Customs Valuation: Effects of the Goods and Services TaxMemorandum D13-2-5

Ottawa, May 02, 2014 This document is also available inPDF (319 KB)[help with PDF files] The editing revisions made in this memorandum do not affect or change any of the existing policies or procedures. This memorandum provides information relating to the value for duty of goods imported into Canada and the application of the goods and services tax (GST).

Customs ActExcise Tax Act

1.   Subsection 215(1) of theExcise Tax Actprovides that the value of imported goods, for the purpose of determining theGSTliability, is the total of: (a)the value of the goods as they would be determined for the purpose of calculating a duty; and(b)the amount of all duties and taxes payable on the imported goods under theCustomsTariff, theSpecialImportMeasuresAct, theExciseTaxAct(other than theGST) or any other law relating to customs. 2.   The value determined in this way is referred to as the "value for tax." 3.   Therefore, the value for tax will be the aggregate of: (a)the value determined under sections 47 to 55 of theCustomsAct; and(b)all federal duties and taxes (with the exception of theGST) that are levied on the subject imported goods. 4.   Accordingly, the calculation of the value for tax of imported goods does not entail additional requirements regarding the calculation of value for duty.

5.   Where a determination of the value for duty under section 58 of theCustoms Actor a re-determination under section 59 or 60 of theCustoms Actresults in an increase to the amount of duties and taxes as determined at the time of accounting, the Canada Border Services Agency (CBSA) will collect the amount for duties and taxes including theGST. Where a re-determination results in a reduction of duties and taxes, and the importer is not registered forGSTpurposes, theGSToverpayment will be refunded by the Canada Revenue Agency (CRA) after theCBSAapproves the re-determination. In the case ofGST-registered importers, if an input tax credit has not already been claimed for the amount ofGSTin question, an application for aGSTrebate may be filed with the CRA onFormGST189,General Application for Rebate ofGST/HST. A balance of less than $2 will not be refunded or rebated.Additions and Deductions Under the Transaction Value Method6.   Additions: where the importer has paidGSTon any element of, or addition to, the price paid or payable for the imported goods, the amount ofGSTpaid will not form part of the cost of the imported goods for the purpose of determining the value for duty.7.   Deductions: certain costs, charges and expenses may be deducted from the price paid or payable when determining the value for duty, e.g., freight charges from the place of direct shipment included in aCIFprice (cost, insurance and freight). As only the actual cost may be deducted, anyGSTpaid, where it is subject to an input tax credit or some other manner of refund, is not to be regarded as a cost, charge or expense and is therefore not to be included as part of the amount of a deduction from the price paid or payable.8.   For more information, refer toMemorandum D13-4-3,Customs Valuation: Price Paid or Payable, andMemorandum D13-4-7,Adjustments to the Price Paid or Payable.Application of the Deductive Value Method9.   Where value for duty is determined under section 51 of theCustoms Act, the price per unit, as determined under subsection 51(3) of theCustoms Act,will be the price per unit exclusive ofGSTor other domestic retail sales taxes. In determining the deduction from the price per unit under subsection 51(4) of theCustoms Act, anyGSTpaid is similarly not to be regarded as a cost, charge or expense where it would become an input tax credit serving as an offset against anyGSTcharged on sales. For more information, refer toMemorandum D13-7-1,Deductive Value Method – Determination of the Price Per Unit, andMemorandum D13-7-3,Deductive Value Method – Deductions From the Price Per Unit.Application of the Harmonized Sales Tax (HST) on Imported Goods10. Generally, goods that are not subject toGSTassessment when supplied in Canada are not subject toGST/HSTassessment when imported into Canada.11. TheCBSAwill collect theHSTon importations of taxable non-commercial goods (i.e., casual goods not for sale or for any commercial, industrial, occupational, institutional or like use) imported by a person who is considered to be a resident of a participating province forGST/HSTpurposes, except for importations of motor vehicles required to be registered in a participating province. In the case ofGST/HSTtaxable commercial goods imported by a person who is considered to be a resident of a participating province forGST/HSTpurposes, only theGSTis payable by the importer at the time of importation. After the goods are imported into a participating province, the importer may be obliged to self-assess the provincial component of theHST. The CRA's Technical Information BulletinB-079,Self-Assessment of theHSTon Supplies Brought Into a Participating Province,addresses the requirement to self-assess.Additional Information12. For more information, call contact theCBSABorder Information Service(BIS):Calls within Canada & the United States (toll free):1-800-461-9999Calls outside Canada & the United States (long distance charges apply):1-204-983-3550 or 1-506-636-5064TTY:1-866-335-3237Contact Us online(webform)Contact Usat theCBSAwebsiteReferencesIssuing office:Trade and Anti-dumping Programs DirectorateHeadquarters file:79070-4-2Legislative references:Customs ActExcise Tax ActSpecial Import Measures ActCustoms TariffOther references:D13-4-3,D13-4-7,D13-7-1,D13-7-3Supersededmemorandum D:D13-2-5 dated November 22, 2006

6.   Additions: where the importer has paidGSTon any element of, or addition to, the price paid or payable for the imported goods, the amount ofGSTpaid will not form part of the cost of the imported goods for the purpose of determining the value for duty. 7.   Deductions: certain costs, charges and expenses may be deducted from the price paid or payable when determining the value for duty, e.g., freight charges from the place of direct shipment included in aCIFprice (cost, insurance and freight). As only the actual cost may be deducted, anyGSTpaid, where it is subject to an input tax credit or some other manner of refund, is not to be regarded as a cost, charge or expense and is therefore not to be included as part of the amount of a deduction from the price paid or payable. 8.   For more information, refer toMemorandum D13-4-3,Customs Valuation: Price Paid or Payable, andMemorandum D13-4-7,Adjustments to the Price Paid or Payable.

9.   Where value for duty is determined under section 51 of theCustoms Act, the price per unit, as determined under subsection 51(3) of theCustoms Act,will be the price per unit exclusive ofGSTor other domestic retail sales taxes. In determining the deduction from the price per unit under subsection 51(4) of theCustoms Act, anyGSTpaid is similarly not to be regarded as a cost, charge or expense where it would become an input tax credit serving as an offset against anyGSTcharged on sales. For more information, refer toMemorandum D13-7-1,Deductive Value Method – Determination of the Price Per Unit, andMemorandum D13-7-3,Deductive Value Method – Deductions From the Price Per Unit.

10. Generally, goods that are not subject toGSTassessment when supplied in Canada are not subject toGST/HSTassessment when imported into Canada. 11. TheCBSAwill collect theHSTon importations of taxable non-commercial goods (i.e., casual goods not for sale or for any commercial, industrial, occupational, institutional or like use) imported by a person who is considered to be a resident of a participating province forGST/HSTpurposes, except for importations of motor vehicles required to be registered in a participating province. In the case ofGST/HSTtaxable commercial goods imported by a person who is considered to be a resident of a participating province forGST/HSTpurposes, only theGSTis payable by the importer at the time of importation. After the goods are imported into a participating province, the importer may be obliged to self-assess the provincial component of theHST. The CRA's Technical Information BulletinB-079,Self-Assessment of theHSTon Supplies Brought Into a Participating Province,addresses the requirement to self-assess.

12. For more information, call contact theCBSABorder Information Service(BIS):Calls within Canada & the United States (toll free):1-800-461-9999Calls outside Canada & the United States (long distance charges apply):1-204-983-3550 or 1-506-636-5064 TTY:1-866-335-3237 Contact Us online(webform)Contact Usat theCBSAwebsite