How cross-border vehicle sales work under Canadian laws

Cross-border vehicle sales aren’t as simple as buying a car in the US and driving it into Canada. Canada’s road safety standards require compliance with specific requirements before importation. If you’re thinking about buying vehicles from another country, here’s what you need to know. 

What are the rules for importing vehicles in Canada? 

Imports are any goods, products, or services brought into Canada from another country. By that definition, even cars that were driven out of Canada and then brought back with modifications are considered imported.  

Before importing vehicles, however, the first question to ask is: will the laws of Canada allow the car to enter the country? After that, the next question is: will the laws of Canada allow the use of the car in the country? In both cases, the answer is: it depends.  

Several departments work together when assessing the admissibility of cross-border vehicle sales. It can be quite confusing, but this article should help you better understand the ins and outs of cross-border auto sales.  

A good guide for Canada-based buyers would be the Memorandum D19-12-1. It can be confusing though, so let’s break it down. To start, the import of vehicles depends on compliance with the Motor Vehicles Safety Act (MVSA) and the source of the import.  

Cross-border vehicles sales based on MVSA compliance 

Vehicles may be regulated or non-regulated. Essentially, a non-regulated vehicle does not need to comply with the Motor Vehicle Safety Act (MVSA). However, these must still meet Canada Border Services Agency (CBSA) requirements before entry. 

Regulated vehicles 

Regulated vehicles must comply with the MVSA regulations. Generally, these are vehicles meant for road use and are less than 15 years old. This includes light-duty trucks, passenger cars, motorcycles, and some off-road vehicles.  

Non-regulated vehicles 

Non-regulated vehicles include those driven by tourists for a temporary entry into Canada. In the context of cross-border vehicle sales, however, the following vehicles are unregulated: 

• vehicles 15 years old or older 
• buses manufactured before January 1, 1971 
• vehicles temporarily brought by foreign workers, foreign students, or by visitors  
• vehicles for off-road use like construction equipment 
• off-road restricted-use vehicles with a speed limit of not more than 32 km/h 
• competition vehicles for closed-course competition 
• utility terrain vehicles made before February 4, 2021 

Remember that in all cases, import does not automatically mean use. Hence, there are instances when you may import a vehicle, but it cannot go into the RIV Program. Businesses participating in cross border vehicle sales are subject to the same requirements. 

Electric vehicles (EVs) 

EVs can still be categorized based on where they came from and if they’re regulated or not. The legal framework is catching up on the rising demand for EVs, especially in the environmental compliance sector. Currently, however, there are specific regulations with EVs, especially those that come from China. 

Cross-border vehicles sales based on origin 

Narrowing cross-border vehicle sales depending on the country of manufacture helps streamline the process. With this, it’s easier for regulatory bodies to figure out which imports need additional inspections before being admitted into the country. Here’s how Canada laws impact country of manufacture: 

Vehicles from US and/or Mexico 

Canada currently upholds the Canada-United States-Mexico Agreement (CUSMA), which covers import of cars in Canada. You can enjoy all the benefits of CUSMA if the car falls within the specifications allowed in the agreement. 

To keep track, Canada maintains a Registrar of Imported Vehicles (RIV) Compatibility List. This records all the vehicles that may be safely brought and operated in the country. You can get the list online or ask for it from vehicle manufacturers. 

Note, however, that the list can change from time to time. Vehicles listed include those that may be admitted without modifications and those that may be admitted if certain modifications are made. But just because a car may be modified to meet Canadian standards does not automatically mean it will be admitted or registered. 

There are certain exceptions, of course, which include the 15-year rule discussed above. Confused? You can check out the Legal FAQs page for specific questions about cross-border vehicle sales. 

Vehicles from other countries 

Buying cars from countries other than Mexico and the US makes cross border vehicle sales more complicated. It’s not impossible, but for the sake of safety, the vehicle must meet the Motor Vehicle Safety Regulations. Otherwise, the car needs to be exported or destroyed under the supervision of officials. 

Generally, returning vehicles are accepted. This means that a vehicle purchased new in Canada, shipped abroad, and then re-purchased are accepted back. This also applies to cross-border vehicle sales of cars bought new in the US, shipped abroad, and then re-purchased by a Canadian resident. 

Cars that meet Canadian standards and purchased new from abroad may also be shipped. However, this requires pre-authorization from Transport Canada. Ultimately, Canada’s regulations are made with the purpose of maintaining road safety while keeping the domestic automobile industry stable.  

Who can participate in cross-border vehicle sales? 

Both permanent and temporary residents can purchase vehicles from different countries. However, the requirements vary depending on who is purchasing the vehicle and bringing it into the country. 

Permanent residents 

Permanent residents buying and importing regulated vehicles must meet CBSA procedures. Permanent imports will also require payment of duties and taxes. Since you will be using the vehicle on the road, it must also be registered with the RIV program. 

