The value of goods on which duty will be based is determined in accordance with the Customs Act.

The most common transaction is an arms length sale between two unrelated parties. This type of transaction is addressed in Section 48 of the Customs Act.

Section 48 (1) of the Customs Act states "The value for duty of goods is the transaction value of the goods if the goods are sold for export to Canada to a purchaser in Canada and the price paid or payable for the goods can be determined without condition."

In the case of a sale made by a Non-Resident Importer where the selling price includes freight, brokerage fees and duty, Section 48 allows for the selling price to be adjusted downward to the extent that such costs are included, to determine the value for duty. It is imperative that a Non-Resident indicates the terms of sale on the commercial invoice and Canada Customs invoice so that a downward adjustment in selling price for duty purposes will be accepted by Canada Customs.

Alternate valuation methods are also addressed when an arms length sale does not exist. Without elaborating, these methods are:

1. Identical Goods
2. Similar Goods
3. Deductive Method
4. Computed Method
5. Residual Method

Using these alternate methods usually requires prior approval in the form of a written ruling from Revenue Canada. PBB can assist in providing the necessary representative to obtain a written ruling from Revenue Canada pertaining to valuation.