M4.6 Valuation and Calculation of Duty

Question 1

What are the 6 Methods of Valuation?

Answer 1

1. Transaction Value of Goods - Section 48, D13-4-1
2. Transaction Value of Identical Goods - Sec 49, D13-4-1
3. Transaction Value of Similar Goods - Sec 50, D13-5-1
4. Deductive Value - Section 51, D13-7-1
5. Computed Value - Section 52, D13-8-1
6. Residual Method - Section 53, D13-9-1

Question 2

A importer my choose which two Transaction Methods in reverse order as long as they advise CBSA?

Answer 2

Deductive and Computed

Question 3

What is the purpose of the Transaction methods

Answer 3

In the !970 Tokyo Round Canada adopted to the GATT valuation code intended to provide far, uniform and neutral valuation that confirms to commerical realities and prohibits arbitrary and fictitious customs values.

Question 4

What is the 1st digit of a Value for Duty code represent?

Answer 4

1 = Vendor and Purchaser are not related
2 = Vendor and Pruchaser ARE rekated

Question 5

What does subsection 45(3) of the Customs Act mean my related to each other ?

Answer 5

• blood, relationship, marriage, common-law
• is officer or direct of the other
• is officer or director of same two coorporations, partnerships
• partners
• one is employed by the other
• directly or indirectly control or controlled by the same person
• or by the same person
• owns 5% of stock of each such person
  -owns 5% stock of the other

Question 6

What does the 2nd digit represent?

Answer 6

3 = Price paid without adjustments
4 = price paid with adjusments
5 = Transaction value of identical goods
6 = Transaction value of similar goods
7 = Deductive value
8 = Computed Value
9 = Residual method

Question 7

What costs are added to the price paid or payable?

Answer 7

1. Commissions - Selling not buying
2. Brokerage - Not Customs brokerage - agent hired to purchase ie Food broker
3. Packing Costs and Charges - unless suitable for repetitive use
4. Assists - items/Materials consumed in the production of goods
5. Royalties and Licence Fees - payment made to aquire of using a protected right ie payments made to a patent holder, trade mark anme or brand.
   6.Subsequent Proceeds - fee paid based on percentage of sales of the good in Canada.
6. Transportation TO the place of direct shipment - cost of shippping items from manufactuing plant to a holding warehouse to be shiipped to Canada.

Question 8

What are the 3 types of rate for duty?

Answer 8

1. Ad Valorie - % of value
2. Specific - amount per unit
3. Combination of 1 & 2

Question 9

Calculate the GST owing on the following goods: Value: $12,459.43 USD
Weight: 5,445 kg
Exchange rate: 1.431
Duty rate: 11.93¢/kg plus 6%
Excise duty rate: 2.2%

Answer 9

$12,459.43 X 1.431 Exchange rate = $17,829.44 VFD

5,445 kg X 0.1193 Duty rate = $649.59 Duty

$17,829.44 VFD X 6% Duty rate = $1,069.77 Duty

$17,829.44 VFD X 2.2% Excise duty rate = $392.25 Excise duty

$17,829.44 VFD + $1,069.77 Duty + $649.59 Duty + $392.25 Excise duty =

$19,941.05 VFT

$19,941.05 VFT X 5% GST = $997.05 GST