The Canada Border Services Agency (CBSA) regularly conducts audits or “verifications” of importers, to assess compliance with Canada’s customs laws. Such verifications could result in additional duties, GST and/or other levies payable on imported goods, as well as required self-corrections and administrative monetary penalties (AMPS) in cases of non-compliance. Twice a year (in January and July), the CBSA publishes its verification priorities giving importers advance notice of a CBSA customs audit.

CBSA customs verifications target three principal program areas, namely: origin, tariff classification, and value for duty. The CBSA may also conduct reviews of an importer’s level of compliance with accounting for imported entries under Canada’s customs laws, compliance with duties relief programs, or other customs requirements.

The publication of the customs verification priorities list gives importers who have not yet been notified of a customs audit an opportunity to conduct an internal customs compliance audit to assess their level of compliance, and whether there is a need to file a customs voluntary disclosure to correct any past errors.

HOW ARE THE PRIORITIES ESTABLISHED?

Trade compliance is managed by the CBSA both by random and targeted verifications. Random verifications promote voluntary compliance and are designed to measure compliance rates and revenue loss as well as to gather information that can then be used for risk assessment purposes.

Targeted verification priorities are established by the CBSA on an ongoing basis as a result of a risk-based analysis.

THE JANUARY 2021 LIST

The most recent list released by the CBSA contains 21 tariff classification priorities, two valuation verification priorities and one origin verification priority. For ease of reference, we have set out in table format the verification priorities by both tariff number (within Canada’s List of Tariff Provisions), targeted program (tariff classification, valuation or origin) general description and the date added to the priorities list. Importers of goods declared under the listed tariff numbers or descriptions set out in the table, may wish to take proactive measures to assess, and if necessary correct and improve, their customs compliance.

TAKEAWAY FOR IMPORTERS

To prevent mistakes in their declarations to the CBSA, importers should aim to implement best practices that will help them keep an informed eye on any changes in legislation and ensure continuous compliance.

In the event that an importer discovers inaccuracies in past import declarations prior to being notified of an audit by the CBSA, they should take corrective measures immediately. In such situations, importers may either make a simple correction of such declarations or file a voluntary disclosure to the CBSA. By correcting or disclosing erroneous declarations in a timely manner, importers may be able to minimize applicable penalties.

Finally, while importers of goods listed as a priority are more likely to be subject to an audit by the CBSA, importers of goods that are not included in the most recent list must keep in mind that a trade compliance verification remains possible at any time, and that they are not immune to random verifications.

TABLE - 2021 Verification Priorities of the CBSA

Tariff No.

Tariff Classification

Date Added to List

Chapter 2, Chapter 4

Import permit numbers (Round 2)

October 2017

02.07, 16.01, 16.02

Spent fowl (Round 2)

July 2017

19.02

Pasta (Round 3)

November 2015

20.01

Pickled vegetables (Round 4)

June 2012

38.24

Other chemical products

December 2018

39.26, 40.15

Disposable and protective gloves (Round 4)

October 2012

39.26, 42.02, 85.17

Cell phone cases (Round 2)

January 2016

39.26

Articles of apparel and clothing accessories (Round 3)

December 2014

42.02

Bags (Round 2)

October 2017

42.03

Gloves (Round 4)

July 2017

64.03

Footwear (C$30 or more per pair) (Round 4)

March 2014

65.06

Safety Headgear (Round 4)

December 2011

73.22

Air heater and hot air distributors (Round 2)

June 2018

83.02

Other mounting and fitting, suitable for furniture (Round 2)

June 2018

84.79

Parts of machines and mechanical appliances

December 2018

85.06

Batteries (Round 4)

November 2013

85.13

Flashlights and miners’ safety lamps (Round 2)

June 2018

85.39

LED lamps

May 2020

94.01, 94.03

Furniture for non-domestic purposes (Round 3)

January 2013

94.03

Stone table and counter tops (Round 2)

March 2016

94.05

Parts of lamps (Round 4)

September 2015

Tariff No.

Valuation

Date Added to List

Chapters 61 and 62

Apparel (Round 3)

February 2012

Chapter 64

Footwear (Round 2)

February 2012

63.01, 63.02, 63.03

Bedding and drapery (Round 2)

February 2012