Did you know Canadian exporters could be leaving thousands of dollars on the table? If your business imports goods or materials—raw or as finished products—you may be eligible to get back the duties paid on those imports.

The Canada Border Services Agency (CBSA) Duty Drawback Program offers a strategic opportunity to improve cash flow, lower production costs and help you stay competitive in global markets. This article explains how the program works, who qualifies and why exporters with growing international operations should take a closer look.

The CBSA Duty Drawback Program allows Canadian businesses to recover customs duties and taxes paid on imported goods that are later exported. It applies to goods exported in their original form or after being made into something new through assembly or packaging. This flexibility makes it a valuable tool for businesses across industries.

Eligible recoveries under the program include:

• Customs tariffs
• Excise taxes

It shouldn’t be confused with the Duties Relief Program. Here’s how they differ:

Duties Relief Program:

• Suspends duties at the time of import
• Requires advance planning
• Ideal for businesses with predictable export flows

Duty Drawback Program:

• Refunds duties after export
• Can be claimed retroactively
• Useful for unexpected exports or missed recovery opportunities

Exporters with complex international supply chains often operate with tight margins and rising costs. Customs duty recovery can provide a much-needed financial boost by:

• Lowering the cost of goods sold (COGS): By recovering duties, you reduce the total cost of your exported products.
• Improving cash flow: Refunds free up working capital that can be reinvested in operations, marketing, or pricing strategies.
• Increasing profitability: Duty recovery helps offset rising input costs and supports competitive pricing.

“If you’ve imported something and you weren’t expecting a $12,000 customs fee, that’s a lot of money out of pocket,” says Carley Mortimer, senior knowledge product manager at Export Development Canada (EDC). “If you’re able to claim that back after exporting that good, that’s money coming back into your cash flow.”

Many business leaders don’t realize they qualify for the Duty Drawback Program. You can apply if you’re a:

• Manufacturer: Goods exported in the same condition or after manufacturing may qualify. However, consumables and goods not re-exported may not be eligible.
• Exporter: Businesses shipping goods abroad, including countries under the Canada-United States-Mexico Agreement (CUSMA)—depending on rules of origin and eligibility criteria.
• Importer of record (IOR): Companies responsible for bringing goods into Canada

To qualify, goods must be exported within four years of import (five years if destroyed), with proof such as import records, export declarations, or bills of lading. For a breakdown of required documentation, read our article on filing a duty drawback claim.

Exporters to the U.S. or Mexico under CUSMA may still qualify for duty recovery on Canadian duties paid on exports that are subject to import tax. Goods eligible under CUSMA rules of origin aren’t eligible for Canadian drawbacks. EDC provides information on how to comply with CUSMA rules of origin, or you can consult with a customs broker.

Manufacturing drawback: How to recover duties on transformed goods

Canadian exporters may assume that manufacturing disqualifies them from duty recovery, but this isn’t the case. CBSA allows claims on goods that are repackaged or transformed if you can show how the imported materials were used in the exported products.

This flexibility makes the program accessible across industries. For example, a food processor importing bulk ingredients and exporting packaged meals could recover duties on the original imports. 

Temporary import duty recovery: Using Tariff Item No. 9993.00.00

If you temporarily import goods for testing, trade shows, or short-term use, you may be eligible for customs duty recovery under Tariff Item No. 9993.00.00. This applies when goods are re-exported from Canada within a set timeframe and aren’t consumed or used up during their stay.

For example, a Canadian cleantech company temporarily imports equipment into Canada, sends it to a U.S. trade show and then re-exports that equipment to Germany. It may qualify for duty recovery, as long as:

• The goods weren’t consumed in Canada.
• They were exported within the required timeframe.
• The exporter can provide proof of import and export.

This is especially useful for international exhibitions. Goods should be properly documented at the time of import, and exporters should consult a customs broker to ensure compliance.

For trade show and exhibit goods, companies can also use an ATA Carnet, an international customs document that allows duty-free and tax-free temporary importation of goods for up to one year. This eliminates the need to pay duties upfront and apply for a drawback later. Learn more about ATA Carnets through the Canadian Chamber of Commerce.

Duty drawback eligibility: Destroyed goods and trade shows

Duty recovery may also apply to:

• Goods exported in the same condition: This is common for distributors or resellers.
• Destroyed goods: Surplus or obsolete inventory that’s destroyed in Canada. These cases require additional documentation and may follow different timelines.

While duty drawbacks can provide substantial savings, there are situations where they’re not worthwhile. Rhonda Galbraith, director of Canadian Trade Services for GHY International, says “If duties paid are minimal, documentation is poor, or waivers can’t be obtained, the cost and effort of filing a claim may outweigh the benefit.”

She recommends that companies review CBSA guidance, conduct a cost-benefit analysis, or consult a customs broker before investing time and resources. This is especially important for businesses with limited export volumes, complex supply chains, or goods affected by trade agreements.

In today’s volatile trade environment, customs brokers are an important asset for streamlining processing duty drawback claims and improving compliance. Galbraith says, “Working with a customs broker not only improves the technical quality of your claim, but also strengthens your position in case of CBSA inquiries or audits—saving time, reducing risk and increasing recovery.”

Here’s how Galbraith says customs brokers can help:

• Reduce the risk of rejection:
  • Filing within the correct timeframe
  • Ensuring tariff codes, product descriptions and valuations are complete and accurate
  • Monitoring regulatory changes and CBSA verification priorities to ensure compliance
• Maximize recovery:
  • Identifying overlooked eligible goods
  • Helping structure claims to recover the maximum allowable duties
• Resolve potential issues quickly:
  • Facilitating communication between parties in multiparty claims
  • Responding to CBSA inquiries or requests for information (RFIs)
  • Representing the exporter in the event of a CBSA audit or verification

Duty drawbacks: Don’t leave money on the table

Want to optimize your export costs? Join MyEDC for more tools and expert advice on duty drawbacks and other common export questions.

You can also take an online course from the Forum for International Trade Training (FITT) to help you grow your global business.

Ready to file a claim? Check out our article Duty drawback application process: Maximize refunds and profitability to learn how to prepare your documents, submit through the CBSA Assessment and Revenue Management (CARM) portal and maximize your refund.

This content was created in part using generative artificial intelligence (Gen AI).