Quick Answer
When your Chinese supplier ships directly to your Canadian customers, Canadian customs duties and 5% import GST apply to shipments over $20 CAD. However, since the goods ship to your customer (not to you), the customer is technically the importer — creating a compliance gap many dropshippers don't know how to handle.
The China-to-Canada dropshipping model has unique tax implications because the goods never physically enter your hands — your supplier ships directly to your Canadian customer. This creates an unusual situation for customs and GST compliance.
Who Is the Importer of Record?
In a direct-to-customer dropshipping model, your customer is technically the importer of record when goods arrive from China. This means the customer is responsible for customs duties and import GST on packages over $20 CAD. In practice, many small AliExpress packages pass through below the threshold or are undervalued — but this is increasingly being caught by CBSA.
Your Income Tax Obligations Are Separate
Regardless of the import mechanics, your dropshipping profit is fully taxable in Canada. Your income is the margin between what your Canadian customers paid you and what you paid your Chinese supplier (in CAD equivalent). The CRA taxes this margin as business income.
Currency Exchange: CNY and USD to CAD
AliExpress and most Chinese suppliers bill in USD or CNY. Convert all supplier payments to CAD using the Bank of Canada daily exchange rate on the date of each payment. Keep records of exchange rates and the conversion for each transaction.
The ePacket and Tracking Fraud Risk
Some dropshippers use suppliers who understate declared values on Chinese customs forms to avoid Canadian import duties. This is customs fraud — and it's illegal for you as the business owner, even if your supplier initiates it. Using suppliers who falsify shipping documents creates compliance risk for you under CBSA rules.
MaxRefund Navigates Cross-Border Dropshipping Tax for Canadians
We sort out the Canada-China dropshipping tax structure for Canadian sellers — CRA-compliant, no guesswork.
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