Good afternoon.
Thank you, Madam Chair, and members of the committee, for inviting us here today to speak with you.
My name is Scott Winter. I'm the Director of Trade and Tariff Policy at the Department of Finance. I'm joined today by my colleague, Mr. Carlos Achadinha, who is the Senior Director of the Sales Tax Division.
I'd like to begin today by explaining the general policy goals of Canada's tariff regime and the goods and services tax—the GST—followed by a short description of the treatment of imported vehicles, including importations on a temporary basis, and how this treatment fits with those goals.
Customs duties are established under customs tariff legislation, and applied on imported goods, where applicable, for a variety of policy reasons, including domestic industry protection, as well as revenue generation.
The GST is Canada's national sales tax. It is a broad-based tax that applies to most goods and services acquired for consumption in Canada. The GST is generally levied on imported goods in the same manner as it is imposed on domestic purchases, in order that the imported goods do not benefit from a tax-based competitive advantage over goods sold in Canada.
In light of these considerations and principles, Canadian residents who import a vehicle into Canada are required to pay applicable import duties and taxes at the time of importation. There are certain exceptions to the general rule that customs duties and the GST apply to the importation of vehicles, including for those imported on a temporary basis.
For example, customs duties and the GST do not apply to vehicles temporarily imported by Canadian residents for the purpose of transporting their own household or personal effects into or out of Canada, or as a result of an emergency or unforseen contingency.
Subject to conditions specified by regulation, Canadian residents are also able to temporarily import, free of customs duties and GST, a foreign-registered vehicle to reach their destination in Canada and return directly to a point outside of Canada within 30 days. However, the vehicle may not be used for other personal reasons while it is in Canada.
The current framework was designed with the broad policy goals of avoiding competitive disadvantages or inequities for Canadian businesses, for example, vehicle dealers in Canadian border communities, as well as minimizing the risks of duty and tax avoidance that could negatively affect government revenues, and create an uneven playing field for Canadian businesses.
The collection and administration of customs duties and the GST on imported goods, as well as the exceptions for temporarily imported vehicles that I mentioned, fall under the responsibility of Canada Border Services Agency—CBSA. My colleague from the CBSA will outline how the agency currently applies and administers the customs duties and GST on temporary importations of vehicles.
Thank you, once again, for allowing us the opportunity to speak today. We welcome any follow-up questions the committee may have.