Canadian cross boarder shopping (Long)

   / Canadian cross boarder shopping (Long) #11  
JDCAN said:
GordNovo not a 100 percent true. Any business can't just claim PST exempt. If you are a video store renting videos are you going to claim pst exempt for "agricultural" purpose?? I mean sure you could file that but when they come and audit you that will not qualify. If you declare PST exempt for "agricultural" purpose you better be in the business of something to do with "agricultural" purposes. You will find yourself in some trouble. Once again sure you can BS and lie and file bogus claims but the chances of an audit are high and can land you in some heat.

And in regards to the GST, you can't write that full amount off in 1 fiscal quater, even tho you pay it all at once. You get to write off that amount over a period of 4 to 5 years.

Also you can't write off 100% of the purchase price if some of the use is for personal. That includes the GST charge. If 50% is for business and 50% is for pleasure, most legit accountants would advise you not to declare 100 percent of it. If they do in a scenario like that, get a new accountant. If you keep the tractor parked at your work and never bring it home and use it mostly for work only, then knock yourself out and write the full amount off.
JDCAN you might want look into your assertions a little more closely.

The fact is that GST paid on a business asset is an input tax credit for a GST-registered business. It is fully refundable in the first year (assuming 100% business usage). I think you're getting this mixed up with the asset value (completely different.. and yes it is depreciated over a 5 year period, 10% first year, and the rest over the remaining 4 years (once again assuming 100% business usage)).

Regarding the scenario you mentioned, anyone who operates a video store and tries to write off a compact utility tractor has serious head problems. If you read my post a little more closely, I say that the tractor 'may be used for agricultural purpose'. It's up to the business owner to make that prudent interpretation.

The point I'm making is that most acreage owners may be able to find a way to write off many of their "soft costs" with a property-based business. Finding a strategic and legitimate way to utilize your tractor on paper (and in the yard!!) and reap the tax-saving benefits can pay significant dividends in the long run. Based on rough estimates, one can expect to save up to 45% off the cost of the purchase price and operating costs of the tractor.

It's all about leverage.

GordNovo
 
   / Canadian cross boarder shopping (Long) #12  
canoetrpr said:
Excellent post. Good to know of a US dealer that will deal hassle free with Canadians and good on JD for honouring the warranty across North America.

I'm still not sure I get why PST is not payed at the border. I've chatted with others that have bought Kubotas over the border and it sounded to me like they paid PST and GST.


Canoetrpr trust me no P.S.T. If you import a car even tho P.S.T will be required you don't pay that at the border. CBSA (Canadian Border Service Agency) does not collect PST. You will only pay the PST when you register the car.

So say you import a ferrari and keep it in your garage for 10 years until you finally drive it, you will only pay the pst when you goto drive it. In otherwords you would not pay the pst for 10 years.

If you import a tractor when will you go and plated it at the DMV like a car? Never , so pst will not be required.

Same goes if you buy live in ontario and buy a tractor from Quebec. If quebec is shipping out of province no PST is required.

If you are thinking about buying from USA call Javan at Mutton Power. He is very nice and easy to deal with. He can also arrange shipping cheap.

When I bought my 2520 with the extra goodies I saved 9000. If you have any further questions feel free to PM me, I will be more than happy to help and answer any questions like I did for Dekay.

Cheers.
 
   / Canadian cross boarder shopping (Long) #13  
DeKay said:
Hi all. First time post, long time lurker. I just recently became a member of the JD clan through a different route than most. This post might be of interest to other Canadians looking at buying some green paint and saving some money in the process.

Earlier this summer I finally decided to get myself a tractor to help out on our 25 acres. The old JD 216 just wasn't up to the task anymore. Thanks to this site and others, I narrowed my search pretty quickly to the JD 2305 and Kubota 2350. I eventually decided on the 2305, primarily for the fact that taking the various implements on and off was so simple (gotta love that 200CX and that iMatch system).

Anyhoo, I thought I'd get a ballpark price from the Kubota dealer and that went a lot as I would have expected. He noted the items I wanted, came up with a price, and knocked some percentage off of list to give me a number that didn't look too bad. Then I crossed the street (literally) to my local JD dealer and they put together a price for me. The difference was they were sticking to their list price.

Me: "This is more than I was hoping to spend. Is there some way we can get this price down?"
JD: "Well, you don't need to buy that tiller right away. That would take the price down."
Me: "That's not what I meant."

So, the 2305 was my first choice but the Kubota was a significant saving. Option 1 was to cave and pay the significant extra $$$ for the 2305 to a dealer who was not prepared to deal. Option 2 was to save the coin and settle for the Kubota.

