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These are:

  • Transaction Value of Identical Goods

  • Transaction Value of Similar Goods

  • Deductive Value

  • Computed Value

  • Residual Value

Customs audit and investigative resources are focusing considerable effort on the enforcement of valuation requirements. Great care need to be taken, particularly by non-resident importers, to ensure that the appropriate value is declared; talk to your broker!

The importer’s assumption of risk for the acts of third parties is nowhere more evident, or more serious, than in NAFTA claims. An importer claiming the benefit of NAFTA tariff treatment must do so on the basis of a certificate of origin issued by the manufacturer or exporter of the goods.

The CBSA regularly audits foreign exporters and manufacturers to determine the validity of certificates of origin. If it is found that the certificate of origin is invalid and/or should not have been issued, the importer should not have been issued; the importer will be required to pay the difference between the NAFTA duty rate and the applicable rate for non-NAFTA goods and the applied AMPS penalty; also the importer may have to pay those additional duties for every customs entry going back 4 years.

There is no simple answer to this problem, the importer must rely on the manufacturer’s or exporter’s certification but is responsible for significantly increased duty costs if that certification is wrong. Clearly, importers need to work closely with their vendors to ensure that certificates of origin are properly issued.

Be Aware!

While the Non-resident Importer program is very attractive, NRIs must be aware of the following:

The Business Number (BN) is a nine digit registered serial number assigned to all commercial concerns in Canada. In order to import commercially into Canada a company must have a BN. The BN also serves as the GST registration number for firms whose sales exceed $30,000 CAD. Your first step in becoming and NRI is applying for the BN, secondly request an Importer Number. After the BN, an RT extension is added for GST and an RM is added for the Importer number. (i.e. 123456789RM0001)

Canadian law requires all commercial records and documentation, to be kept for 6 years. The Canada Revenue Agency may authorize certain importers to maintain records outside Canada provided they submit a letter of undertaking. The purpose of this document is to record and set out the agreement made between the company and the Canada Revenue Agency, concerning the availability of records for Customs audit purposes.

As the importer of record into Canada you must give special consideration to the various Customs regulations and import provisions that could affect your business, such as the valuation of your goods. The importer (you) assumes full responsibility for the correct declaration and calculation of the value in accordance with the Customs Act. Failure to comply with these requirements or with the other programs could result in reassessments by the Canada Border Services Agency (CBSA) for additional duties, interest and penalties. Customs Brokers like Accountants, work with the information you provide, YOU are ultimately responsible for the accuracy. Talk to your broker.

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