On November 30, 2013, the Government of Canada announced a proposed regulation under the Canada Consumer Product Safety Act (the “Act”) to exempt retailers that obtain consumer products through donations from the Act’s requirements to prepare and maintain documents in connection with the source and sale of those products. The regulation is expected to affect about 2,000 second-hand stores across Canada, many of which are thrift stores associated with charitable organizations. The reasons for the proposed exemption include the difficulties these retailers face in complying with the relevant provisions of the Act, the expectation that the information that could be obtained from these types of retailers would do little to advance the purpose of the provisions (i.e., tracking products through the supply chain in order to facilitate product recalls or other health or safety measures), and a recognition that failing to exempt these retailers could discourage some people from making donations.

The proposed exemption does not apply to consumer products that are donated to a retailer by a manufacturer, importer or seller. In those cases, the retailer receiving the donation would still be required to prepare and maintain the necessary documents (i.e., the name and address of the person from whom they obtained the product, and the location where and the period during which they sold the product). The rationale for the exclusion is that these types of donations tend to be on a larger scale and consist of similar products (e.g., year-end clearances and end-of-run productions or old stock), they are likely to include identifying information, and it is reasonable to expect that the required documentation would be prepared and maintained for other purposes, e.g., bookkeeping, inventory or tax records. Finally, the exclusion would serve the purposes of the Act, i.e., to allow more effective tracking of products back through the supply chain, as necessary.

Finally, notwithstanding the exemption, the other requirements of the Act would still remain in force for second-hand retailers, which would still be required to ensure that consumer products they obtain by donation meet the requirements of the Act before selling or advertising them.

Interested persons may comment on the proposed regulation until February 14, 2014. The text of the proposal, the Government’s Regulatory Impact Analysis Statement, and details about how to comment on the regulation, are available here.