Guidance on Valuation of Goods Imported into Canada Not Matching Contracts
Trade Update • July 22, 2025
Key Points
- Goods that are damaged, defective, or differ from the contract must be valued as if they fully meet the contract terms.
- Replacement goods shipped free are valued based on the original shipment’s unit price.
- Overages (extra goods) must be valued separately, using either the extra payment or the value of identical goods if no payment is made.
- Shortages (fewer goods) do not automatically reduce customs value; refunds require a formal request.
The Canada Border Services Agency (CBSA) clarifies how to apply the valuation of goods imported into Canada that do not fully match the contract terms, as detailed in Memorandum D13-2-4 (updated July 17, 2025). This guidance helps importers correctly determine value for duty and avoid potential delays or penalties during customs clearance.
Goods Not Matching the Contract
These include goods that:
- Are damaged or defective
- Differ in quality, class, or description
- Arrive in quantities above or below the contracted amount
Customs Valuation Rules
Under the Customs Act (Sections 48–53), the valuation for duty Canada must:
- Be based on the price as if goods fully met the contract
- Apply regardless of later refunds, credits, or disposal
Valuing Replacement Goods
Replacement goods shipped free must be valued the same as the original goods. Importers need to provide evidence that these replacements are identical.
Example: 10 free replacement units are valued at the original unit price.
Treating Overages
If you receive more goods than ordered, you must declare a value for the extra items. If you pay extra for them, use that amount. If they are free, use the price of the same goods in the original shipment.
Example: 10 free extra units priced at $5 each valued at $50.
Treating Shortages
If you receive fewer goods than ordered, the value is based on what you paid for the shipment delivered. Price reductions or credits don’t lower the value of future shipments unless you request a refund through CBSA’s official process.
Example: You ordered 100 units but only received 90; the value is based on 90 units at the original price per unit.
Why It Matters
Proper valuation of goods imported into Canada following official CBSA valuation guidelines is essential to ensure compliance. It helps prevent penalties, ensures correct duties and taxes are paid, and supports smooth customs clearance.
References
How GHY Can Help?
GHY specializes in helping businesses navigate and reduce the impacts of tariffs through strategic solutions tailored to their needs. Our experts can audit your supply chain to identify inefficiencies, uncover cost-saving opportunities, and ensure compliance with evolving trade regulations. We also employ tariff engineering techniques to optimize product classification and sourcing strategies, minimizing duty exposure and maximizing profitability.
By partnering with GHY, your business gains access to the tools and expertise needed to streamline operations and stay competitive in a challenging trade environment.
Contact Us Today! Booking a Meeting, email consult@ghy.com, or call +1 (800) 667-0771.
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