I'm a Canadian living in the U.S., driving a car that I love, a 2011 Subaru Impreza WRX. The possibility of moving back home to Toronto has arisen recently, and I want to be clear on the rules around bringing my car with me. The car was not manufactured in North America, so I know there will be fees. What can I expect to pay? What about having to pay HST, even though I've paid sales tax on the car already? And would I be better off trading it in here for something manufactured in North America, and then trading that in again for another WRX once I'm back in Canada? – Chris in Albany, N.Y.
You'll be facing the call of duty if you bring your American-bought Subaru back to Canada with you.
Because the WRX is built in Japan, you'll have to pay a 6.1 per cent duty on top of the GST and fees you'd pay to import a U.S.-built car into Canada – but figuring out how much it will be for a car you already own is tricky.
A Canada Border Services Agency spokesperson said the duty and GST get calculated at the border based on the price you paid for the car, including the original sales tax, converted into Canadian dollars.
Using the price you paid might make sense for a car you just purchased – but what about if you've owned it for a couple of years?
The GST and duty will be based on the Canadian Red Book value of your car, says Viraf Baliwalla of the Automall Network, a Toronto-based car broker. If you've been a U.S. resident for a year or more – and you've owned the car for at least a year – you'll get a $10,000 exemption, Baliwalla says.
The tax and duty will be based on the remainder. So, if a car had a book value of, say, $29,000 CAD, you'd pay tax and duty on $19,000. That would be $950 for GST and $1159 for duty.
"The Red Book value is usually much higher than what we'd buy a vehicle for in Canada or the U.S.," Baliwalla says.
The Red Book value can be as much as 20 per cent higher than the black book values you can find on the Internet, says the Alberta Motor Association.
On top of the GST and duty, there's a $100 federal excise tax if the car has air conditioning.
And you'll have to pay the $195 fee plus HST to the Registrar of Imported Vehicles (RIV).
Once you're back in Canada, you'll also have to pay to get it inspected at a Canadian Tire – the only places that do the inspections in the GTA – to see if it meets Canadian Motor Vehicle Safety Standards. If it needs upgrades such as daytime running lights to conform to Canadian standards, you'll have to pay for that.
To get Ontario licence plates, you'll have to get the car inspected to get an Ontario Safety Standards Certificate and a Drive Clean emissions report. The details are on the MTO website.
You'll have 30 days to register the car in Ontario, but there's good news: Ontario's Ministry of Transportation says you won't have to pay the provincial portion of the HST if you already own the car.
Would it be cheaper to buy a WRX in Canada to avoid paying the duty? The Automobile Protection Association doesn't think so – it will still cost more here, even with the dollar nearly at par.
"No, a used WRX is worth more here than there," says the APA's George Iny. "And, because it's a hot sports car, a one- or two-year-old WRX on the market here is very likely to have been hit or wrecked and rebuilt."
Baliwalla thinks you'll lose money by trading it in for a North American-built model in the U.S. to avoid the duty and then trading that car for a used WRX in Canada. "It would be a very bad option, financially," he says.
Sure, you would avoid paying duty, but you'd still would have to pay HST at the border on the full price of that interim vehicle.
Instead of trading it in, you might save a little money if you sell it privately, Baliwalla says.
"Our recommendation would be keep the WRX until it is close to the time to move, then sell it privately there," Baliwalla says. "Rent if you have to for the short term. Get a WRX here in Canada so it is waiting for him when he arrives."
If you do take your car with you, the RIV's website (www.riv.ca) walks you through the importation process.
You'll need to have a recall clearance letter from Subaru, and you'll need to let U.S. authorities know you're crossing at least three days in advance, the APA says.
Also, if you keep the car, you won't be covered for warranty repairs at dealerships in Canada. You'll either have to take the car to a Subaru dealer back in The States, or get it done at a Canadian dealer and submit the bill to Subaru USA for reimbursement.
"Keep in mind, this is basically a gentlemen's agreement and Subaru USA can change its policy at anytime," the APA says on its website.
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Clarification: The quotes from Mr. Baliwalla have been expanded for clarity.