Duties relief and drawback on past Canadian entries: getting duty and surtax back on goods you exported

Who gets duty back when imported goods leave Canada?

Canada does not want duty to stay on goods that only pass through its economy. Section 89 of the Customs Tariff allows relief from duty on imported goods that are exported in the same condition, processed in Canada and exported, or consumed or expended in making goods that are exported. Section 113 then allows a refund, called a drawback, of duty already paid wherever that relief "could have been, but was not, granted". The same section sets the clock: an application must be made "within four years … after the goods in respect of which it is made are released".

That gives an importer two routes for the same goods:

• Duties Relief Program. Duty is not paid at import, under a licence, because the goods are meant for export. It is a forward-looking program.
• Duty drawback. Duty is paid at import and claimed back after the goods, or the goods made from them, are exported. It is the route for past entries.

For a post-entry audit, the drawback side is the one with money in it: every duty-paid CAD line whose goods later left the country, within the last four years, is a candidate. Since 2025 that money includes surtax, which on some steel and aluminum lines is larger than the customs duty ever was.

How do the Duties Relief Program and drawback differ?

Memorandum D7-4-1 is direct about the last row: "The authorization is not retroactive. For any inventory that was duty-paid prior to the company receiving the authorization, a claim for drawback may be filed once the goods are exported."

Both programs cover goods processed in Canada, goods consumed or expended in making exported goods (but not fuel or plant equipment), and goods only displayed or demonstrated before export. Both allow equivalence: domestic or imported goods of the same class used interchangeably, provided enough imported goods were used first and the finished goods are exported within two years of the imported goods' release. Neither relieves GST: D7-4-2 says GST/HST "cannot be refunded by drawback", and GST registrants recover it as an input tax credit through the Canada Revenue Agency.

Can surtax be recovered by drawback?

Yes. Every surtax customs notice the CBSA has issued says the Duties Relief and Duty Drawback programs are available for surtax paid or payable, subject to CUSMA. They do not all say it the same way, and the difference matters when the goods go to the US or Mexico.

Section 113 of the Customs Tariff would let the government prescribe that a surtax cannot be drawn back, through paragraph 113(4)(a). None of the notices says that has been done for any order in force.

For the three orders without the full-relief sentence, the notices give no more detail on how the CUSMA cap applies to the surtax. Before claiming a full drawback of those surtaxes on goods exported to the US or Mexico, ask the CBSA how it will apply the cap.

When does the CUSMA lesser-of-the-two-duties rule cut the claim?

Article 2.5 of CUSMA limits how much duty Canada may refund or defer on goods that end up in the US or Mexico. Memorandum D7-4-3 explains how the CBSA applies it.

Which goods are caught. Imported non-originating goods, or goods substituted for them, used in producing another good that is exported to a CUSMA country. Full drawback or deferral is still allowed for:

• goods exported in the same condition as imported, which D7-4-3 says may include cleaning, cutting, testing, labelling, repacking and similar minor operations, with a same condition ruling available in CARM;
• goods originating in a CUSMA country under the CUSMA rules of origin;
• goods exported to non-CUSMA countries;
• certain deemed exports, such as delivery to a duty-free shop or as ships' stores.

How the cap works. The drawback "cannot exceed" the lesser of the customs duties paid on the goods imported into Canada and "the total amount of customs duties paid on the exported good in the CUSMA country". The comparison is in Canadian dollars at the exchange rate of the foreign entry date.

SIMA duty is worse. For goods caught by the restriction, D7-4-3 says "SIMA duties may not be claimed via drawback", and SIMA duty deferred under the Duties Relief Program must be paid within 60 days of export.

The evidence. The claimant needs five data elements from the foreign import: entry number, date of importation, tariff classification, rate of duty and amount paid. They can come from the foreign entry document or an affidavit based on the customer's records, and for drawback they go in with the claim as a summary.

D7-4-3's own example: duty paid on a non-originating material in Canada of CAD 9.00, duty paid on the finished product entering the US of CAD 6.00, drawback allowed CAD 6.00. Under the Duties Relief Program the same facts mean CAD 3.00 is payable within 60 days of export.

Drawback, remission or refund: which route fits a past line?

A duty-paid line can come back through four different doors, and they do not stack.

1. A refund under section 74 of the Customs Act if the line was wrong when it was filed: wrong tariff item, value, origin or surtax. Four years from accounting. This is covered in correcting a Canadian entry, and the surtax cases in why your CAD shows the wrong surtax.
2. A refund for an unclaimed preference if the goods qualified for CUSMA, CETA, CPTPP or another agreement and the rate was not claimed. See unclaimed preference on past Canadian entries. That route returns customs duty, never surtax.
3. Surtax remission if the goods fall under a remission order. Customs Notice 25-19 says remission under the United States Surtax Remission Order (2025) is claimed within four years after importation (as modified November 9, 2026), but the Order as consolidated on Justice Laws (paragraph 5(c)) still says two years; the amending order made November 5, 2026 is not yet published, so until it is, treat two years as the safe deadline. The notice also says section 3 relief for manufacturing, processing and food packaging inputs applies even though "the end product … may be exported". The Department of Finance said on November 9, 2026 that this horizontal relief is in place until June 30, 2028, for non-steel goods; section 3 relief on US steel goods ended for goods imported from February 1, 2026.
4. Drawback if the line was right, the duty or surtax was owed, and the goods or the goods made from them were exported.

