Read Section 2.2:
http://www.canadapost.ca/tools/pg/ma...Gcustoms-e.asp
Basically anything over $20CDN is subject to duties/taxes (with a few exceptions).
Items marked as "Gifts" under $60CDN are exempt; over $60CDN is duty/tax applicable.
If you use USPS, the only people that check are Canada Post, and they dont have the time nor manpower to inspect each package in full detail. That's why a lot of packages slip by without duties/taxes (even though they should get dinged).
Courier companies (UPS, Fedex) will be the broker for the packages they ship by default, so anything that's duty/tax applicable (as per the above criteria) WILL get flagged and processed by these companies. By providing this service, they will charge you their stupid brokerage fees. It's a source of revenue for them, so that's why they're so strict on it. It's totally legit, and they're following the letter of the law to a T for these packages. (You CAN refuse the brokerage fees and advise them that you wish to import it yourself, but there's a lot of paperwork you have to do before they will release the package to you, w/o their brokerage fees).
Technically by asking the US shipper to mark it as Gift or anything other than what it is, is illegal, and many US companies plainly state that they will NOT do that, as they will be committing mail fraud if they do.
If you ask them to declare a lower value than it actually is, then IF the package gets lost, you will only be covered for the amount stated on their customs declaration receipt. So that's a bit of a risk too.
These smaller companies shipping smaller packages dont really care one way or the other. But the larger ones may.
For anyone who lives near the US border, I do suggest you ship larger packages to a post office service right across the border, drive down to pick it up and pay them the $3US per package or whatever, then drive the package back to Canada yourself and take your chances with the Cdn border guards. You save on shipping costs since they will be at the cheaper domestic US rates (so the seller can't Gouge you for shipping to Canada), and you have a 50/50 chance at the border :P
I use this one all the time:
http://www.thelettercarrier.com/services
Just something to think about.