBSA has many different types of offices around the country but the one that can do the type of processing you're looking for is called an Inland Office.
I won't list out all of them but here are a few offices that we've located:
- Vancouver – Vancouver Commercial Operations West (809) at 1611 Main Street, 412-4th Floor, Vancouver.
- Calgary – Calgary Air Commercial (701) at 175 Aero Way North East Unit 162, Calgary
- Toronto – Toronto Lester B. Pearson International Airport Commercial Operations (4,973) at 2720 Britannia Road East, Mississauga. On the map, it looks like it's literally in the airport but in reality it's outside of the airport and can be driven to.
- Montreal – Montreal (395) at 400 Place d'Youville, Montreal.
- Quebec City – Quebec (312) at 130 Dalhousie Street, Quebec.
- Halifax – Halifax Commercial (9) at 263 Susie Lake Crescent
To talk to someone directly at CBSA, call 1-800-461-9999.
Step 5: Visit CBSA Inland Office to Pay Tax and Duties
Before you leave the house and plan your trip to the CBSA Inland Office, make sure you have a print out of the documents UPS provided in Step 3. Also make sure you have a piece of ID. Your driver's license will suffice.
Each Inland Office will be set up differently so we can only speak from experience with the Toronto location.
The Toronto office is adjacent to the airport and is located on the first floor of a large office building. You'll likely see many courier trucks in the vicinity. Once you walk in, the Inland Office is to the right.
Speak to CBSA Officer
When you enter, you'll first head to the left and line up to speak to one of the CBSA officers. These officers are luckily in a much better mood than the ones at the airport.
You'll hand over your UPS document and ID.
The officer will enter the information into the system and print out paperwork that you'll need for the cashier. In some cases, they'll ask you to sit down and they'll call you up when the paperwork is ready.
This is a quick process and shouldn't take more than 10-15 minutes.
The cashier is at the back of the Inland Office where you'll queue again. The CBS officer will directly pass the paperwork to the cashier.
At the cashier, you'll pay the taxes and/or duties owed. You can pay by cash, debit, or credit card (American Express accepted). They said that they prefer not to handle cash at the moment.
The output of this step is a “Casual Good Accounting Document” stamped by the cashier that says “Duty Paid”. You'll also get the documentation you provided back where you'll notice that the UPS invoice is also has a CBSA stamp.
Step 6: Email photo of receipt to UPS
With the stamped “Casual Good Accounting Document” and the stamped UPS invoice in hand, you can either take a photo with your phone or scan the document. This is the proof you need to provide to UPS that you've completed the self-clearing and that the taxes and duty have been paid.
In the e-mail from Step 3, there'll be instructions for who to send this photo or scan to. In most cases, this'll be the admin from the UPS port warehouse. If they happen to be working night shifts, they won't be able to process your documents until they are back at work.
After this has been processed, you'll receive an e-mail back with confirmation that the package is now released for shipping. Your tracking will be updated according and start moving from the port warehouse to your local warehouse.
Step 7: Package is delivered
The final step is like any other package UPS delivers except there won't be any warnings of ludicrous import fees.
Your UPS tracking will be updated and your package will be delivered.
UPS brokerage fees are infuriating especially when you know they are the highest in the industry. Having learned how to avoid DHL custom fees, we applied the same learnings with our latest import fee surprise from UPS.
Something we often get asked is whether this process is worth it. In this personal case study, you'll see how avoiding UPS brokerage fees can be very much worth it.
I purchased a Lord of the Rings collectible coming from the United States and you'll see that UPS charged these additional fees: HST, Brokerage Fee, Duty, and taxes on fees.
Something that triggered some alarm bells was the fact they charged duty which didn't make any sense since was coming from the United States.
UPS Import Fee Bill Total: $232.19 CAD
After going through the self-clearance process with CBSA, I paid significantly less.
CBSA Taxes and Duty Bill Total: $89.37 CAD
Total savings: $142.82 CAD
Not only did we save the ludicrous brokerage fee (disbursement fee embedded), but we also avoided the bogus duty charges that were accessed.
Worth it? Oh yes!
Frequently Asked Questions
This depends on the value declared on the package. At a minimum it's $23.25 CAD + tax (brokerage + disbursement fee) but increases as the value increases.
There is unfortunately no substitute for going to an inland office in person. You cannot do self clearance of UPS packages online or over the phone.
In theory, UPS will not deliver a package with import fees unless they've been paid for ahead of time. That said, UPS has been known to deliver to your door and expect payment. Your best bet is to initiate the self clearance process as quickly as possible and while the package is still in transit.
If the delivery guy drops off the package at your door despite having import fees, expect to receive a bill in the mail. At this point, it is too late to self-clear the package because it is in your hands already.
Using the national post office of the originating company (i.e. USPS, Royal Mail) don't charge a brokerage fee if taxes and duty are accessed.
They cannot hold your package indefinitely. UPS says that they will hold your package for 5 calendar days before warehouse storage fees kick in ($20.00 + $0.04 per lb. per day).
ICOD is an acronym for Import Collection on Delivery. This is a UPS fee that's applied when the driver collects the import fee. Currently, it's $6 CAD + tax that's added to your import fee total.
Yes, you can refuse shipment. The package will then be returned back to sender.
You'll be surprised to hear that you have up all the way until the first failed delivery attempt to let UPS know you'd like to self-clear the package.
If you signed up for a UPS My Choice account (free to sign up), you'll receive an e-mail. Otherwise, shippers have to put a receiver phone number so if you don't receive an e-mail, they will be calling you. Now you know why e-commerce sites always ask for your phone number.
Officially, UPS says you have 2 business days from the point that you receive the self-clearance documentation or else the package will be shipped back to the sender.
UPS Worldwide Express Plus, UPS Worldwide Express, UPS Worldwide Express Freight, UPS Worldwide Express Saver, and UPS Worldwide Expedited services.
If import fees (including brokerage fee) was assessed, you will receive a bill in the mail afterwards that you'll be required to pay. UPS says that this should never occur but it has certainly happened to people.
Brokerage fees exist for Americans but only if the value of the duty exceeds $800 USD which is significantly more lenient than what it is for Canadians.
If you catch the package on its way in, the package will be held in the border port warehouse.
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