Value for duty in Canada: what counts, what comes off, and which sale sets it

What is value for duty, and why does every number on the CAD hang on it?

Section 44 of the Customs Act says that any duty charged at a percentage rate is calculated on a value determined under sections 45 to 55. That value is the value for duty, and on a Commercial Accounting Declaration (CAD/B3) it is the base for the customs duty and for any surtax charged as a percentage. It also feeds the GST: section 215 of the Excise Tax Act sets the value for GST as the value for duty plus the duties and taxes payable on the goods, "whether the goods are in fact subject to duty". So a value error moves the GST even on a line that is free of duty.

Section 47 sets the order of methods. The first is always the transaction value of the goods themselves (section 48). Only when its conditions fail does the appraisal move on, in this order: the transaction value of identical goods (section 49), of similar goods (section 50), the deductive value (section 51), the computed value (section 52) and, last, the residual method (section 53). Under subsection 47(3) an importer can ask in writing, before the appraisal starts, to swap the order of deductive and computed value.

Almost every commercial line is valued under section 48, so this page follows its structure: which sale, what the price is, what gets added, what comes off, and when a related-party price stands.

Which value for duty code goes on the CAD?

Every commodity line on a CAD carries a two-digit value for duty code (field 48 in CBSA Memorandum D17-1-10, revised October 21, 2024). The first digit says whether the vendor and purchaser are related under subsection 45(3) of the Customs Act; the second names the valuation method:

D17-1-10 says the code is completed for each commodity on every type of CAD, and that F-type CADs show "013".

The code is a cheap first test of a value audit, because it states what the declarant claimed to have done:

• A code starting with 2 is a declaration that the parties are related. On those lines the price stands only if the relationship did not influence it, and the importer must hold the analysis that shows it (see "When does a related-party price stand?" below and transfer pricing adjustments and value for duty). A related-party price coded 13 or 14 is a finding in itself.
• A code ending in 3 says nothing was added or deducted. If the Incoterm is ex works, the importer supplies moulds or pays a royalty that is a condition of sale, or the price includes freight beyond the place of direct shipment, the line should carry an adjustment and code 14 or 24.
• A code ending in 5 to 9 says the transaction value was set aside. Section 47 of the Customs Act makes transaction value the first method and turns to the others only when it cannot be used, so each such line needs a reason on file.

Which sale sets the value when goods pass through several hands?

Subsection 48(1) applies the transaction value "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". Two questions follow: which sale is the sale for export, and is its buyer a purchaser in Canada.

The sale for export. Memorandum D13-4-2 reads "sale" in the widest sense and says a sale for export to Canada occurs when, before import, a person in Canada has agreed to buy the goods, or a person outside Canada has agreed to buy them and arranges for them to be sent to Canada. In a series of sales, "the transaction in which the person in Canada is directly involved" is the relevant sale. The memorandum's examples settle the common cases:

Naming someone as importer on the CAD does not change any of this. The memorandum is explicit that the importer of record does not decide which sale is relevant.

The purchaser in Canada. Section 2.1 of the Valuation for Duty Regulations defines it as a resident, a non-resident with a permanent establishment in Canada, or a non-resident with neither that imports the goods for its own use in Canada, or for sale in Canada if, before buying the goods, it had not agreed to sell them to a resident. Memorandum D13-1-3 adds the tests the CBSA applies to a business: it must carry on business in Canada with management and control here to be a resident, or operate through a fixed place of business in Canada to be a permanent establishment.

Is "sold for export to Canada" defined yet?

Not in force on November 11, 2026. Here is where each piece stands:

• In force. Subsection 48(1) uses the phrase without defining it, and the consolidated Valuation for Duty Regulations, current to October 19, 2026, define only "purchaser in Canada" (section 2.1, in force since 1997). The governing interpretation is the Supreme Court of Canada's decision in Canada (Deputy Minister of National Revenue) v. Mattel Canada Inc., 2001 SCC 36, which the CBSA's own regulatory proposal summarizes as making the sale for export "the sale by which title to the goods passes to the importer", together with the CBSA memoranda above.
• Enacted, not in force. Section 212 of the Budget Implementation Act, 2021, No. 1 (S.C. 2021, c. 23), which received royal assent on June 29, 2021, adds to subsection 45(1) of the Customs Act that "sold for export to Canada has the meaning assigned by the regulations". The Customs Act lists it under amendments not in force, so the Act still delegates nothing on the point.
• Proposed, not made. The CBSA pre-published Regulations Amending the Valuation for Duty Regulations in the Canada Gazette, Part I, on May 27, 2023. The draft would define "sold for export to Canada" as goods subject to an arrangement to be transferred for payment "for the purpose of being exported to Canada, regardless of whether the transfer of ownership of the goods is completed before or after the goods are imported", and would tighten "purchaser in Canada". Its section 4 brings the regulations into force on the day section 212 comes into force, so both pieces would start together. Its stated aim is the last-sale rule: stopping non-resident importers from valuing goods on an earlier, cheaper sale between two foreign parties.
• What happened next. The CBSA's What we heard report records 335 submissions, the main concern being that the wording could pull domestic sales into the value, and says the policy is not to use a Canadian resident importer's resale price. The CBSA Forward Regulatory Plan says an informal consultation on a revised draft opened on December 3, 2025, that the CBSA planned to republish in Part I in fall 2026, and, in a note on the same entry, that "as of June 2026, work on this regulatory initiative has been paused".

