Reference no: EM132812566

Jack Tremblay was delighted to receive a job offer from the Canadian subsidiary of TGZ Technologies Inc., a California-based manufacturer of mini-computers. Tremblay was hired as a systems engineer in the Montreal office to install the company's product and serve as a troubleshooter for clients who experienced problems.

During his first two weeks of work, Jack accompanied experienced systems engineers from the Montreal office to see how TGZ's products were installed. Jack had been a systems engineer in a related business for five years, so he could understand many of the steps the experienced engineers went through to install the equipment. However, every client has unique requests, so Jack could not install these systems until he received formal training from the company's head office in California.

At the end of two weeks, Jack was sent for an intensive one-week training program in California where he learned how to install different types of TGZ computers in a variety of situations. Jack met other recently-hired systems engineers from across North America, including four other Canadians. It was a high-spirited gathering where the learning was intense and close friendships were formed. Jack returned to the Montrealoffice even more dedicated to the company than before and highly motivated to work with clients to install and service TGZ's products.

After three months of work, Jack returned to TGZ's head office in California for another four days of training. The program included many of the same people he had met in the previous program. On the third day of training, Jack was approached by a production manager at TGZ's California plant. He asked Jack to take a small package back with him to Montreal and handed over a small box containing several small components and circuits for a TGZ minicomputer that was about to be installed for a Montreal client. Although these pieces would fit into a shaving kit, they were worth several thousand dollars in the retail market. Jack asked whether these items should be declared at Canadian customs, but the manager quickly said "No. Uh, we will handle that. You just keep them in your luggage so that there's no confusion with the customs papers we have sent already."

1. What should Jack do here? Explain your answer.

2. Would your decision be different if: (a) Most other computer manufacturers also imported a fraction of their components without paying customs duty? (b) The amount of duty owing in Jack's shipment was only $50 rather than $500?