Paving and concrete cross-border tax: buying US equipment without importing surprises

What actually happens when the machine reaches the border

Every piece of equipment you bring in from the US is a commercial importation, and three things happen at once. First, GST of 5 percent is assessed on the value for duty in Canadian dollars; as an HST registrant importing for commercial use you pay only the federal part at the border and recover it as an input tax credit on your next return, so it is a cash-flow cost rather than a real one. Second, duty is assessed by tariff classification and origin. Much of the self-propelled construction machinery in Chapter 84 of the Customs Tariff is duty-free regardless of origin, and US-made equipment with valid CUSMA certification is duty-free in any case, but a machine built in Japan or Germany and bought at a Texas auction is classified on its own merits, so we check the HS code before you bid. Third, since October 2024 commercial importers must be registered in the CBSA's CARM Client Portal and post their own financial security or arrange to use a broker's, a step that stalls a delivery if nobody has done it.

Two further points depend on the year. Canada applied surtaxes to lists of US-origin goods during 2025 and has changed those lists more than once; as at the time of writing, the current surtax list should be checked against your HS code before any purchase, because a surtax is not recoverable the way GST is. And on-road vehicles — a used tri-axle from a US dealer, for example — go through the Registrar of Imported Vehicles process and admissibility rules that do not apply to off-road machines, with their own paperwork and fees.

The auction bill: premium, state tax and the exchange rate

A US auction invoice has more on it than the hammer price, and most of it belongs in the tax cost of the machine. The buyer's premium, transport to the border and on to your yard, customs brokerage, any duty or surtax, and the cost of making the machine road-legal or compliant are all part of the capital cost for CCA. The GST paid at the border is not, because you recover it. Some US auction houses will waive state sales tax when the machine is exported with proper documentation and some will not; we confirm before the sale, because sales tax paid to a US state is not recoverable in Canada and simply adds to cost.

Everything is then converted to Canadian dollars at the exchange rate on the date of purchase, which fixes the capital cost for the life of the asset. Paying in USD from a Canadian account, from a USD account or through an FX provider does not change that; it changes the bank's spread. We record the purchase using the rules for USD transactions in Canadian books, so the fixed-asset register, the CCA schedule and the loan all agree on one Canadian-dollar number.

US-dollar financing and US-owned suppliers

Much of the equipment financing in this trade comes from manufacturers' captive finance arms and from dealers, many of which contract through Canadian affiliates. Where a loan is actually made by a US lender at arm's length, Canadian withholding tax on the interest generally does not apply — arm's-length interest paid to non-residents has been exempt from Part XIII withholding since 2008, with exceptions for participating debt — so the payments go out gross. The item to watch is the currency: a USD loan repaid from Canadian-dollar revenue produces exchange gains and losses on each payment, and because the loan financed a capital asset, those are generally capital gains and losses rather than ordinary income.

US-owned suppliers raise a different question when they send people rather than parts. A US technician who flies in to commission a paver or repair a milling machine is providing services in Canada, and the fee is subject to 15 percent Regulation 105 withholding unless a waiver is in place, reported on a T4A-NR. Parts and warranty items shipped from the US are simply further imports, with the same GST and origin questions. Our guide to paying a US contractor from a Canadian business covers the withholding mechanics.

The rare US job, and owners who are US citizens

US work is uncommon for Ontario paving and concrete contractors, but companies near Niagara, Sarnia and Windsor do get asked. Before pricing it, the list to weigh is state contractor licensing, US payroll and workers' compensation for crew on site, state sales tax on materials, temporary importation of the equipment and its return, and the treaty rule that a construction site becomes a US permanent establishment once it lasts more than twelve months. A short job can usually be structured so that no US federal income tax arises, with a protective 1120-F filed to preserve that position; a long one is a US business. For most contractors, our honest advice is to price the compliance into the bid and see whether the job still makes sense.

Finally, if an owner-manager is a US citizen or green-card holder, the Canadian corporation itself is a US reporting item — annual information returns and the GILTI rules apply — regardless of where the work is done. That is a personal cross-border file rather than a paving question, and we handle it alongside the corporate one. Our cross-border tax services page covers the full two-country toolkit, and the CFO page for paving contractors shows how the fleet decisions that drive these imports are made in the first place.

Source: CBSA — CARM: CBSA Assessment and Revenue Management.