Canadians Buy a Car in the USA

With the recent rise in value of the Canadian Dollar, it is currently cheaper to buy many vehicles in the USA and then import the car. In many cases, vehicles are much cheaper in the U.S., but that's if the dealer will actually sell one to you.

Many dealers are telling Canadians that they can't or won't sell to them. This is apparently because of concerns over their dealer franchise agreement with the car manufacturers, like GM, Toyota and Honda, among others.

I contacted 4 Toyota dealers in New York and 1 in Vermont and they said Toyota USA does not allow sales to Canadian residents.

Just recently, a Newfoundland couple filed a discrimination complaint with the Maine Human Rights Commission and announced plans to sue five car companies, after they say more than 80 New England car dealerships refused their business. That story posted on the National Post

The federal competition bureau says there's nothing illegal about the practice.

But basically, General Motors, Ford, Chrysler, Jeep, Dodge, and Honda and Toyota were seeking to maximize profits by not allowing Canadians to take advantage of their strong dollar and buy new cars in the United States, where prices are much lower.

Savings can be significant. A $40,000 Cadillac Escalade in the United States now fetches about $80,000 in Canada.

Last month, consumer advocacy groups in Canada filed a class-action lawsuit in Ontario Superior Court seeking $2 billion in general damages and $100 million in punitive damages from General Motors, Honda, Chrysler and Nissan for allegedly fixing car prices 25 per cent to 35 per cent higher in Canada than in the United States.

Apparently I've heard some dealers bending the rules, selling new cars with 500 Kilometers (about 312 miles) as used cars.

For those of you that are looking into doing this, here are some tips for importing a car into canada.

As a general rule, used cars that are at least 15 years old can be imported from the U.S.A. and are not subject to safety and emission equipment requirements. Age is not determined by model year; the month of importation must be at least 15 years after the month of manufacture of the vehicle.

If your vehicle is less than 15 years old and was manufactured for sale in the U.S., you must first determine whether it qualifies for importation. Transport Canada's Registrar of Imported Vehicles (RIV) program ensures that qualifying vehicles are modified, inspected and certified to meet Canadian safety standards.

Upon arrival at Customs, a qualifying vehicle will be entered into the RIV program. The registration fee is $197 in Quebec and $182 in other provinces. Within 45 days, the vehicle must be altered at your expense to meet Transport Canada requirements (it may need daytime running lights and metric labels for instruments, for example). You won't be able to register and license the car in Canada until it is modified and inspected. The RIV Web site contains a list of eligible vehicles and detailed information about typical modification and inspection requirements.

Vehicles that are eligible for importation will be subject to import levies including customs duty and GST. Customs duty is generally based on the price paid for the vehicle and the percentage rate of duty varies depending on the vehicle's country of origin. For example, a vehicle imported from the U.S. that was manufactured in the U.S. is duty-free. However, a British-built car imported from the U.S. is subject to a duty of 6.1 per cent, the same rate applied to British vehicles imported directly from Britain.

If your collector car has air conditioning, working or not, you will pay an excise tax of $100. There are additional levies if your vehicle weighs more than 2,007 kilograms (4,425 pounds).

Finally, GST will be charged at the rate of six per cent of the total of the purchase price plus the customs levies.

When you have satisfied all the import requirements, a critical document called a Vehicle Import Form will be given to you by customs, your broker or the RIV program, depending on the circumstances of your importation. Without this piece of paper, you will get only a blank stare from your provincial licensing authorities.

Before heading off to your licensing bureau, you'll need to satisfy the provincial requirements. In Ontario, for example, your car must pass a safety-standards inspection. You will also need a Drive Clean inspection certificate if the vehicle is more than three model years old and less than 20 years old.

In addition to the fees for registering your newly imported car, provincial authorities may collect sales tax on the price you paid for the vehicle. Don't bother asking why provincial sales tax applies to a sales transaction that occurred outside Canada.

The information presented here has been condensed for brevity and is subject to change. There are special rules for vehicles imported in certain circumstances, for example by former residents returning to live in Canada.

For customs information about importing vehicles into Canada, contact the Canada Customs and Revenue Agency's automated information service free of charge at 1-800-461-9999. You can also find information on the CCRA's Web site at www.ccra.gc.ca.