Border guards are being told to wave through cross-border shoppers as quickly as possible during peak traffic hours, by either ignoring potential shoppers or unofficially raising the duty-free limit, according to documents obtained by several news organizations.
While that sounds like music to the ears of the hundreds of thousands of Canadians who regularly seek bargains south of the border, it sounds like trouble for Canadian businesses and taxpayers’ groups.
The rule was put in place because of skyrocketing overtime costs at the Canada Border Services Agency (CBSA), according to the National Post — the apparent result of the Harper government’s cuts to staffing levels at the border agency.
"During periods of peak traffic, I’ve seen [the federal duty exemptions] raised anywhere from $150 to $200 and more per person in order to alleviate the traffic strains," Jason McMichael, a spokesperson for the Immigration and Customs Union, told CTV News.
McMichael told the Post that while the government claims not to have cut any front-line staff from the agency in in its latest budget cuts (which eliminated 250 positions at the CBSA), 70 front-line staffers took early retirement offers and have not been replaced.
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The Rules Have Changed
The biggest change to cross-border shopping is the increased allowances to duty-free purchases. Canadian travellers outside the country for more than 24 hours can now bring in up to $200 in goods. The previous limit was capped at $50. <a href="http://www.flickr.com/photos/blmurch/" target="_hplink">Photo courtesy of: Flickr/ blmurch </a>
The Rules Have Changed: Part II
As of June 1, Canadians who find themselves outside of the border for 48 hours or longer will have their allowance double from $400 to $800. The limit for travellers outside of the country for more than seven days has also changed. <a href="http://www.cbsa-asfc.gc.ca/media/facts-faits/106-eng.html" target="_hplink">Their limit has increased by $50 from $750 to $800</a>.
It's All About Timing
For those looking to capitalize on the new duty-free rules, here's some advice: plan accordingly as the new rules are still time sensitive. For example, Canadians can't claim duty-free status on any goods if their trip less than 24 hours. Also, the date you left Canada <a href="http://www.taxfreetravel.com/Canada Duty Free Exemptions" target="_hplink">doesn't count towards your trip length</a>, but the day you return can.
Personal vs Commercial Use
The duty-free status still only applies if your purchases are for personal use. That means it can be for your house, a souvenir, or anything else for your own personal enjoyment. However, if it's anything for commercial use, expect to pay full duties. Also, while you can bring back gifts for other people under your duty-free allowance, that allowance can't be shared with other people.
The Rules To Alcohol Still Apply
The rules regarding alcohol purchases outside of Canada still hold true, despite the increased in allowance. For example, you can only claim duty-free status if your trip is 48 hours or longer in length. Also worth noting is that only <strong>one</strong> of the following items can count towards your allowance: 1.14 L (40 oz.) of liquor; OR 1.5 L of wine; OR 24 X 355 ml (12 oz.) containers of beer.
Shoppers can expect to rake in many goods across the border with Canada's new rules, but certain items are still off limits. For example, certain fruits, meats and vegetables are prohibited from entering Canada as are weapons such as guns, mace, and pepper spray -- something worth noting if you find yourself at the local gun show.
The Rules To Tobacco Still Apply
Much like alcohol, the rules to tobacco are still in effect. Canadians need to be outside of the country for at least 48 hours but can bring in any of the following as part of their duty-free purchase: 200 cigarettes; 50 cigars or cigarillos; 200 tobacco sticks; and 200 g (7 oz.) of manufactured tobacco.
Ready Your Receipts
Now that the purchases have been made, all that's left is to get them back into Canada and that's where receipts come into play. Canadian Border Services Agency workers may ask for proof of any purchase and having them on hand may be the difference maker between a five-minute process and a five-hour delay. Receipts can also help verify how long your trip was based on the date of your purchases.
Don't Forget To Pack Your Goods
Canadians can now make more purchases over the border but they still need to be sure that they can bring everything back. That's because the CBSA still limits the duty-free status to goods on your possession when returning. There is one exception to this rule though: travellers gone longer than seven days can have the duty-free status apply to their <a href="http://www.cbsa-asfc.gc.ca/media/facts-faits/106-eng.html" target="_hplink">goods delivered to them via mail, courier, or by a delivery agency.</a>
The result has been “burnout” among border officers, some of whom work six to 10 days in a row. Some border crossings are having a hard time filling overtime shifts.
That means a significant additional cost to taxpayers. According to documents obtained by the Post, the CBSA is now spending more than $59 million annually on overtime costs, with Quebec the leading region for overtime payouts at more than $14 million annually.
But according to the Post, orders to ignore cross-border shopping, or to raise the minimum amount for which shoppers can be charged duty, have been issued for the past 13 years, well before the recent round of budget cuts.
While cross-border shoppers are likely to rejoice at the news, the situation has businesses and taxpayers' groups worried.
"(Businesses) are going to have a tough time if you’re letting border guards let shoppers come right through," Mike Klassen, a spokesperson for the Canadian Federation of Independent Business, told CTV News.
He said small businesses near the U.S. border would be particularly impacted, adding they are just looking for a "level playing field."
McMichael of the Immigration and Customs Union says the government should increase staffing levels at the border.
"It’s been the union’s contention all along that if borders were properly staffed, then there’d be no need to compromise any element of our job," he said, as quoted at CTV News.
Cross-border shopping has been particularly appealing in recent years, with the Canadian dollar hovering near parity with the U.S. greenback.
However, shopping south of the border could lose some of its appeal, if projections that the loonie is in for a fall prove to be true.
And some market analysts have noted a “Target effect,” in which the arrival of the large discount U.S. retailer in Canada has spurred some consumers to stay at home instead of shopping across the border.