What you need to know about customs valuation for assists

If you provide your foreign supplier with tooling, materials, designs, or technical work to help produce your goods, the value of those contributions must be included in your value for duty.

Customs valuation for assists is one of the more easily overlooked requirements in Canadian importing.

When assists are missed, the declared value for duty on your imports may be understated, and this can lead to reassessments, additional duties, interest, or even penalties.

In this article, we explain what assists are, how to value and declare them, and what happens when you don’t account for them.

What are assists?

An assist is a good or service that you, as the purchaser or importer in Canada, provide directly or indirectly to your foreign supplier. It is provided free of charge or at a reduced cost and used to produce goods for export to Canada.

In other words, assists are what you give, fund, or develop to help your supplier produce the imported goods. Common examples include:

• Materials, components, parts, and other goods incorporated or consumed in production
• Tools, dies, moulds, and similar goods used in production
• Engineering, development work, artwork, design work, plans, and sketches (when undertaken outside Canada and necessary for producing the imported goods)

How customs valuation for assists works

Once you identify that an assist applies, you need to determine its value and apportion it to the imported goods in a reasonable way.

Because a single assist often supports multiple shipments, its value is usually apportioned across the goods it helps produce.

For example, if a mould costs $10,000 and is expected to produce 10,000 units, you would apportion $1 per unit to your value for duty. CBSA guidance also allows other reasonable apportionment methods, if you can support the method used.

You should be able to show how the assist was valued, how its value was allocated to the imported goods, and which shipments or units were covered by that allocation.

How to declare the value of assists

Under the transaction value method, the value of assists is added to the price paid or payable for your goods before the value for duty is reported on your Commercial Accounting Declaration (CAD).

However, if you’re not using the transaction value method, different rules may apply. Speak with your customs broker to confirm how assists should be handled under the valuation method you’re using.

If your assist costs were paid in a foreign currency, you’ll need to convert them to Canadian dollars using the applicable exchange rate at the time of importation.

What happens when you don’t account for assists

If you don’t account for assists, you may end up reporting an understated value for duty. And, if the CBSA identifies undeclared assists during an audit, verification, or compliance review, you’ll need to correct the declared value for the affected shipments.

This can result in:

• Additional duties and taxes owing on the reassessed value
• Interest charges on any amounts that should have been paid at the time of accounting
• AMPS penalties, especially where you had ‘reason to believe’ the declaration was incorrect and failed to correct it within 90 days

To protect your business, review your supplier relationships on a regular basis and identify anything you’ve provided as an assist.

Getting customs valuation for assists right starts with good records. So, always keep records of what you provided, how much it cost, whether it was used in production, and how its value was apportioned.

How we can help

At Cole International, we offer trade consulting and customs brokerage services to help Canadian businesses declare an accurate value for duty and streamline their import process.

Reach out to one of our trade professionals to make sure your assists are properly valued and declared before your next shipment arrives in Canada.