The Canada Border Services Agency recently issued a statement affecting those in the Canadian harness racing industry that import horse semen from the United States
.
The notice from the CBSA is as follows:
Customs Notice 11-020
1. This customs notice provides information concerning the calculation of the value for duty (VFD) of imported horse semen, and supersedes any previous information provided by the Canada Border Services Agency (CBSA) on this subject.
2. The VFD is determined using one of six methods identified in sections 48 to 53 of the Customs Act. The most commonly applicable of these is the transaction value method (TVM) identified in section 48. The TVM ordinarily applies when:
(a) goods are supplied as a consequence of a sale, including a contract with a payment to be made later;
(b) the goods are sold for export to Canada to a purchaser in Canada;
(c) the price paid or payable for the goods can be determined; and,
(d) there are no limitations on the use of the TVM.
3. The price paid or payable (PPP) is defined in subsection 45(1) of the Customs Act as “the aggregate of all payments made or to be made, directly or indirectly, in respect of the goods by the purchaser to or for the benefit of the vendor.” Usually, a vendor will generate a single invoice to be paid by the purchaser, and the amount of payment is the PPP.
Sometimes, a vendor may generate separate invoices identifying various charges to be paid by the purchaser, or may instruct the purchaser to pay a third party for charges that would otherwise have been paid by the vendor. In these circumstances, the PPP is the sum of all payments made directly to the vendor, as well as any payments made to a third party on the vendor’s behalf.
Third-party charges that are absorbed by the vendor and not passed on to the purchaser are not included in the PPP.
4. In scenarios involving the sale for export to Canada of horse semen, examples of charges that may be paid by the purchaser to or for the benefit of the vendor include, but are not limited to:
(a) stud fees;
(b) collection and processing fees;
(c) shipping container charges and handling fees;
(d) veterinary fees (e.g., fees charged by the USDA accredited veterinarian to collect and complete a US Origin Health Certificate for Export of Equine Semen to Canada (Zoosanitary Export Certificate) at the semen collection premises);
(e) trip fees (e.g., amounts incurred by the vendor to bring a US Origin Health Certificate to the USDA veterinarian’s office for signature and seals);
(f) booking fees; and,
(g) laboratory fees for analysis and testing, including DNA testing.
5. Under the TVM, charges that can be deducted if they have already been included in the PPP include:
(a) amounts to transport goods directly from the foreign vendor to Canada (i.e., actual transportation costs to Canada from the foreign point of direct shipment. Documentary evidence to substantiate the amount of the deduction may be requested by the CBSA);
(b) fees paid to a customs broker to account for the importation; and,
(c) any applicable Canadian duties and taxes (GST/HST).
6. Commercial documentation exchanged between a purchaser and vendor or third party should reflect all information necessary to support a VFD declaration.
Alternatively, this information can be submitted to the CBSA using form CI1, Canada Customs Invoice, in support of an importer’s customs declaration. Departmental Memorandum D1-4-1, CBSA Invoice Requirements, provides information on completing the
form CI1.
7. Generally, horse semen is sold for export to Canada in one of the three following commercial circumstances:
(a) a supply is made in a single shipment for an identified price payable at the time of shipment;
(b) a contract for supply to inseminate one mare is made with an identified price payable at time of the first shipment and a series of shipments occurs until conception is confirmed or breeding season concludes; or,
(c) a contract for supply to inseminate one mare is made with an identified price and a series of shipments occurs until conception is confirmed or breeding season concludes, and full payment is not required to be made before the birth of a foal occurs.
8. In the first circumstance identified in paragraph 7 above, the VFD would be based on the PPP for the single shipment.
9. In the second circumstance, the VFD of the first shipment would be based on the PPP. Subsequent shipments imported at no additional charge to the purchaser would each be declared with a VFD of zero.
Any additional charges relating to the subsequent shipments paid or payable by the purchaser to or for the benefit of the vendor would be included in the VFD. In all circumstances where a subsequent shipment occurs, documentation indicating that the
VFD in full was accounted for on the first shipment should be provided. For example, a copy of the B3, Canada Customs Coding Form, or B15, Casual Goods Accounting Document, customs entry for the first shipment, or information referencing the transaction
number and the VFD of that entry, should be provided to the CBSA when accounting for the subsequent shipment.
10. In the third circumstance, the VFD would be established as instructed in paragraph 9. In all circumstances where a subsequent shipment occurs, documentation indicating that the VFD in full was accounted for on the first shipment should be presented to CBSA when accounting for the subsequent shipment.
11. There is no authority under the Customs Act that would provide for a refund of the GST/HST assessments where a subsequent shipment occurs because conception did not result from a preceding shipment or where a birth of a foal does not ensue. An importer who is a GST registrant may claim the amount of tax assessed on each importation to the Canada Revenue Agency as an input tax credit.
12. In the event that horse semen is imported in to Canada but not as a consequence of a sale for example, a person in Canada has an ownership interest in a stallion maintained outside of Canada and obtains and imports an amount of that stallion’s semen free of charge, the VFD is established under one of the alternate valuation methods identified in sections 49 to 53 of the Customs Act.
In the example provided, the declared VFD should approximate the price a purchaser in Canada unrelated to the foreign supplier would pay for that stallion’s semen. The CBSA’s Importer’s Valuation Guide and the D13 series of departmental memoranda provide additional information on determining the VFD under the alternate valuation methods.
13. For more information, within Canada call the Border Information Service at 1-800-461-9999. From outside Canada call 204-983-3500 or 506-636-5064. Long distance charges will apply. Agents are available Monday to Friday (08:00 – 16:00 local time/except
holidays). TTY is also available within Canada: 1-866-335-3237.