Understanding CBSA Refund Rules
($2 Threshold, Interest Rule, and 85% Refund for Perishable Goods)
Importers in Canada sometimes pay more customs duties or taxes than required, or goods may become damaged, unusable, or returned. In such situations, Canadian customs law allows importers to request refunds or drawback of duties.
However, the Canada Border Services Agency (CBSA) applies certain thresholds and conditions before processing refunds.
This article explains three important refund rules that every importer and customs broker should understand.
1. The $2 Minimum Refund Rule
Source
Customs Act (Canada)
Rule
CBSA does not process refunds or collections of duties or taxes when the amount is less than $2.
This rule exists because the administrative cost of processing a refund may exceed the refund amount.
Practical Example
Importer originally paid:
Duty assessed: $101
After review, correct duty should have been:
$100
Difference:
$1
Result:
CBSA will not issue a refund because the amount is below the $2 threshold.
2. Interest on Late Duty Payments (91-Day Rule)
When importers do not pay duties on time, CBSA may charge interest.
Source
Customs Act (Canada)
and
CBSA Memorandum D17-1-5
Rule
Interest on unpaid duties starts on the 91st day after the payment becomes due.
Explanation
The importer must normally pay duties at the time of accounting for goods.
If payment is delayed:
Period
Result
Day 1–90
No interest charged
Day 91 onward
Interest begins
Example
Duty payable:
$10,000
Payment timeline:
Day 60 → No interest
Day 95 → Interest begins
3. 85% Refund for Perishable or Fragile Goods
Sometimes imported goods cannot be sold or used because they are damaged, spoiled, or destroyed.
In such cases, importers may apply for a drawback refund of duties.
Source
CBSA Memorandum D7-2-1
Rule
For certain perishable or fragile goods, CBSA may allow a refund of up to 85% of the duties paid.
This allows the importer to recover most of the duties while recognizing that some administrative costs remain.
Example
Duty originally paid:
$1,000
Goods spoiled or became unusable.
Refund allowed:
85% × $1,000 = $850
The importer absorbs the remaining 15% loss.
Why These Refund Rules Exist
The Canadian customs system balances two objectives:
Administrative efficiency
Small amounts like $1 or $2 are not processed to avoid unnecessary administrative costs.
Fairness to importers
When goods are damaged or duties are overpaid, CBSA provides mechanisms to recover duties.
Compliance discipline
Interest rules encourage importers to pay duties on time.
Practical Advice for Importers
To avoid problems with refunds:
- Keep accurate import documentation
- Verify duty calculations before payment
- Monitor payment deadlines carefully
- Apply for refunds promptly when goods are damaged or returned
A knowledgeable customs broker can assist importers in filing proper refund claims.
Conclusion
CBSA refund procedures involve several important thresholds and rules.
Key points to remember:
- Refunds under $2 are not processed
- Interest begins on the 91st day for unpaid duties
- Up to 85% duty refund may be available for perishable or damaged goods
Understanding these rules helps importers manage customs costs and compliance more effectively.
Disclaimer
This article is provided for educational purposes only. Customs laws and procedures may change. Importers should consult the Canada Border Services Agency (CBSA) or a licensed customs broker, barrister, or solicitor for professional advice.