Recent Steering You Right articles
By Jordan W. Charness
Last week we discussed some of the possible problems that could pop up when purchasing a car on an online auction site. As Internet transactions become more common, more and more people will be turning to the Internet to buy all sorts of things, including cars. Of the several automobile purchases on eBay I’ve heard about, most of have turned out alright as long as the buyers remained prudent.
Let’s say that you found your dream machine in a nearby U.S. town. Since it’s only about four hours or so away, you can easily go down and check the car out after you’ve placed the winning bid on eBay. It would be prudent not to give any credit card deposit or any other type of deposit until you’ve actually seen the car. Sometimes this is possible and in others it is not.
Let’s also say that your best friend is a car mechanic and is willing to travel down to the States with you to check out the car. Since we are making this a perfect world we might as well have your mechanic friend declare the car a true gem. We’ll even let him whisper in your ear that with the current currency exchange you got a sweetheart of a deal. All you need to do is hop in the car and drive home. Right? Wrong!
Even in a perfect world things are just not that simple. In order to import a car across the border you must comply with both U.S. and Canadian laws. The Americans want to be sure that what is being exported is legal (as do the Canadians). The most important rule is to make sure that your paperwork is in order. You’ll need an American certificate of title, certificate of registration, the invoice, and receipt for your payment. Make sure that your receipt is for the real price that you paid or else your car may be seized when you try to take it across the border.
Let’s hope in your perfect world you remembered to bring down a flatbed float to bring the car back home. When the car is sold to you in the States they will remove the plates and you cannot get a transit sticker that will take you across the border and be valid on our side. Not only that, U.S. export control requires about 72 hours for them to do the paperwork.
One idea would be to flatbed the car as close to the border is you can get and store it somewhere in a safe storage facility. Don’t just park it overnight in a shopping centre! Proof of where you stored it will be very important to you as you’ll see later.
The Americans will check to be sure that the car has not been stolen or comprised of stolen parts. They will make sure that there is no reason to restrict the export of that particular vehicle and they will probably charge for the privilege of checking this all out. Sometimes the paperwork is done in less than 72 hours and giving them a call after the first day and a half or so might save you some time.
When your paperwork is ready you can finally bring the car to the border. Once again you’ll have to go to export control so they can check the car out and make sure that it is indeed the car reflected in the paperwork. They will also search the entire vehicle to make sure that you are not trying to sneak drugs or other contraband out of the country. (The Canadians will do the same when you get to their side of the border)
This is where your storage receipt comes in handy. Tell the inspectors that you had the car stored while waiting for the paperwork to be done. Show them the receipt and tell them that as far as you know there’s absolutely nothing in the car that would be contraband. As long as you are telling the truth (and they can usually tell) if they find something you may avoid being arrested or having the car seized.
Once the Americans finally let you out of the country, you still have to get it into Canada. You’ll drive to the little gate that you usually pass-through at the border but this time when they ask you if you have anything to declare you will tell them that the car on the trailer behind you is being imported. You will of course be asked to pull over and report to import control. Now the fun begins.
The Canadians will want to look at all the same paperwork that you’ve just shown the Americans three minutes ago. They will assume that the car is not stolen since the Americans already checked that. They will however be particularly interested in the declared sale price. Canada Customs usually uses a published automobile evaluation book to ascertain the fair market value of your car. Since the taxes that you pay are based on a percentage of the value of the vehicle this can lead to a healthy debate.
Obviously if you bought a car in the States it’s because you thought you got a better deal that you would if you bought it here. If the real price that you paid for the car is less than the listed price you’ll have to convince Canada Customs that a) this really was the price you paid, and b) there was a good reason why you paid so much less than its Canadian value.
Once everyone is agreed on the value of the car you’ll pay a fee for the privilege of importing it plus GST and duty on the value of the car. You won’t pay provincial sales tax at this point although it will catch up with you when you register the car in most provinces. You will however pay an additional $100 excise tax if the vehicle you’re importing has an air conditioner. If the air conditioner is broken you still pay the excise tax.
Once you’ve passed any provincial requirements you’ll be able to drive the car home to proudly show your wife or husband who can tell you that they never really liked that type of car in the first place.