B3 elements

Our staff members can help you determine the proper tariff classification, value for duty, origin, and the duty and tax rates that apply, and will provide written rulings on request. You can contact us by calling the CBSA's BIS and speaking to an agent. The agent will refer you to a staff member who specializes in these matters.

• Value for duty
• Tariff classification
• Origin
• Duties relief
• Drawback
• Duty deferral program
• Refunds
• Remissions
• Temporary importation programs
• Temporary exportation programs

Value for duty

The value for duty is essentially the price you pay for the goods (selling price) converted to Canadian funds, with certain additions or deductions. Examples of additions to the selling price include amounts you pay for royalties and licences and selling commissions. Examples of deductions include amounts for volume discounts you receive and brokerage fees the vendor pays.

The transaction value method is Canada's primary system of valuing imported goods, and is based on an internationally approved set of rules under the World Trade Organization (WTO) Agreement, also known as the General Agreement on Tariffs and Trade (GATT), to which Canada and most of its major trading partners are parties.

To use the transaction value method, a sale in the country of origin for export to Canada must have taken place, and there must be a price paid or payable for the goods.

In rare cases when you cannot use the transaction value method, you must use other methods to determine the goods' value for duty. For more information on these valuation methods, see Memorandum D13-3-1, Methods of Determining Value for Duty.

For more details on how to determine the value for duty of your shipments, see the Memoranda D13 series.

Tariff classification

Many trading countries, including Canada, the United States, Japan, and Great Britain, use the harmonized system (HS) of classification. In Canada, the classification number consists of 10 digits:

• the first six digits are standardized or harmonized for all countries using the international tariff;
• the seventh and eighth digits are for Canadian trade purposes; and
• the last two digits are the statistical suffix.

Example
The tariff classification for ladies' all-leather shoes is:

6403.59.90.92

6403.59 - the international tariff number

90 - Canadian number for trade purposes

92 - the statistical suffix

On your invoice, there has to be enough detail for you to identify the goods, determine the quantity, and correctly establish the tariff classification. If the invoice contains these details, you can avoid later reassessments of duties.

Once you have identified the goods, you can determine the tariff classification number by referring to the Customs Tariff and its explanatory notes. Please keep in mind that these international notes are written in British English, so it may be difficult to find certain information. For example, if you want information about trucks, you would find details under "lorry," the British word for truck.

It is important that you use the correct tariff classification number and statistical suffix. We are responsible for providing trade information to Statistics Canada. The information which Statistics Canada extracts from the invoice and Form B3 helps to paint a true picture of Canada's economic situation. This information is used nationally to establish monetary policy and promote Canadian interests abroad, and internationally by foreign investors who are considering Canada for potential business.

Therefore, all data must be accurate, especially for shipments from the United States, since that country exchanges import data with us.

Special classification provisions in Chapter 99 of the Customs Tariff are unique to Canada and provide importers with lower rates of duty. These classification provisions eliminate or reduce the customs duty rate for qualifying goods under specific conditions, such as the end-use of the goods in Canada. Once you have determined the initial 10 digit classification number in Chapters 1 to 97, you should verify whether your goods qualify for classification under a Chapter 99 special classification provision.

For more details on Canada's classification system, see the Memoranda D11 series.

Origin

The country of origin of your goods determines the trade agreement under which they qualify, and the tariff treatment they will receive. Depending on the country of origin and whether that country is a partner in a trade agreement with Canada, some goods may receive a preferential or lower customs duty rate.

Once you establish the tariff treatment and tariff classification of the goods, you can determine the customs duty rate that applies.

For more information on the rules of origin and tariff treatments, see the Memoranda D11 series

Duties relief

You can take advantage of CBSA's drawback, refund, and remission programs, which are collectively known as duties relief programs. You can use them to reduce, eliminate, or defer customs duties on qualifying goods. These and other programs enable Canadian businesses to compete more favorably in the world market.

Drawback

Drawback programs allow eligible claimants to receive a full or partial drawback of duties paid on items which, in some cases, you import to manufacture goods you will later export. Drawbacks are also available for qualified goods you use for specified purposes and that are consumed in Canada. For more information on drawbacks, see the Memoranda D7 series.

Duty deferral program

Under the duty deferral program, you can defer paying duties on goods for export or that you use to process goods you later export. You must apply to participate in this program.

Refunds

We can grant refunds of full or partial duties you paid on exported or destroyed goods, defective goods, shortages, or equipment you removed from the goods and returned to the manufacturer for credit. For more information on refunds, see the Memoranda D6 series.

Remissions

At the CBSA, we administer a variety of legislation, including remission orders and orders-in-council. All goods entering Canada, even those imported temporarily or exported temporarily, are subject to duties on their full value, unless there is a specific provision in legislation or regulation that entirely or partially relieves you of this obligation. Some of this legislation may apply only to goods imported by a specific importer. Remissions programs include the following programs.

Temporary importation programs

Under the temporary importation programs:

• goods you temporarily import for a trade show can enter duty-free;
• goods you temporarily export to the United States for warranty repair can enter duty- and tax-free; and
• goods you temporarily import to use in an emergency can enter duty-free. (You have to export any goods not consumed or destroyed during the emergency when they are no longer required.)

Temporary exportation programs

The Canadian Goods Abroad program allows for the partial or full relief from payment of duties on goods that you export for repairs, additions, or work done abroad and that are later returned to Canada, as long as you meet specific conditions.

The Repair Abroad of Canadian Civil Aircraft, Canadian Aircraft Engines and Flight Simulators Remission Orderoutlines and explains the conditions under which remission is granted on the difference between the tax paid or payable and the duty paid or payable on the value of the repair for the goods that you exported for repair.

The Tariff Items Nos. 9971.00.00 and 9992.00.00 Accounting Regulations set out the customs duty rates we levy on goods, regardless of origin, which are returned to Canada after being exported to the United States, Mexico or Chile for alteration or warranty or non-warranty repairs.

Goods originating in Canada or goods which have been accounted for and released that have been exported, may be returned to Canada under tariff item Nos. 9813.00.00 or 9814.00.00 respectively if they have not been advanced in value or combined with any other article abroad.

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