Remission and drawback exclude each other. Each remission order's conditions include that no other claim for relief of the surtax "has been granted under the Customs Tariff in respect of the good", and drawback is granted under the Customs Tariff. For US-surtax inputs to manufacturing, remission usually wins: it returns the whole surtax whether the product is sold in Canada or abroad, with no CUSMA cap. Drawback earns its place on steel goods, on the surtaxes that have no general manufacturing remission (China, steel quota, steel derivative, melt and pour), and on customs duty and SIMA duty.

A worked claim on past entries

The figures are illustrative and round. A Canadian manufacturer of truck bodies imported three inputs in February 2026 and paid in full. The Customs Tariff 2026 lists all three tariff items at a free MFN rate (Chapter 76 and Chapter 73), so the money on each line is surtax.

By October 2026 the truck bodies built from these inputs had gone 40% to a buyer in Germany, 30% to a buyer in the US, and 30% to Canadian customers. The US buyer's entries show duty equal to CAD 6,000 on the bodies made from lines 1 and 2.

Line 3, US aluminum profiles. These are aluminum goods of Schedule 1 of the US steel and aluminum order used in manufacturing, so section 3 remission applies to the whole CAD 25,000, whatever share was exported: Customs Notice 25-19 sets the import deadline for aluminum goods of Schedule 1 or 1.1 at July 1, 2028. Aluminum alloy profiles of 7604.29.00.30 are item 10 of Schedule 7 of the Department of Finance's Remission List, with an expiry date of February 1, 2027, so the code is 25-0466V01 rather than 25-0466C (Customs Notice 25-19, para. 49). Claim it within two years after importation (the safe deadline until the amending order is published), and do not also claim drawback. Timing matters here. The same profiles imported from February 1, 2027 lose section 3 relief and would have to come back through drawback instead. Since September 8, 2026, 7604.29.00 sits on Schedule 1.1 of the US steel and aluminum order at 50%, not 25%.

Lines 1 and 2, exported share to Germany. Germany is outside CUSMA, so D7-4-3 places no limit: 40% × (CAD 50,000 + CAD 10,000) = CAD 24,000 drawback.

Lines 1 and 2, exported share to the US. The Chinese sheet and Korean bolts are non-originating inputs in goods exported to a CUSMA country. Canadian surtax on that share is 30% × CAD 60,000 = CAD 18,000. The US duty paid on the exported bodies was CAD 6,000. On the lesser-of-the-two-duties reading the notices for the steel derivative order imply, the drawback is CAD 6,000, with the five data elements from the US entries. For line 1, the China surtax, ask the CBSA how the cap applies before filing.

Share sold in Canada. No drawback. The CAD 18,000 of surtax on that share stays paid unless a remission order covers it.

The CAD 30,000 not recovered is CAD 18,000 of surtax on the share sold in Canada plus CAD 12,000 lost to the CUSMA cap on the US share (CAD 18,000 paid, CAD 6,000 drawn back).

Each claim runs on its own clock: drawback within four years of release, so February 2030 for these lines, and remission within two years after importation to be safe (Customs Notice 25-19 now says four; the Order as published says two). The GST paid on the surtax is not in any of these figures and comes back as an input tax credit, not through the CBSA.

How do you find drawback-eligible lines in past entries?

Drawback is the one recovery an audit of the CAD alone cannot find, because the evidence is on the export side.

1. List every duty-paid line from the last four years with tariff item, origin, release date, customs duty, SIMA duty, surtax and surtax code, from the broker's accounting export.
2. Drop lines already relieved: a Duties Relief licence number on the CAD, a remission code in the Special Authority field, or a remission claim filed.
3. Match the remaining lines to what left the country. Export sales invoices and proof of export for goods resold as is; bills of materials and production records for goods used as inputs; sales to duty-free shops, ships' stores and bonded warehouses, which section 89(3) of the Customs Tariff treats as exports.
4. Split exports by destination. US and Mexico exports of non-originating inputs need the lesser-of-the-two calculation and the customer's entry data; the rest qualify in full.
5. Check remission first for every surtax line, because remission and drawback cannot both be granted, and remission often returns more.
6. Secure waivers. If a supplier, customer or processor could also claim, D7-4-2 requires waivers on Form K32A or K32B with the claim.
7. File the oldest lines first. The four years run from release, line by line.

Then decide on the future. If exports are steady, a Duties Relief licence stops the duty and surtax from being paid in the first place, at the price of the record-keeping and audits D7-4-1 describes.

TariffSense reads CAD/B3 lines and broker accounting exports, totals the duty, SIMA and surtax paid per line, flags lines where a remission order would have relieved the surtax, and, with your export and production records, marks lines whose goods were exported within the four-year window, split by CUSMA and non-CUSMA destination. Filing the claim stays with you or your broker. The post-entry audit page shows what goes in and what comes back.

How does Canadian drawback differ from US drawback?

An importer that runs drawback in both countries should not carry the US habits across. The Canadian claim is filed within four years of release on Form K32 in CARM, it covers surtax as well as duty, and the CUSMA cap is tested against the duty actually paid in the US or Mexico. US drawback runs on its own statute, forms and time limits; it is covered in duty drawback on past entries.

What should you do next on your own entries?

Pull the surtax lines from the last two years first: that is where the amounts are largest and where remission, drawback or both may apply. Match them against export sales and production records, claim remission where it fits, and build drawback claims for the rest, oldest release dates first. Confirm the route, the CUSMA treatment and the claim form with a licensed customs broker or trade counsel before you file.