4 mistakes to avoid when declaring value for duty

By understanding the most common mistakes and making sure your declared value for duty is accurate and well supported, you can help keep your imports moving smoothly.

Declaring value for duty correctly is one of the most important steps in the import process. It’s also one of the easiest to get wrong.

The value declared to the Canada Border Services Agency (CBSA) affects the duties and taxes assessed on imported goods. When that declaration is incorrect, it can lead to reassessments, delays, corrections, and added compliance risk.

In this article, we look at why value for duty matters, and four common mistakes to watch out for when declaring it to support smoother customs clearance and stronger compliance.

Why value for duty matters

Beyond calculating the duties and taxes owing, your declared value for duty needs to do two things. It needs to be accurate, and it needs to be supported by your import documents.

If the value is too high, you may end up paying more than you need to. If it is too low, the risk is much greater and may lead to serious compliance issues.

Under the Administrative Monetary Penalty System (AMPS), the CBSA can issue monetary penalties for non-compliance, including inaccurate declarations of value for duty. Those penalties can apply even when the error was unintentional.

Your declared value for duty must also align with the rest of your import documentation.

When the declared value does not align across your commercial invoice, purchase records, or Commercial Accounting Declaration (CAD), it can raise questions with the CBSA.

4 common mistakes when declaring value for duty

Here are some of the most common mistakes Canadian importers make when declaring value for duty, and how you can avoid them.

1. Undervaluing goods

If the declared value appears unusually low, it may attract the CBSA's attention.

This can lead to delays, reassessments, and penalties. Even when undervaluation is unintentional, it can still create compliance problems.

Make sure the value declared is accurate, supported, and consistent with the transaction and your records.

2. Declaring samples or gifts at zero value

It's a common mistake to assume that samples or gifts can be declared at zero value because no payment was made. In most cases, that is not acceptable for customs purposes.

The CBSA still expects a value to be declared for these goods. Because there is no sale for export to Canada in these transactions, the transaction value method cannot be used. Instead, the remaining valuation methods under the Customs Act must be considered, in order, until the first applicable method is found.

Declaring a zero value without support may be treated as undervaluation. So, when you’re importing samples or gifts, make sure the declared value is reasonable and clearly supported by your documentation.

3. Using the wrong valuation method

Not every shipment should be valued the same way.

Under the Customs Act, there are six methods of customs valuation. These methods must be applied in sequential order, using the transaction value method first whenever it applies, and only moving to the next method if the previous one can’t be used.

Using the wrong method or skipping ahead in the sequence can result in an inaccurate declaration and increase the likelihood of a CBSA challenge. Confirm which valuation method applies to your transaction before declaring value for duty.

4. Overlooking charges that affect the declared value for customs in Canada

Value for duty is not always based on the invoice total alone.

Depending on the structure of the transaction and the terms of sale, certain amounts may need to be included when determining the value declared for customs purposes.

You must add to the price paid or payable:

• Transportation and insurance costs to the place of direct shipment to Canada
• Packing costs and charges
• License fees, assists, and royalties
• Resale proceeds returned to the vendor

If relevant charges are overlooked, the value for duty may be understated, which can lead to corrections, reassessments, and penalties.

Note that certain amounts must be deducted if they were included in the price paid or payable, such as transportation and insurance costs from the place of direct shipment, certain post-importation costs, and import duties and taxes.

What to do if you discover an error

If you have reason to believe that a value for duty you previously declared is incorrect, you need to address it as soon as possible.

Your customs broker can review the entry, determine whether a correction is needed, and help manage the next steps.

How we can help

At Cole International, we offer trade consulting and customs brokerage services to help Canadian businesses manage customs valuation requirements and strengthen their compliance.

Reach out to one of our trade professionals to review your valuation process, support accurate value for duty declarations, and help keep your imports moving smoothly.

Customs Brokerage. It's what we do.