That was when I came across this post from (the now unbanned!) JDCAN in which he talked about buying a tractor from a US dealer and bringing it in across the border. So I got ahold of Javan at Mutton Power Equipment and I was amazed at the cost differences I was seeing. After a bunch of emails back and forth, here is what I calculated.
Code:
Exchange Rate    1.065            
                Local Dealer  Mutton(US$)  Mutton (C$)    Savings
2305 Tractor      12,500.00
62" Mower          2,500.00
200CX Loader       3,400.00
Subtotal      18,400.00   13,399.00    14,269.94   4,130.06
Plus Tiller       2,500.00    1,799.00     1,915.94     584.06
Plus iMatch         400.00      250.00       266.25     133.75
Plus Block Heater    200.00      110.00       117.15      82.85
Plus Grill Guard     220.00      169.00       179.98      40.02
Plus Ballast Box     250.00      199.00       211.94      38.06
Cash Discount        -500.00        0.00         0.00    -500.00
Shipping           0.00    1,450.00     1,544.25  -1,544.25
Total              21,470.00   17,376.00    18,505.44   2,964.56
GST               1,288.20    1,042.56     1,110.33     177.87
PST               1,073.50        0.00         0.00   1,073.50
Grand Total      23,831.70   18,418.56    19,615.77   4,215.93

                                         Total Savings   17.69%
Now that is a serious chunk of change. A couple things the sharp eyed Canadian might catch though:
  • You didn't account for duties! These bad boys are duty free. Thank you NAFTA.
  • You didn't account for brokerage! Yeah, I had my companies broker do the paperwork and haven't gotten the bill yet. But I was told it will be around $40. Not much impact on the bottom line.
So I made another visit to my dealer with wife in tow, spreadsheet in pocket, and chequebook in hand. My wife buzzed the tractor around the lot, after which I said to the dealer that we should go inside and talk further. I pulled out my spreadsheet folded in half, showing my itemized list and his prices. He confirmed the prices were pretty much bang on. Then I unfolded the paper to show the difference between what he was asking and what I could get it for. He was astounded at the delta. I explained I wanted him to meet me somewhere in the middle, as there were some tax costs in there he couldn't do anything about (even though I was on the hook for way more in shipping than he would have been), and that there were some advantages to buying local. But the best he could offer was
  • knocking off the tire recycling fee (A whopping $4 per tire. There are only four tires! Do the math!)
  • rounding down to the nearest $50 increment
As a friend of mine later said, making an offer like that is like leaving a 17 cent tip in a restaurant.

So then the BS started to fly. Here are my local dealer's claims vs. reality.
  • You won't have any warranty in Canada for a tractor bought in the US. Totally bogus. JD's warranty is valid per region. North America is a single region (see here). Or you can call JD's warranty center at 1-866-993-3373. Ask for Cynthia :)
  • The tractor won't be set up. All the attachments will be in crates. Bogus again, as the (hopefully) attached picture of the the tractor as it showed up on the delivery truck illustrates. Javan also mentioned that JD mandates that their dealers do all of this setup.
So it was pretty obvious that my dealer wouldn't deal. He had his chance. I called Javan at Mutton the next day to get my order in. I received the tractor three weeks later with one hour on the hour meter, all labels attached, all manuals provided, and with the tractor and all implements in perfect condition.

Regrets? The only regret I had was the shipper let me down. It took two weeks from pickup to delivery. One week of that was sitting in the nearest city a half hour drive away. Very frustrating, but no fault of the good folks at Mutton. Would I do it again? In a heartbeat.

By the way, props to JDCAN who gave me a call and put my mind at ease for going this route. His approach and experience was very similar to mine. Only problem was he worked hard to convince me I should go with the 2520!!! But I stayed with the 2305 and I'm happy I did. Now that I've got it, I see that it fits my needs perfectly.

Hope all this info helps somebody else north of the 49th parallel...

Hi DeKay,

Did you need the dealer in the states to provide you with a Certificate of Origin? I've seen cases where this document hasn't been completed on new/used vehicles and customs refused entry of the goods without duty payment.

As long as you get your paper work in order, it's pretty straightforward. Just like everything else, it's 15% know-how and 85% confidence. If someone's willing to do their homework, it's truly amazing how much a consumer can stand to save!

GN
 
   / Canadian cross boarder shopping (Long) #14  
GordNovo said:
JDCAN you might want look into your assertions a little more closely.

