Nightmare selling to Canada

It works the same way in the other direction as well. I was told by my bank last year that since 9/11, US Bank money orders take some 30 days to officially clear up in Canada.

This harsh dose of today's reality doesn't particularly bother me as I still prefer to take a money order from a US buyer over Paypal.

Pilotboy, if Krell completes the return paperwork properly
you should be only liable for taxes on the cost of the
repairs as well as any customs brokerage fees.

Pilotboy,
The last paragraph of Hack's response above is a good summary about brokerage fees. The sad part about UPS is that you will pay a significant brokerage fee even if no taxes or duties are owing as in your case. UPS does have more expensive shipping options (eg. "Expedited") where the brokerage fee is built into the higher cost.

Markphd,
I have to agree that it is wise to pay all applicable taxes when you buy an item new from a dealer, especially if you expect warranty and all else that being a new owner might entail. A transaction involving a used piece between two private persons is a little different and here I think there can be a lot of subjective leeway in how much the item is valuated for tax purposes.

Let's say you lent an amp to a friend who brought it with him Stateside for grad school. A year later, he decides to send it back to you in Canada. Surely you don't feel that any taxes should be paid? Although no money exchanged hands here, I see this as being analogous to a private transaction for a used product. I feel this is consonant with the spirit of the GST although I admit I don't know what the letter of the law is here.