40GB iPods have been discontinued by Apple, so you've purchased an older model iPod from leftover inventory.
I would imagine that a retailer can charge whatever they choose to charge.
The current iPod models are a 30GB ($299 USD) and 60GB ($399 USD). I'm not sure what that equates to in Canadian dollars, but if you do the currency conversion, you should know if you've been overcharged for a 40GB iPod.