As the festive season approaches, Canadian businesses importing goods should be aware of a critical compliance issue: suppliers including holiday gifts in commercial shipments. While these gestures may seem like goodwill, they can create significant liability for the importer of record (IOR).
Consider this scenario: a supplier ships 500 gear boxes purchased by a Canadian company and adds two branded travel mugs with a Christmas card as a gift. Because the shipment contains purchased goods, it is classified as commercial, and the gift exemption under Tariff item 9816.00.00 does not apply. All items including the mugs must be declared at their fair market value, and duties and taxes will apply on the total value of the shipment.
Importers of record are legally responsible for all goods in the shipment, even those they did not purchase. Gifts must be declared accurately and valued properly. Failure to do so can lead to penalties, interest, and post-import audits.
To stay compliant, businesses should follow these steps:
- Ensure suppliers list all gifts on the commercial invoice with realistic values.
- Include gifts in the customs entry and pay applicable duties and taxes.
- Keep documentation to support declared values in case of audit.
Risk Mitigation Advice: To avoid unnecessary liability, communicate clear instructions to foreign vendors: do not include holiday gifts or promotional items in shipments tied to purchase orders. If gifts are intended, they should be shipped separately and not under your business number as the importer of record. This approach ensures gifts are treated as casual shipments and prevents them from being classified as part of a commercial import.
By taking these precautions, Canadian businesses can enjoy the holiday season without facing unexpected compliance risks.