The Canada Border Services Agency publishes a Memorandum which outlines and explains the treatment of discounts in determining a transaction value under the Customs Act. The transaction value will become, in most instances, the "value for duty" on which duties and taxes are calculated.
For the purposes of the Memorandum, the term "discount" refers to an arrangement whereby the vendor, in return for the purchaser's undertaking of certain obligations or accepting or meeting certain conditions, reduces the amount of the price paid or payable for the imported goods. For example, the vendor may grant a discount for prompt payment (cash discount) or because the vendor operates at a certain level of trade (trade level discount) or because the purchaser has agreed to purchase a specified quantity of the goods in the sale giving rise to their importation (quantity discount).
The price paid or payable is the total of all payments, whether direct or indirect, made or to be made by the purchaser, to or for the benefit of the vendor.
If a discount is effected - that is, the obligation or condition necessary for a discount is fulfilled or met - prior to importation, the amount of that discount should be considered when calculating the price paid or payable for the imported goods.
With the exception of cash discounts, the amount of a discount effected after importation cannot be deducted from the price paid or payable for the imported goods.
The importer may be required, at the time of importation or subsequently, to satisfy customs that the cash discount will be or has been taken.
Further details are available in Memorandum D13-4-10 Discounts (Customs Act, Section 48).
