As we reported in two previous editions of the Stikeman Elliott Tax Law Update, the controversy over the so-called "iPod tax" began with the release of the 2013 federal budget proposal to eliminate access by high-income, export-competitive countries to Canada's General Preferential Tariff ("GPT") program.1 We indicated that the proposed changes to the GPT regime would potentially trigger an increase in customs duties levied on goods imported (most notably) from China, where most of the world's electronic goods are manufactured. The media nicknamed the proposed reform of the GPT regime after Apple's "iPod", one of the best known MP3 players on the market, although the name is misleading as the issue affected much more than just that one product and was not a "tax" per se.

This update concerns some important new developments in this area, namely a recent regulatory amendment and the publication of three new "D-Memoranda" by the Canada Border Services Agency ("CBSA") at the end of April 2015. These represent the latest effort of the Government of Canada to bring the controversy surrounding the "iPod tax" to an end.


The "iPod tax" basically involves the application (or, in fact, the non-application) of an alternative favourable tariff classification under tariff item No. 9948.00.00 of the Customs Tariff which (among other things) allows for the relief of customs duties on imported goods to the extent that such goods are capable of being "for use in" computers. The term "for use in" is defined in subsection 2(1) of the Customs Tariff and means: "that the goods must be wrought or incorporated into, or attached to, other goods referred to in that tariff item." Decisions from the Canadian International Trade Tribunal have clarified that the goods in issue must be "physically attached to and functionally joined" the other goods referred to in the tariff item.

At the time of our updates of two years ago, stakeholders' concerns were centered on the practicality of applying this particular tariff item to consumer goods. One of the reasons for these concerns was based on the CBSA's Memorandum D10-14-51, published in 2007, which provided that: "importers are expected to provide end-use certificates confirming that the goods were solely used for the purpose for which they were imported." Obviously, if taken literally and strictly enforced by the CBSA, this requirement would have posed serious practical problems for importers of MP3 players or other electronic goods destined to individual consumers.

In hopes of easing these concerns and making the application of tariff item No. 9948.00.00 more flexible, the CBSA issued, on June 28, 2013, Customs Notice 13-015 to clarify that the end-use certificates relating to tariff item No. 9948.00.00 were no longer required at the consumer level but rather at the importer level. This Notice explained that importers could simply attest to the contemplated use of the goods and retain records of the relevant written attestations. At that time, we recommended that importers exercise some degree of caution regarding the use of tariff item No. 9948.00.00 as it was still uncertain precisely how the CBSA would handle the attestations in practice. We wondered whether the authorities would accept attestations from importer-wholesalers or only from importer-retailers who deal directly with the end consumers. More importantly, the degree of knowledge or evidentiary support that the importer was required to have in order to make its attestation with respect to the contemplated use of the goods was still uncertain.

CBSA's long-awaited response

On April 1, 2015, when Governor in Council approval was received, the amendment of the Imported Goods Records Regulations ("IGRR"), as provided for in Customs Notice 13-015, was enacted. As mentioned above, the CBSA wanted to clarify the record-keeping requirements with respect to goods imported duty-free under tariff item No. 9948.00.00 to make it clear that those requirements rest at the importer level, rather than at the end-user level. Accordingly, Section 3 of the IGRR now includes an additional paragraph that states:

(a.1) in the case where the commercial goods have been released free of duty under tariff item No. 9948.00.00 in the List of Tariff Provisions set out in the schedule to the Customs Tariff, an attestation signed by the person who imports the goods or causes them to be imported indicating the person's name, address and occupation and the intended use of the commercial goods, sufficient to confirm that the goods fall within the description of goods corresponding to that tariff item.

Put simply, this means that for qualifying goods imported duty free under tariff item No. 9948.00.00, the importer of the goods is allowed to certify their intended use rather than requiring a certificate to be signed by the end-user of the commercial goods confirming their actual use. This amendment is retroactive to the date Customs Notice 13-015 was published (June 28, 2013).

On April 17, 2015, the CBSA issued a new Memorandum D11-8-6 "Interpretation of Section 3 of the Imported Goods Records Regulations" to reflect this amendment. In the Memorandum, the CBSA states that for articles imported under tariff item No. 9948.00.00 on or after June 28, 2013, instead of keeping records of actual use, the importer is only required to provide an attestation as to the intended use of the article. This attestation is a written statement made by the importer that must include the following information about the item being imported under tariff item No. 9948.00.00:

  1. A detailed description;
  2. The classification of the good under Chapters 1 to 98 of the Customs Tariff as applicable; and
  3. The importer's assertion of intended use.

An Appendix to Memorandum D11-8-6 is provided in which an example of a suitable text for an attestation can be used. The text used in the Appendix provides that the importer simply has to attest: "that the [...] article has been imported into Canada to enhance or complement the function of (insert the good listed in tariff item No. 9948.00.00 in which the imported article will be 'for use in')."

The CBSA also released a new Memorandum D10-14-51 on April 17, 2015, superseding the 2007 Memorandum mentioned above, in which the reference to the expectation that importers provide an end-use certificate has been deleted to take into account the amended IGRR.

In conjunction with the release of these two D-Memoranda, the CBSA also published a new Memorandum D11-8-5 to clarify its policy regarding the eligibility of imported goods for conditional relief tariff items at large.

Although we have yet to see how the CBSA would actually handle the attestations in practice, these additional clarifications certainly represent some big steps toward a happy ending to the "iPod tax" saga.