US parts, US warranty calls: cross-border tax for Canadian trade shops

The border moved into your parts bin

For decades, small southbound shipments rode the US$800 de-minimis exemption and never met a customs officer. That ended August 29, 2025: commercial shipments into the US now require formal entry regardless of value. The saving grace is origin — goods that qualify as CUSMA-originating still enter duty-free — which turns origin paperwork from an afterthought into margin. A trade shop that buys US parts weekly and ships south occasionally is now running a small customs operation, whether it planned to or not.

Northbound: duty, the 5 percent, and who the importer is

Parts and equipment from US suppliers enter Canada with three questions attached. Origin first: CUSMA-originating goods come in duty-free, but an offshore-made compressor does not become American by passing through a US distributor — misdeclared origin is the classic small-importer reassessment. Duty second, if origin fails. GST third: commercial imports attract 5 percent GST at the border, which a registered shop recovers as an input tax credit — provided the entry names your company as importer of record rather than a courier account or a supplier.

Commercial importers also now live inside CBSA's CARM portal: registration, duty and tax accounting, and your own financial security instead of riding a broker's bond. We reconcile broker and CARM statements to the books monthly, so the ITCs you claim match the entries CBSA has on file.

Southbound: warranty returns, parts sales, and proving origin

Canadian-made goods you ship to US customers still cross free — if you can certify origin. CUSMA needs no prescribed form; a certification with the required data elements on the invoice works. But origin is a rules test, not a feeling: a part your shop manufactures from qualifying inputs can pass, while an offshore part you merely resell southward fails, and post-de-minimis there is no small-shipment escape hatch for the difference. Warranty returns deserve their own care — repair-and-return provisions exist, and the customs description should be settled before the box ships, not argued after.

The GST/HST side of exports is the easy part: sales shipped to US customers are zero-rated, so there is no tax on the invoice, your input tax credits stay intact, and the only discipline is keeping proof of export.

Occasional US work: small revenue, real questions

A few warranty calls or a niche installation contract in the US rarely creates US federal income tax. Without a permanent establishment, the treaty leaves business profits taxable only in Canada, and where the revenue is meaningful we document that with a Form 8833 disclosure on a protective 1120-F. Three flags travel with the truck anyway: state sales tax treatment of service and installation work differs state to state; sending employees raises immigration questions — after-sales warranty service under a sales contract is a recognized business-visitor category, but that call belongs to an immigration lawyer; and a handful of US working days generally leaves wages taxable only in Canada under the treaty's employment article.

One paper trail, both directions

We build the border into the bookkeeping rather than bolting it on at year-end: customs entries reconciled to ITC claims, zero-rated exports supported by shipping evidence, origin certifications on file, and treaty positions documented once instead of improvised per request. It connects to the rest of the shop's file — vehicles, apprentices, WSIB — through our skilled trades tax services, with the full Canada-US toolkit at cross-border tax services. Boutique firm, cloud-first, fixed fees quoted after a discovery call.

Source: PwC Canada — US eliminates de-minimis shipment exemption.