Buying iron at US auctions: the excavation contractor border file

The auction math starts before you bid

US yards move enormous volumes of used excavators, dozers and rock trucks, and the posted results look like bargains next to Ontario dealer pricing. The gap narrows fast. The buyer premium adds its percentage on top of the hammer, the whole amount converts at an exchange rate that has moved since you last looked, and the machine still has to clear a border and travel hundreds of kilometres on a float. We build the landed-cost sheet first — bid ceiling included — so the auction stays a purchase decision instead of an adrenaline decision.

One line deserves attention before payment, not after: US state sales tax. Many states will not tax a sale that is documented as an export — typically the machine leaving by common carrier with the auction house handling the paperwork — but the rules differ by state and by yard, and refunds chased afterward are slow and sometimes impossible. Settle the exemption with the auction office before you pay.

Origin rides with the machine, not the seller

Where you bought the machine means nothing at the Canadian border; where it was built means everything. A dozer assembled in Illinois is US-origin. An excavator built in Japan is Japanese-origin even after ten years working in Texas, and it keeps whatever MFN rate its tariff item carries — though many self-propelled machines enter Canada at a free rate, which a broker confirms by tariff item, not by brand.

The volatile layer is the surtax file. Most machinery came off the Canadian counter-tariff lists effective September 1, 2025, while the steel and aluminum product lists stayed — which can still catch attachments, buckets and components invoiced separately — and the lists have been amended several times since. We verify the tariff item against the orders in force during the week of the auction, because an answer from last season is not an answer.

At the border: value, GST and who does the importing

Customs value is more than the hammer price. The buyer premium belongs in it, and US inland freight up to the point of direct shipment generally does too, all converted to Canadian dollars at the rate for the date of shipment. On that value CBSA collects 5 percent GST, which comes back as an input tax credit — but only when the entry names your company as importer of record. A commercial importer also needs a CARM registration and its own financial security with CBSA, and the broker entry should be reconciled to the books the month it happens, so the ITC you claim matches the declaration on file.

After the import: a CAD number that lives for years

Everything above lands in one figure — the Canadian-dollar capital cost — and that figure drives CCA claims for the life of the machine, the gain or recapture when you sell it, and the collateral value your lender sees. Get the exchange rate or the premium treatment wrong at entry and the error compounds quietly for years. If the purchase is financed in USD, the loan adds its own FX gains and losses at each repayment, which is one more reason the buy-versus-finance decision belongs in a model, not a gut call — that modelling is excavation CFO work.

The occasional US job, flagged honestly

Excavation is local work, and most contractors will never invoice a US customer. For the rare border-city exception, the Canada-US treaty keeps business profits free of US federal tax without a permanent establishment — but construction sites can become one when a project runs long, so a US dig is a conversation before it is a contract. That call, the import file and every other Canada-US question run through cross-border tax services. Boutique firm, cloud-first, fixed fees quoted after a discovery call.

Source: CBSA — CARM: Assessment and Revenue Management.