The fact is that GST paid on a business asset is an input tax credit for a GST-registered business. It is fully refundable in the first year (assuming 100% business usage). I think you're getting this mixed up with the asset value (completely different.. and yes it is depreciated over a 5 year period, 10% first year, and the rest over the remaining 4 years (once again assuming 100% business usage)).

Regarding the scenario you mentioned, anyone who operates a video store and tries to write off a compact utility tractor has serious head problems. If you read my post a little more closely, I say that the tractor 'may be used for agricultural purpose'. It's up to the business owner to make that prudent interpretation.

The point I'm making is that most acreage owners may be able to find a way to write off many of their "soft costs" with a property-based business. Finding a strategic and legitimate way to utilize your tractor on paper (and in the yard!!) and reap the tax-saving benefits can pay significant dividends in the long run. Based on rough estimates, one can expect to save up to 45% off the cost of the purchase price and operating costs of the tractor.

It's all about leverage.

GordNovo


GordNovo I just went thru a full GST audit and I can assure you that you can't write off the full GST payment in 1 fiscal quater on equpiment purchases. Computers, cars, tractors, shelving units etc. You have to deprecate the GST in the same rate you depricate the equipment purchase. Trust me I agured with the GST lady, it makes no sense since I pay out the gst right away. Why can't I claim it in 1 quater? Well the fact is the tractor does not become worthless after 1 quauter so you have to spread out the gst claims. Once again call up big brother and check your facts. You will see I speak the truth.

Lastly most users that only own 1 mini tractor will hardly ever qualify for a 100 percent write off, most 1 owner users will use an item like that for personal. Revenue Canada is not that stupid. Even if you own a small company that could take advantage of a mini tractor but still use it to cut your 2 acres on your personal home , you can't claim 100 perecnt of it.

Once again I am not a revenue tax collector but I am postive Canada would not allow every user a full 100 percent write off.

In the end you can file anything you want, but once again if they find out you use it for personal and you have been saying it's 100 percent write off you will be in more trouble than good. You probally would be better served to declare your claim proper.

To each their own
 
   / Canadian cross boarder shopping (Long) #15  
GordNovo said:
Hi DeKay,

Did you need the dealer in the states to provide you with a Certificate of Origin? I've seen cases where this document hasn't been completed on new/used vehicles and customs refused entry of the goods without duty payment.

As long as you get your paper work in order, it's pretty straightforward. Just like everything else, it's 15% know-how and 85% confidence. If someone's willing to do their homework, it's truly amazing how much a consumer can stand to save!

GN

Not to sound like a smart arse but cert. of origin are easy to obtain and in most cases not needed. For vehicles yes I would never suggest the import without them, but in most cases you just need to keep a cert of origin on file for 12 months, just incase CBSA comes back and asks for it. Atleast that is what CBSA rules state. Even if a custom agent that is processing the entry questions the country of origin in the case of John Deere tractor labelled head to toe MADE in USA it's pretty easy to import one without a cert of origin.

I don't see any custom agent dening an entry unless you BS the dollar value.

Still can't hurt to have the simple 1 page doucment on hand.
 
   / Canadian cross boarder shopping (Long) #16  
JDCAN said:
GordNovo I just went thru a full GST audit and I can assure you that you can't write off the full GST payment in 1 fiscal quater on equpiment purchases. Computers, cars, tractors, shelving units etc. You have to deprecate the GST in the same rate you depricate the equipment purchase. Trust me I agured with the GST lady, it makes no sense since I pay out the gst right away. Why can't I claim it in 1 quater? Well the fact is the tractor does not become worthless after 1 quauter so you have to spread out the gst claims. Once again call up big brother and check your facts. You will see I speak the truth.

Lastly most users that only own 1 mini tractor will hardly ever qualify for a 100 percent write off, most 1 owner users will use an item like that for personal. Revenue Canada is not that stupid. Even if you own a small company that could take advantage of a mini tractor but still use it to cut your 2 acres on your personal home , you can't claim 100 perecnt of it.

Once again I am not a revenue tax collector but I am postive Canada would not allow every user a full 100 percent write off.

In the end you can file anything you want, but once again if they find out you use it for personal and you have been saying it's 100 percent write off you will be in more trouble than good. You probally would be better served to declare your claim proper.

To each their own
Hi JDCAN, I'm sorry to hear about your audit woes. I just went to the Canada Revenue Agency and found the following content on Claiming ITC (input tax credits) on depreciable capital.

As longs as you're able to show that the use of the tractor (or any other capital cost for that matter) is 'primarily' used for the commercial ventur, then the full amount can be claimed as an ITC (within that reporting period).

