Contributing Lawyers

Canada

Cyndee Todgham Cherniak

United States

Susan Kohn Ross

Australia

Andrew Hudson



Canada Border Services Agency Has Difficulties With Cross-Border Private Sales

When a Canadian resident purchases goods outside Canada, they must declare the goods when returning to Canada.  When the individual is over the exemption limit ($800 for stays outside Canada exceeding 48 hours, $50 for same day), they must pay applicable customs duties, GST/HST, excise taxes and other imposts and charges.

Many individuals purchase big ticket goods (such as motor vehicles, motor homes, ATVs, sailboats, motor boats, motor cycles, watercraft, etc.) by way of private sale using Craigslist and other Internet-based web-sites where people list stuff they would like to sell.  These transactions are legal and provide an opportunity to get big ticket goods for a lower ticket price. However, remember the old saying "if a deal seems too good to be true ..."

Firstly, individuals MUST remember to declare these purchases. When they do not make a proper declaration to the Canada Border Services Agency (CBSA), they risk criminal charges if the value exceeds a certain threshold. it is possible for the CBSA to lay criminal charges for smuggling and for the CBSA to seize the goods.  It is costly to defend such errors in judgement.

Even when the individual does declare the purchase, the CBSA may scrutinize these declarations. Often the buyer/importer does not have any documentation from the vendor.  The buyer pays cash and does not have any evidence of the price paid or payable.  In these circumstances, the CBSA will look on web-sites for a value and it often greatly exceeds what was actually paid.

Even when the buyer/importer has a sales invoice or receipt (or transfer paperwork), the CBSA is skeptical. Many CBSA officers have seen false invoices and, as a result, do not accept private sales invoices without further supporting documentation.  What buyers/importers do not realize is that they  have the onus of proving what they paid.

I recently had a client who gave the CBSA officers the name and telephone number of the vendor to allow the officers the opportunity to corroborate the price.  However, the CBSA officers would not call the vendors based on their belief that the vendors were not a reliable source of supplemental evidence.  The CBSA refusing to make a call to the vendors does not happen every time, but it is not a guarantee either.  The CBSA officers may believe that the buyer/importer and vendor conspired to falsify the invoice/paperwork and that the vendor would inform them that the buyer/importer paid the amount of the receipt/paperwork.

This is an unfortunate situation for honest individuals who like a good private sale deal.  The question is: what can they do to differentiate themselves from the bad guys who lied to the CBSA?  This is a hard question to answer.

The CBSA often asks to examine an iPhone or Blackberry or PDA or computer.  They do this looking for email exchanges with the vendors about the price. If they find emails concerning a price that is different than what was paid, this will raise red flags.  On the other hand, if there an email trail concerning the negotiation of the price, that is helpful.  I would recommend that all emails with the vendors be printed and bring a folder to the border. Also include the original listing / offer for sale even though it often is unrealistically high.  If you have that information organized and the CBSA does not have to look for it, the CBSA may accept your evidence.  That being said, the CBSA may also view an emails as self-serving.

Supporting documentation could come in the form of independent blue book values.  Some of these big ticket items are listed in blue books by make and model and year.  These third party businesses often include retail prices and values for the goods in good condition.  This evidence can be helpful.

Whether goods are in a good condition or in need of repair affects the price.  If the goods are not in prestine condition, documentation of the damage is necessary (not that the CBSA will always agree with you on the appropriate discount). I recommend writing a list of deficiencies in the goods/repairs suspected prior to reaching the border.  If the vendor will agree to sign the list, then it will demonstrate a mutual recognition.  The vendor may wish to indicate that sale is taking place on an "as is" basis so that any new problems do not become their problem. In any event, the list may be more complete if you take a moment before reaching the border.  Also, if there is a disagreement, you can leave a copy of your list and obtain an independent third party in Canada to corroborate after importation (such as an appraiser or repair shop).

Where possible, do not pay cash.  I say "where possible" because the final negotiation often is based on a face-to-face meeting and a visual inspection of the goods for damage. As a result, it is not always possible to bring a money order or bank draft.  Vendors often do not accept cheques because once the goods are gone, it is difficult to get paid if the cheque is bad. I recommend asking if the vendor uses PayPal because the transfer can be verified. That being said, the CBSA may also believe that a cash top-up was given.  The fact that these transactions re often cash transactions is the problem with private sales.

There is no magic information that the CBSA will accept with respect to private sales of big ticket items.  The more information you have, the better.  If you are an honest traveler and run into difficulties with a CBSA officer, ask to speak with the supervisor. Show how you have attempted to bring adequate documentation. Be prepared to give the vendor's information to the CBSA. Be prepared to answer the hard questions.  Do not get angry if the CBSA asks questions. Be prepared to agree to disagree, pay the penalty and then appeal after more information can be gathered.

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