Temporary residents 

Temporary residents buying vehicles from across the border must still pass CBSA standards. The requirements are less strict because the cars fall under the “non-regulated” category. However, these vehicles may only stay for as long as the temporary resident stays in the country. 

Generally, the vehicle must stay no more than one year within the country. However, if the temporary resident becomes a permanent one, the vehicle must now meet additional standards. Otherwise, it would be exported or destroyed. 

Here are some guidelines on cross-border vehicles sales based on your status as a resident: 

Procedure for importing vehicles in Canada 

Importing cars in Canada starts with determining if the car is regulated or not. If it is regulated, you must then make sure that it falls within the RIV Compatibility List. From there, you will need to fill in and submit the appropriate import form along with all the documents related to the vehicle. 

What government agencies are concerned with the import of vehicles? 

• Canada Border Services Agency – imposes and ensures that all the documentation necessary for import is present. They’re also the agency responsible for collecting taxes and duties on all imports 

• Transport Canada – is responsible for overseeing transport policies to ensure that all vehicles are efficient, safe, secure, and eco-friendly. For cross-border vehicle sales, they make sure that all vehicles meet safety standards before entry 

• Registrar of Imported Vehicles – handles the registration, inspection, and certification of vehicles brought into Canada 

• Environment and Climate Change Canada – enforces the regulations when it comes to vehicle emissions. Cars that do not meet the emission standards may be denied entry on this ground 

Federal laws primarily govern the entry and use of imported cars. However, specific provinces or territories may have additional requirements. These additional requirements can include further inspections or, in the case of automated cars, the issuance of technology testing permits. 

You must also be aware of the export requirements of the country the vehicle is coming from. This is something the seller could assist you with to streamline the process. 

What documents are needed for importing vehicles to Canada? 

The documents you need may vary from one government agency to another. Generally, however, you will need to provide the following documents: 

• vehicle title or proof of ownership 
• bill of sale 
• proof of insurance 
• proof of no recall, if any 
• filled-in import form, which can vary depending on whether you are buying a temporary import or a permanent one 

Here are some of the most important information you need on hand for cross-border vehicle sales: 

How much do cross-border vehicle sales cost? 

The cost of importing a vehicle depends mainly on where it is manufactured. Existing agreements with Mexico and the US mean that imports from these two countries are exempt from tariff. However, the key word here is “manufactured”. 

Those manufactured outside of Mexico and the US are subject to 6.1 percent duties based on the value of the vehicle. Other costs associated with importing a car in Canada are: 

Most of these costs are dependent on provincial laws and the car itself. Hence, the expenses of cross-border vehicle sales can really add up and have a wide margin. For example, Ottawa recently imposed a 25 percent retaliatory tariff for US-produced vehicles imported into Canada. 

Does Canada have the 25-year import rule? 

No. Canada has a 15-year import rule compared to the 25-year import rule of the US. Under this rule, vehicles are exempt from the safety and emission standards of the MVSA if they are more than 15 years old. The counting starts from the month and year the vehicle is manufactured until the day of importation. 

For buses, anything manufactured before January 1, 1971, is exempt from MVSA requirements. 

The logic behind the rule is simple: buses and cars that meet the age requirement were made before the strict requirements for vehicular safety. This rule is also great for car enthusiasts who want to bring in classic cars. Note, however, that the import must still meet CBSA requirements. 

What are your responsibilities as the buyer in cross-border vehicle sales? 

Purchasing vehicles from across the border requires harmonizing different laws. It can be confusing, especially if you are doing it for the first time. As the Canada-based buyer, part of your responsibility is ensuring the accuracy of all documentations. This includes insurance documents and the appropriate declaration forms. 

Except for special circumstances, cross-border vehicle sales are best done with admissibility in mind. A vehicle that’s already vetted by Transport Canada makes the whole process easier and faster. Buying from a reputable seller also helps since you can still rely on aftercare during the import process. 

Your responsibilities do not stop after the importation, however. Within 45 days after getting into the country, the vehicle needs to be checked as required by the RIV Program. Note that there are continuing obligations related to imports. This means that the vehicle must consistently meet certain standards for its stay and operation in the country. 

What are the benefits of buying cars from foreign markets? 

Is it worth buying a car in the US or other countries? Looking at the process, it may not seem like it. However, importing vehicles may be cheaper if the exchange rate favours Canada. Certain car brands and models are also unavailable in Canada and will necessitate importation. 

Considering the above, it’s not surprising most people seek help with cross-border vehicle sales instead of doing it themselves. The recent implementation of the Assessment and Revenue Management System (CARM) also promises to streamline the process despite the initial setback.  

However, if the goal is to minimize import costs or reduce waiting time, having professionals facilitate the transfer is always a good idea.  

For accurate assistance, you can look through our directory of Lexpert-ranked best cross border lawyers in Canada.