The full article can be found at this link below:

RC4022 - General Information for GST/HST Registrants

I respectfully refer you to the text in RED



Claiming ITCs for capital property

Capital property for GST/HST purposes is based on the meaning of the term for income tax purposes. It is:
  • any depreciable property. This means property that is eligible or would be eligible for a capital cost allowance for income tax purposes; and
  • any property, other than depreciable property, from which any gain or loss if you disposed of the property would be a capital gain or capital loss for income tax purposes.
In general, capital property is property you buy for investment purposes or to earn income. It may include:
  • real property, such as land or a building (see "Claiming ITCs" for information on claiming ITCs for real property); and
  • personal property such as equipment or machinery that you use in your business.
Other examples of capital personal property include:
  • photocopiers, computers, and cash registers;
  • furniture and appliances used to furnish places such as offices, lobbies, and hotel rooms; and
  • free-standing refrigerators, ovens, and other large appliances (built-in appliances are fixtures that are usually considered to be part of the real property).
Note
Capital property for GST/HST purposes does not include property described for income tax purposes in class 12 (such as chinaware, cutlery, or other tableware costing less than $200), class 14 (certain patents, franchises, concessions, or licences for a limited period), or class 44 (a patent or a right to use patented information for a limited or unlimited period). You can claim ITCs for these items based on the rules for operating expenses.
Capital personal property

The general rules for claiming ITCs for capital personal property such as computers, equipment, and office furniture are as follows:
  • If you use the capital personal property primarily (more than 50%) in your commercial activities, you can claim a full ITC.
  • If you use the capital personal property 50% or less in your commercial activities, you cannot claim an ITC.
Example
You buy a computer for $2,000 plus GST/HST. You will use the computer 60% in your commercial activities and 40% for personal use. Since you will use the computer more than 50% in your commercial activities, you can claim an ITC for the full amount of the GST/HST you pay for the computer.
 
   / Canadian cross boarder shopping (Long) #17  
Hey Gordnovo where did you find this statment , you posted this in your reply.

As longs as you're able to show that the use of the tractor (or any other capital cost for that matter) is 'primarily' used for the commercial ventur, then the full amount can be claimed as an ITC (within that reporting period).

I read everyting you posted but no where did I see you could claim that ITC in the same reporting period. I did read the above but where did you find that?

In my case I did not have over 50% of tractor write off so maybe that could explain why I can't remit the full gst payment in the quater.

With that said the audit was a breeze. I have a great accountant. 12 years of business it was bound to happen and thankfully I practise good accounting and keep very detailed books. I guess it was just a random audit to make sure we are doing everything correct.

I got some m8's that have had 3 to 5 audits within 5 or 6 years.

The main point is very few users will get the full 100 percent write off on a baby john deere purchase. So expecting 100 percent refund on the GST is not something I would bank on if you are looking at buying a tractor from USA.

Clearly as you explained it comes down to the line of business and reason for purchase.
 
   / Canadian cross boarder shopping (Long) #18  
JDCAN said:
Not to sound like a smart arse but cert. of origin are easy to obtain and in most cases not needed. For vehicles yes I would never suggest the import without them, but in most cases you just need to keep a cert of origin on file for 12 months, just incase CBSA comes back and asks for it. Atleast that is what CBSA rules state. Even if a custom agent that is processing the entry questions the country of origin in the case of John Deere tractor labelled head to toe MADE in USA it's pretty easy to import one without a cert of origin.

I don't see any custom agent dening an entry unless you BS the dollar value.

Still can't hurt to have the simple 1 page doucment on hand.
Hey JDCAN, you should check the stamp cast on the arm of the 200CX loader....... "MADE IN CHINA". Plus I'm just guessing here but I don't think the Yanmar engines are American made.

Also, for those following this thread for more than the shear entertainment value, this "simple 1 page document" is know as Form A and can be obtained from the Canada Boarder Services Agency. Failure to produce this document at the border when requested will result in either you leaving your equipment at the border or incurring the full import tarrif to bring it across. I respectfully refer you to section 7 of the CBSA Step by Step guide to importing. See section in RED.

