Online shopping across the border? Expect added fees and do your research

Online shopping is becoming more and more popular, but the way duties and shipping costs are applied to purchases from international retailers can leave even the most seasoned shopper with an unexpected bill.

No one can avoid paying taxes and brokerage fees when a purchase is delivered by mail from outside Canada. And many purchases over $20 Cdn are subject to duty fees. The confusion comes in when, due to trade agreements, various duties are applied to some products, but not to others.

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The application of these fees seems unpredictable, leading to confusion for consumers. 

"Sometimes there aren't any [fees] and sometimes there are, and you don't know which is going to be which," said Bruce Cran, president of the Consumers' Association of Canada. "There doesn't seem to be any rhyme or reason to it."

He ​said these duties, as well as a wide range of shipping fees, can often increase the cost of a purchase by 30 per cent or more.

"I get calls all the time from people who think they're buying something for $35 and they end up paying $60," said Cran. "It isn't a very good setup for consumers at all, because we never really completely understand what we're dealing with."

The government has a site that helps to calculate the cost of duties and taxes, but even then, it's just an estimate.

Esme Bailey, senior media spokesperson with the Canada Border Services Agency, said Canada Post has a standard fee of $9.95 for international deliveries, while courier services like UPS and FedEx can charge more.

These shipping fees, in addition to duty fees, can add up. Bailey said it's important for consumers to do their research to avoid any surprises.

Basically, consumers should expect to pay, and consider it a happy surprise if you don't have to.

And if a fee seems too high, a consumer can refuse a package and request a fee readjustment or reassessment.

Border hopping

If a readjustment or reassessment doesn't work out for a consumer, there is another option: a handful of companies charge a flat fee for the use of an American postal code.

Canadians can ship their purchases there, and then pick them up. All they have to do is decide whether the savings on the item are worth the trip.

Cran, who lives in Vancouver, said he's about an hour away from a town called Point Roberts in the U.S. He said every Saturday morning, there's a lineup about a kilometre long of vehicles slowly moving through the border.

And he said they're not exactly going there for the sights.

"I'd say their main business down there could well be Canadians picking up their packages with an American address," he said. "There must be 20 firms down there that all they do is supply an address, and so they're only there to serve Canadians who want to pick up their stuff."

If the trip to the U.S. is 24 hours or longer, these shoppers can spend up to $200 on purchases duty-free. Shoppers do, however, have to pay duties and taxes on the total amount if they exceed $200.

Some companies take it a step further. Instead of just providing the U.S. address, they'll ship it, too. They can negotiate their own shipping and brokerage fees, which can offer some savings to the consumer.

In some cases, this cross-border option doesn't cut down on the final cost. But it does eliminate the possibility of getting an unexpected bill.

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'If there wasn't a benefit, they wouldn't be doing it.'

Shipllama is one of the many companies offering this service. The company says that even if the savings aren't any better in the U.S., there is no sticker shock, because customers can get an accurate estimate of what their shipment will cost, before they place the order.

"You can know exactly what it's going to cost you, and it helps the consumer decide whether or not it's worth the purchase or not," said Cassandra Cassar, the vice-president of information systems for the company.

And since some companies don't ship to Canada at all, this can offer Canadians more options.

Cran said he's not suggesting that people can dodge fees by shopping in the U.S., but there are likely savings to be had this way.

"If there wasn't a benefit to them [cross-border shoppers], they wouldn't be doing it."

Without changes to duty fees, online shoppers who want the choice that the international market offers will have to sit tight, and do their research before buying.