Lately, i have been confronted with buyers from Canada who have insisted that i declare an artificially low value for an item that i am selling so that they can avoid the heft customs duties in Canada. In one case, this request was made AFTER the buyer had already paid me. In a subsequent case, i told the prospective buyer up front that i would not mis-state/under-insure the the item and this put an end to our discussions (presumably, the customs fees would have been so significant that we couldn't resolve this by simply "pricing it into the deal.")
I have no problem selling to buyers from Canada, but i do have a problem providing false statements on a Customs Declaration. Am I over-reacting?
When I've sold to Canada and have been requested to declare a lower value I always inform the person that if the item is lost, stolen or damaged the only thing they can get is the declared amount not matter the actual cost. 90% say no problem.
I say pay the taxes and don't cheat. With that said, money, like water, follows the path of least resistance. Therefore, we have tax avoidance in a multitude of ways, running the whole gambit from under-valuing a piece of audio equipment coming across the Canadian border to offshore bank accounts.
Made outside North America: Duty + GST + PST + brokerage + shipping
Duty, if any, and taxes are charged on the declared value of the goods. It doesn't matter if the goods are used or new.
The sale price of the item will be verified if an insurance claim is made. Transaction records such as auction postings and bills of sale will be required to prove the amount paid. Besides being illegal to falsify a customs declaration, it is a foolish risk.
Selling into Canada there is no duty either way. My understanding is there is sales tax on transactions used or new. It is a General Sales Tax (GST) and possibly Provincial Sales Tax (PST) levied after it clears customs, which adds up to as much as 14%.
I was always under the impression that there is no duty on used merchandise. Is that not the case? In my experience, when I've written USED MERCHANDISE on the customs label, there no duty has to be paid.
Great thread. I had two buyers, one in Canada and another in Europe, in the last two weeks, back out of deals on a $7k+ purchase because of this. One suggested I use UPS and declare it "repair" or "sample" so he could get it through customs without taxes/duty. If it's seized, I lose the gear (though I would have his money) and I am also probably subject to some form of fraud prosecution. Since he doesn't actually receive it, he'd probably expect his money back as he never took delivery. The buyer has nothing at risk at least in terms of criminal act. Of course I said no way.
The other guy bangs me up on low offers for a week, which I finally move up enough to accept, then he wakes up and figures out he doesn't have enough money to cover GST/PST's and shipping/brokerage fees to go across the border. Seems like you'd know that before making an offer, right?
Lately it seems to be much more common to encounter these guys. Both had very low or non-existent feedback numbers so I was wary to begin with. Unfortunately there's really no way to warn others about them. I guess they're just wasting our time to see if we'll weaken and go for it.
Shadorne, your comments on budget deficits and Chinese economics are excellent thoughts. I thought however for the record I should point out the US budget deficit is now at $8.7 Trillion dollars. I wish it was only one, our dollar would be much strong.
It is the law and laws must be obeyed irrespective of whether they make any sense. Are many of these taxes reasonable or fair?...no they most certainly are not! For example, an item originating from the UK and sold in the US will have US import taxes and sales taxes applied to it. This same item if sold used to a Canadian will have import duties and all sales taxes applied all over again....double taxation!!!
Oh and NAFTA....it is a complete farce. Americans apply protectionist taxes against many Canadian products (such as softwood lumber) and Canadians apply protectionist taxes against many American products (telecomms, banking, financial services, cars etc.)
The only things certain in life are death and taxes!
BTW....this will only get worse. The US has $1 trillion in debt...China has a seriously undervalued currency (Yuan) => more protectionism looks heavily on the cards!
I have the shipment sent to a close to the border Fed Ex station to be held there and pick it up in person. That way I take it across the border myself, declare what I paid for the item (you should see the looks of disbelief on the agents' faces, no not because the value is low but they simply can't figure out why a guy should buy a used amp or cd player and pay way way more than a new one at Best Buy), but save the horrendous so called "brokerage" fee charged by the shipping companies. The shipping is cheaper too. I know, I know, this is of no help if you live, say, in Edmonton or Cornerbrook.
No duty on items made in the US, just GST and PST. I got Linn products with a declaration that they are made in Scotland or GB or the EU across and never was charged duty either, just taxes, for reasons that escape me.
Its amazing anyone would ask to have anything falsified on a transaction. I do know it happens and it has been asked of me too. I sure don't wish to be involved any anything illegal so somebody can save a buck.
Good thread, perhaps enough will read this and stop this nonsense.
Just to underline the point: Canadians pay taxes, not duty, on audio gear made in North America. These can vary but the 14% mentioned is typical. On gear from outside North America, taxes are charged and duty is also charged; the maximum duty is just under 7%. Finally, the carrier will charge fees for taking the package through Customs, and these vary. The cheapest is Canada Post.
I have never asked a U.S. shipper to declare any other value than the one I paid. For small uninsured packages--tubes, perhaps--it is convenient to have the shipper drop the total a bit, deducting the shipping charges for example. Some do this without being asked, but as far as I'm concerned it is entirely up to him. A good deal is built on mutual understanding and respect of each other's limits.
I don't think you're overreacting at all. As a "Northern Neighbor" and a purchaser from both A'Gon & eBay I have never felt comfortable in asking that a vendor lie about the value of the item. The only request I make of US vendors is to clearly mark the item as "Used" if such it is. With many used A'Gon items being almost indistinguisable from new I want to make sure that an over-zealous customs guy/gal doesn't try and charge inflated duties. I concur that the NAFTA question is a good one - I've never been able to figure out exactly what is & isn't dutiable and, more importantly, why.
GENTLE men, duties (only) apply if it is a product manufactured outside the US & Canada (could be up to 7% or so). Many ask to reduce values due to the provincial & federal taxes (up to 14%). The other issue is that shipping by UPS/Fedex, etc., by Ground/Standard (this does not apply to "air" shipments such as Expedited or Express which is built into the pricing) results in brokerage charges as well. The more valuable (declared) the item the higher the brokerage cost. I am Canadian & have much (terrific in some cases) experience at this & would suggest NOT to undervalue/underinsure, especially if you have been paid by paypal. If lost & only declared for say $100, yet worth $5000, you know what the buyer will do! If you have received an MO or Draft & have instructions in writing & the buyer understands he is responsible.....maybe, if you want to sell....
I had a package come up that caught the custom's officers attention. Had to go out to the airport and get "interviewed" by a large guy with a gun. He also called the seller and checked Ebay and Audiogon for records of the transaction. These guys are serious about collecting their taxes. Needless to say, I learned my lesson. I don't even want to imagine the penalty for fraud.
I still think it's ridiculous to charge taxes on used items but it's the duty charges by couriers that really irks.
It's totally your call, and god forbid that something bad happened to your item and an insurance claim needed to be made with an artificially low declared value. Who's left holding the bag then? You are well within your rights to act as you are, don't do business with anyone that makes you uncomfortable, that's your perogative.
Audiogon was built on honesty. It's said that one percent of the population causes most of the problems. If it makes you uncomfortable, let them buy it somewhere else.
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