For a resident importer buying from its own foreign supplier, the CBSA says nothing would change. The exposure sits with non-resident importers and Canadian subsidiaries that declare a foreign parent's purchase price: if a definition is made, the sale to the Canadian customer would become the basis. Check the Gazette before relying on today's position for future entries.

What gets added to the price paid or payable?

The price paid or payable is defined in subsection 45(1) as all payments made or to be made, directly or indirectly, by the purchaser to or for the benefit of the vendor. Paragraph 48(5)(a) then adds six amounts, each only to the extent the price does not already include it:

Three of these need a closer test.

Assists are valued under section 4 of the Valuation for Duty Regulations, generally at what the purchaser paid to acquire or lease them, or their cost of production, plus transport to the producer. Subparagraph 48(5)(a)(iii) of the Act then requires them to be apportioned to the imported goods "in a reasonable manner and in accordance with generally accepted accounting principles". Memorandum D13-3-12 says materials are usually apportioned by the quantity incorporated. Only engineering and design work undertaken outside Canada is an assist; work done in Canada is not added.

Royalties follow the condition-of-sale test. Memorandum D13-4-9, applying Mattel Canada, says a royalty is added only if it is in respect of the goods and the purchaser's failure to pay it would entitle the vendor to refuse to sell or to repudiate the contract, and that this consequence must be explicit in the documents. A royalty paid to an unrelated licensor under a separate licence, with no link to the supplier's sale, is often outside the value. A royalty the supplier collects for the brand owner is often inside it.

Post-import payments are not all subsequent proceeds. Memorandum D13-4-13 lists management fees, contributions to research and development, marketing contributions and recovered overhead as payments to examine, and says dividends are not subsequent proceeds and stay out of the value.

What comes off the price?

Paragraph 48(5)(b) deducts, to the extent they are included in the price:

• Transport from the place of direct shipment onward, with loading, handling and insurance. Memorandum D13-3-4 places it where the goods begin "their direct and uninterrupted journey to a specific destination in Canada", usually where they are loaded with a Canadian destination on the transport documents. Memorandum D13-3-3 counts forwarders' fees, export documentation, inspection, warehousing and demurrage as associated costs that follow the same split.
• Post-import construction, assembly, maintenance or technical assistance, if identified separately from the price.
• Canadian duties and taxes, including GST, SIMA duties and Customs Tariff duties, if identified separately.

Paragraph 48(5)(c) works the other way: any rebate or price decrease effected after import is disregarded. Memorandum D13-4-10 applies this to any agreement made after import to reduce the price, and sets two exceptions. The CBSA accepts a post-import reduction if the buyer takes cash discount terms the vendor offered before import, or if "an agreement in writing to later reduce the price paid or payable was in effect at the time of importation, and the reduction results from the agreement". The second exception covers deferred discounts and volume rebates between unrelated parties when the terms were written into the deal before the goods arrived, and it can support a refund. For related parties, Memorandum D13-4-5 applies the same rule to transfer price adjustments, covered in transfer pricing adjustments and value for duty in Canada.

Subsection 48(6) closes the loop. If there is not sufficient information to quantify an addition (defined in subsection 45(1) as "objective and quantifiable information"), the transaction value cannot be used at all, and the appraisal moves down the section 47 ladder.

When does a related-party price stand?

Subsection 45(3) makes persons related in nine situations, including officers or directors of each other, employer and employee, common control, and any person owning 5% or more of the voting shares of each, or one owning 5% or more of the other. For related persons, paragraph 48(1)(d) accepts the transaction value only if the relationship did not influence the price, or the importer shows the price closely approximates a test value under subsection 48(3).

