Value for Duty: 6 Methods for Determining Customs Value in Canada

By TariffCalc Editorial Team

The value for duty (VFD) is the base amount on which Canadian customs duties are calculated. CBSA follows the WTO Customs Valuation Agreement, which prescribes six methods applied in strict order.

Method 1: Transaction Value (Most Common)

The price actually paid or payable for the goods when sold for export to Canada. This is used in approximately 90% of all imports.

Adjustments are added for:

Commissions and brokerage fees paid by the buyer
Assists (tooling, molds, designs provided to the supplier)
Royalties and license fees related to the imported goods
Proceeds of subsequent resale accruing to the seller
Packing costs

Method 2: Transaction Value of Identical Goods

If Method 1 cannot be used, CBSA looks at the transaction value of identical goods sold for export to Canada at approximately the same time.

Method 3: Transaction Value of Similar Goods

Same as Method 2 but using similar (not identical) goods that are functionally interchangeable.

Method 4: Deductive Method

Starts with the resale price in Canada and works backward by deducting Canadian costs (profit, transport, duties, taxes).

Method 5: Computed Method

Built up from the cost of production: materials + manufacturing + profit + general expenses in the country of export.

Method 6: Residual/Fall-back Method

A flexible application of Methods 1-5 with reasonable adjustments. Cannot use arbitrary or fictitious values.

Key Rules

Methods must be applied in order (1 through 6)
Method 4 and 5 can be reversed at the importer's request
The importer has the right to be informed of which method CBSA uses
Related-party transactions require extra scrutiny under Method 1

Use TariffCalc

Enter your product value in our duty calculator and TariffCalc calculates duties based on the VFD you provide. Understanding VFD is essential for accurate landed cost calculations. The Incoterm on your invoice determines which costs are included. For complex valuation scenarios, consult a licensed customs broker.

Frequently Asked Questions

Which value for duty method is used most often?▼

Method 1 (Transaction Value) is used for approximately 90% of imports. It is based on the price actually paid or payable for the goods, adjusted for certain additions (freight, insurance, assists, royalties) and deductions.

What costs are added to transaction value for customs?▼

Additions include: freight and insurance to the point of export, commissions paid by the buyer, assists (materials/tools provided to the producer), royalties and license fees, and proceeds of resale that accrue to the seller.

When can transaction value NOT be used?▼

Transaction value cannot be used when: there is no sale (e.g., consignment goods, free samples), the buyer and seller are related and the relationship influenced the price, or there are restrictions on the disposition of the goods.

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