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Buying iron at US auctions: the excavation contractor border file

A US auction win is not a landed cost. Buyer premium, exchange rate, possible duty or surtax, 5 percent GST at the border and freight all stack on top of the hammer price — and each one behaves differently in your books, from customs value to input tax credits to the CCA base you depreciate for years. Here is the math we run for excavation and demolition contractors before the bidding starts, not after the wire goes out.

By the AnalytIQ Accounting team · Last reviewed: September 12, 2026

Excavator digging on a construction site

At a glance · excavation contractors

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GST/HSTTaxableExcavation and demolition services are fully taxable at 13%; ITCs recover HST on fuel and repairs.
StructureCorp for the ironFinancing six-figure equipment loans is easier and cheaper through a corporation than personally.
DeductionClass 38, 30% CCAExcavators, dozers, and loaders depreciate at 30% declining balance in Class 38.
Key formT5018Payments to hired dump-truck haulers and sub-contractors get reported on a T5018.

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.

Cost lineIn customs value?Where it ends up in your books
Hammer priceYesCapital cost of the machine, in CAD
Buyer premiumYesCapital cost
Duty or surtax, if anyCalculated on itCapital cost — it depreciates with the machine
Border GST, 5 percentNo — charged on the valueInput tax credit, not cost — when the entry is in your name
Freight and float to your yardPost-shipment leg, noCapital cost of getting the asset in service
US state sales tax, if not exemptedAvoid it insteadDead cost — this is why the exemption is settled before payment

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.

What we take off your plate

Cross-border tax for excavation contractors, handled.

  • US auction wins landed at true CAD cost, CUSMA duty and GST sorted
  • Importer-of-record set so the 5% border GST becomes an ITC, not a cost
  • Canadian and US returns prepared by one team
  • Treaty positions and foreign tax credits lined up
  • FBAR and T1135 foreign reporting
  • ITIN applications certified in-house

Mistakes we fix

Three things that go wrong for excavation contractors.

  1. Averaging fuel and repair costs across the fleet instead of costing each machine per metered hour
  2. Selling a machine at a strong auction price and missing the recapture bill that comes with it
  3. Running coloured diesel through a licensed on-road truck instead of only the off-road machines

Recognise one? Book a call and we will tell you what it is costing you.

Services for excavation contractors

Six services, one team that knows how excavation contractors run.

Start with one. Add the rest when it makes sense; the books, payroll and tax already talk to each other.

Free proposal

A fixed fee for your cross-border tax work, in writing.

  1. Tell us about your business. The form takes about a minute.
  2. A short discovery call. Fifteen minutes to confirm what you need.
  3. A fixed fee in writing. We reply within one business day. No hourly surprises.
  • Canadian and US filings under one roof
  • Cloud-first: QuickBooks Online, Dext, Wagepoint
  • Brampton, Ontario, with clients across Canada and the US

Related answers

Browse all 200 answers.

Common questions.

Do we pay US sales tax when we win a machine at auction?

Often avoidable — many states exempt sales documented as exports, typically when the machine leaves by common carrier with the auction house paperwork in order. Settle the exemption with the auction office before payment, because refunds afterward range from slow to impossible.

Is there duty on a used excavator bought in the US?

It depends on the tariff item and where the machine was built, not where you bought it — many self-propelled machines enter at a free rate, but counter-tariff lists have changed several times since 2025. We verify against the orders in force the week of the auction.

Do we get the 5 percent GST at the border back?

Yes, as an input tax credit for a registered company — provided the customs entry names your company as importer of record and the broker paperwork is reconciled to your books.

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