Memorandum D13-4-5 says how the CBSA looks at each route:

• Circumstances of the sale. Comparable sales by the vendor to unrelated buyers in Canada, a price settled in line with normal industry pricing (for example published commodity prices), or a price that recovers all costs plus a profit representative of the vendor's overall profit on goods of the same class or kind.
• Test values. The transaction value of identical or similar goods sold to unrelated buyers, or their deductive or computed value, for goods exported at "the same or substantially the same time", which the CBSA generally takes as 30 days before to 30 days after the export of the goods being appraised.

The importer must keep the analysis on file. D13-4-5 says an importer that uses a transfer price must retain "the information justifying their conclusion and the calculation of the transfer price". A transfer pricing study built for income tax is a starting point, not proof: the memorandum warns that a price set by a transactional profit method may not show an uninfluenced customs price on its own.

How does a value error look on one CAD line?

A Canadian importer buys 10,000 housings from an unrelated factory in Vietnam at USD 4.00 each, ex works, under a tariff item with an illustrative MFN rate of 6.5%. No surtax order covers the goods. The importer also:

• paid the factory's trucker USD 800 to move the goods to the port of Haiphong, where they were loaded on a vessel booked to Vancouver;
• paid ocean freight of USD 2,500 from Haiphong;
• supplied the injection moulds free of charge, at a cost of CAD 13,500 for an expected run of 30,000 units;
• pays the brand licensor, through the factory, a fee of USD 2,000 on this order, and the supply agreement lets the factory refuse to ship if the fee is unpaid.

The broker entered the invoice price only. With an illustrative exchange rate of 1.38 on the date of direct shipment:

The line is undervalued by CAD 8,364, and CAD 989.04 of duty and GST is owed, before interest. The moulds will be in the next two shipments too, so the same finding repeats on every line of the run. Had the goods been of an origin listed in a surtax order, the surtax would rise with the value at its full percentage, which is why value errors cost most on surtaxed lines. The rates and treatment for any tariff item and origin are in the duty calculator.

The finding runs the other way just as often: an ex-works price entered with the ocean freight folded in, a broker's fee left in the price, or duties and taxes included in a delivered price and not deducted. Each of those overstates the value and supports a refund.

How is Canada different from the US on value?

A cross-border importer meets the same six additions in both countries, with three differences that change the number:

• Which sale. The US allows a qualifying earlier sale in the chain (see first sale for export on past entries). In Canada, the relevant sale is the one the person in Canada is directly involved in, so a resident importer cannot reach back to a factory price behind its supplier.
• Freight split. US entered value excludes international freight from the port of exportation. Canada splits at the place of direct shipment, which can sit inland, at a consolidation point or in a third country, under D13-3-4.
• Post-import price changes. Canada disregards post-import decreases by statute, except cash discounts offered before import and reductions under a written agreement in effect at import (D13-4-10), including related-party transfer price adjustments (D13-4-5).

What counts in US entered value is covered in assists, royalties and related-party value on US entries.

How do you check value on your own past CADs?

1. Pull four years of CAD lines with the value for duty, the value for duty code, currency, exchange rate, Incoterm and vendor. Four years is the window for both corrections and most refunds.
2. Map each vendor to its chain. Note who the importer bought from, whether that party is related under subsection 45(3), and where the goods were loaded for Canada.
3. Match the Incoterm to the freight on the line. Ex works and FCA prices usually need inland freight added; delivered prices usually need freight from the place of direct shipment, Canadian duties and the broker's fee taken out.
4. Search the ledgers outside the invoice: tooling and mould purchases, design contracts, licence and royalty payments, intercompany management fees, commission agreements. Each is a candidate addition.
5. Recalculate the line, including duty, any surtax and GST, and sort findings into amounts owed and amounts overpaid.
6. Correct and claim. An underpayment found this way starts the 90-day section 32.2 clock for the same and similar goods; an overpayment can be claimed under section 74 within four years. Both routes are set out in correcting a Canadian entry.

TariffSense reads your CAD lines next to the commercial invoices, freight bills and payment records behind them, rebuilds the value for duty under section 48 on each line, and flags the lines where an addition is missing or a deduction was not taken, in both directions. Filing stays with your broker. The post-entry audit page shows what goes in and what comes back.

What should you do next on your own entries?

Pick your three largest vendors by duty paid, write down the chain of sales and the Incoterm for each, and list every payment you make that is not on their invoices. If the list is not empty, recalculate one shipment per vendor using the table above before you look at the rest. For related-party vendors, confirm you hold the D13-4-5 analysis on file, and for any line where you are unsure which sale or method applies, confirm with a licensed customs broker or trade counsel before filing. The line-by-line checks that sit around value are in the CAD audit guide, and what happens if the CBSA reaches the same lines first is in CBSA trade compliance verifications.