Canada Border Services Agency - Small and Medium Enterprise Centre - Importing Guide



SME Centre

A Step-by-Step Guide to Importing

In this sectionBefore Importing

Before importing goods into Canada you must:
  1. Obtain a Business Number from the Canada Revenue Agency (CRA) for an import-export account:
  2. Identify the goods you plan to import. You must have an accurate description of the goods you plan to import before proceeding.
  3. ..........
  4. ..........
  5. ..........
  1. Once you have a tariff classification number, you must determine the rate of duty, which is also found in the Customs Tariff.
    • Most Favoured Nation (MFN) Tariff
      Goods originating from all countries, except North Korea and Libya, are entitled to use the rate of duty specified under this column.
    • Applicable Preferential Tariffs
      This column lists reduced rates of duty for goods based on trade agreements such as the:
      • North American Free Trade Agreement (NAFTA);
      • United States Tariff (UST);
      • Mexico Tariff (MT);
      • Mexico-United States Tariff (MUST);
      • Chile Tariff (CT);
      • Canada-****** Agreement Tariff (CIAT); and
      • Canada-Costa Rica Tariff (CRT),
      or those based on special tariff provisions such as the:
      • General Preferential Tariff (GPT);
      • Least Developed Country Tariff (LDCT);
      • Commonwealth Caribbean Countries Tariff (CCCT);
      • Australia Tariff (AUT); and
      • New Zealand Tariff (NZT).
      The requirements of the particular trade agreement or tariff treatment must be satisfied in order to benefit from a preferential duty rate. You must possess a valid certificate of origin for the specific trade agreement at the time of importation. For example, to claim the UST you must have a valid NAFTA certificate of origin. Various proof of origin requirements exist for all other preferential tariff treatments. These can include Form A, Certificate of Origin or the Exporter's Statement of Origin. In addition, the goods normally have to be shipped to Canada from a beneficiary country on a through-bill of lading.
    A complete list of countries eligible for the above tariff treatments can be found in the front of the Customs Tariff. Regulations on origin are in Memoranda series D11 (D11-4 and D11-5).
 
   / Canadian cross boarder shopping (Long) #19  
GoroNovo I import for a living. I can assure you a cert of origin is not needed. It is highly recommended but hardly the end of all ends.

In regards to the motor being made in Japan, let me ask you a simple question.

Where do all those parts, china moldings, japan motor etc. etc become a tractor?Hmm ya in the USA, so the tractor becomes labelled made in USA, regardless if the motor was made in Japan. The motor is not what is being imported but a full on finished tractor.

All those parts form and become a tractor in the good old USA. So since you are importing a fully built tractor made by John Deere in USA, CBSA wants to no where that unit becomes a tractor and it's clear the tractor is USA made.

In todays world of internet and google , custom agents do have access to these tools, they can find out quickly where stuff is made.

Can you imagine the millions of shipments that show up at the border with no Cert of origin what would happen if canada refused all of them?

I have a big sticker on my cx200 loader that says made in Canada welland ontario. The rest of my tractor is plastered with made in USA.

I will tell you right now I had no cert of origin when I imported it, and am willing to beat neither did Dekay.
 
   / Canadian cross boarder shopping (Long) #20  
JDCAN said:
I got some m8's that have had 3 to 5 audits within 5 or 6 years.

These m8's aren't running video stores with their John Deere tractors, are they? :D

JDCAN said:
The main point is very few users will get the full 100 percent write off on a baby john deere purchase. So expecting 100 percent refund on the GST is not something I would bank on if you are looking at buying a tractor from USA.
The truth is any business owner who uses their tractor 'primarily' for business purposes can write off the full GST ---end of story.

The origin of the purchase (USA or Canada) has nothing to do with it.

JDCAN said:
Hey Gordnovo where did you find this statment , you posted this in your reply.

As longs as you're able to show that the use of the tractor (or any other capital cost for that matter) is 'primarily' used for the commercial ventur, then the full amount can be claimed as an ITC (within that reporting period).

I read everyting you posted but no where did I see you could claim that ITC in the same reporting period. I did read the above but where did you find that?

I made my statement based on the first sentence in the following link to the Government of Canada website:

GST/HST - Sole Proprietors - Time limits for claiming ITCs

See statement in RED.


Time limits for claiming ITCs

Most registrants claim their input tax credits (ITCs) when they file their GST/HST return for the reporting period in which they made their purchases. You may have ITCs that you did not claim when you filed the return for the corresponding reporting period. In general, we allow you to claim any unclaimed ITCs in your returns that meet the following condition:
  • Your ITCs must be claimed in a GST/HST return filed by the due date of the return for the last reporting period that ends within four years after the end of the reporting period in which the ITC could have first been claimed.
Example
You are a quarterly filer and you buy office furniture in the reporting period October 1, 2005, to December 31, 2005, for which you can claim an ITC. The due date of the return is January 31, 2006. You can claim your ITCs in any future return filed before January 31, 2010.
 

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