Importing into Canada

  1. Role of the Canada Border Services Agency (CBSA)
  2. Role and responsibility of the Canadian importer
  3. Role and responsibility of the Customs Broker
  4. North American Free Trade Agreement (NAFTA)
  5. Harmonized System Tariff Classification
  6. Required Documentation
  7. Invoice Requirements
  8. Administrative Monetary Penalty System (AMPS)
  9. Compliance Verification Audits
  10. Compliance Checklist for Canadian Importers
  11. Avoiding Penalties and Delays
  12. Industry Links:

Role of the Canada Border Services Agency (CBSA)

  • The Canadian Border Services Agency’s main job is securing our border against terrorism, drugs, smuggling and other illegal activities.
  • CBSA is responsible for collecting all duties, taxes and fees pertaining to each shipment imported into Canada.
  • The CBSA’s commercial operations are available 24/7 at most ports.

To learn more attend a Canadian Customs Compliance Seminar.


Role and responsibility of the Canadian importer

  • Importers are ultimately responsible for payment of all duties, taxes and fees to CBSA.
  • If goods are inspected by CBSA, and the goods must be moved from one location to another location in order to do the exam, the importer is responsible for the costs involved in moving, unloading, and reloading the goods.
  • Importers must understand CBSA regulations, be aware of any changes and be in full compliance.
  • Voluntary compliance with refund, amendments and voluntary entries to CBSA shows due diligence.
  • Importers should keep their Customs Broker in the loop.  Make sure your Customs Broker is aware of changes in your company structure, ownership, new divisions or branches, new products being manufactured or items being imported.  There could be special requirements on specific products that you need to know about before you import them.

To learn more attend a Canadian Customs Compliance Seminar.

 

Role and responsibility of the Customs Broker

The role of a Canadian Customs Broker includes:

  • Customs brokers work in the best interest of their client and try to use their knowledge and expertise to make sure everyone is in compliance with regulations.
  • Customs brokers work with their clients and exporters to ensure that all Canada Border Services Agency (CBSA) and other government department import requirements are met.
  • Customs brokers can advise clients of impending changes, which could affect their business.
  • Customs brokers can assist with transportation issues.
  • Customs brokers can advise regarding compliance issues.

To learn more attend a Canadian Customs Compliance Seminar.

 

North American Free Trade Agreement (NAFTA)

  • The North American Free Trade Agreement (NAFTA) makes up the worlds’ largest free trade area, consisting of Canada, the United States and Mexico.
  • NAFTA covers all goods manufactured, produced or grown in Canada, U.S.A. and Mexico – goods made in other countries do not qualify.
  • NAFTA was fully implemented on January 1st, 2008.
  • Certificate of Origin is complicated and requires a lot of background information to be in full compliance. 
  • Staying current can be very time consuming with record keeping requirements, depending on how many suppliers of raw material are involved.

 

 To learn more attend a NAFTA Workshop.

 Read more about NAFTA.

 

Harmonized System Tariff Classification

  • Classifies absolutely every type of good imaginable.
  • Some tariff classifications are very specific and some are very vague, therefore more details and information about a product is required to determine the correct tariff number.
  • Tariff classification and country of origin determine the duty rate applicable, which can range from duty free to 18% duty (for example – clothing).

 

To learn more attend a H.S. Tariff & Classification Workshop

 

Required Documentation

 

Invoice Requirements

  • Full clear descriptions of the items being shipped – not just a model number, product number or abbreviations, which is useful to the exporter and importer, but is not useful to CBSA or your customs broker.
  • Samples must have ‘value for Customs purposes only’.
  • Date shipped determines the exchange rate used for the Customs entry.  It should be the date the goods leave for their journey to Canada, not the date the documents are prepared.
  • Importer of Record and Consignee could be different.  If you want the goods to be delivered directly to your client but you are still responsible for the customs clearance, then you must be shown in Box # 5 of the Canada Customs Invoice as the ‘Purchaser’ with your client’s name and address in Box # 4 as the Consignee.  Your Canadian Customs Broker handles the shipment and your client sees nothing but the shipment, which arrives at their doorstep.
  • Produce – fresh fruits and vegetables require a COS (Confirmation of Sale) instead of the Canada Customs Invoice.

 

Administrative Monetary Penalty System (AMPS)

AMPS is a penalty regime designed to “provide the Agency with a means to deter non-compliance by its client (the Importer), and thereby to encourage compliance.  AMPS ensure a level playing field for all Canadian businesses by ensuring that there is a cost for non-compliance.  To this end, AMPS is designed to be a remedial rather than a punitive program”.  There are over 300 specific situations that can trigger an AMPS penalty to be issued.  AMPS penalties can range from $150.00 per transaction up to $25,000.00 for multiple infractions. 

  • Reason for AMPS is to enforce compliance
  • Penalty amounts increase with each subsequent infraction
  • You are responsible for declarations made on your behalf by your Customs Broker, carrier, freight forwarder.
  • Imports and exports are subject to AMPS

To learn more attend a Canada Customs Audit Seminar.

Read more about AMPS here.

 

Compliance Verification Audits

Should the CBSA choose your company for a Compliance Verification Audit; you will be asked to provide a number of sample transactions for them to review. 

The verification could be for:

  • tariff classification
  • valuation
  • country or origin or
  • a combination thereof

For example, for tariff verification, you will be provided with a letter requesting copies of transactions that the CBSA wish to review.  You may also be asked to provide samples of the products in question.  At the conclusion of the review, a letter will be sent outlining the CBSA findings. 

If the CBSA makes a determination that all transactions were filed in accordance with the regulations, they will issue a letter to close the audit.  If the CBSA determine that there are corrections required, and the “Reason to Believe” is determined to be the date of the final verification letter; corrections would be required to be filed on any affected transactions from the date of the final verification letter, including 12 months from the date of the last fiscal year end.  However, if it is determined that there was “Reason to Believe” that an error had been made in the tariff classification, prior to the verification audit, corrections may be required to be filed on transactions going back four (4) years from the date of the final verification audit letter.  Furthermore, in this scenario, the CBSA can issue AMPS penalties of $150.00 per transaction to a maximum of $25,000.00 for each correction required to be filed.  It is important to note, that any CBSA findings and subsequent corrections and/or penalties are subject to appeal. 

To learn more attend a Canada Customs Audit Seminar

Get assistance managing the risks of importing and improving efficiencies in your business’ processes.

 

Compliance Checklist for Canadian Importers

  1. Look at your systems, processes and documents
  • Verify that the tariff classification, tariff treatment, valuation, and country of origin for the goods that you declare to the Canada Border Services Agency for imports and exports are in accordance with the requirements of the Customs Act and the Customs Tariff.
  • Ensure that you produce the documents and supporting information, including certificates of origin, which we need to verify your import and export transactions.
  • Verify that your imported and exported goods comply with the requirements of other departments and agencies (e.g. Foreign Affairs and International Trade Canada, Canadian Food Inspection Agency). Do you have all the necessary licences and permits?
  • If your goods are subject to dumping or countervailing duties, verify that your procedures comply with requirements.
  • Ensure that your carrier is aware of reporting and release procedures and the documents required for international shipments.
  • If you have received any correspondence or rulings from the CBSA on any of your products please ensure that a copy is forwarded to our office.

 

  1. Verify the links between your program and your accounting systems and procedures
  • Examine the accounting system’s links between your documents and your purchasing, receiving, vendors’ invoices and payables processes. Document these processes to identify any shortcomings.
  • Verify the links between your documents and your accounting systems and procedures. Select a representative sample of transactions and conduct an audit to verify accuracy.

 

  1. Assess your level of compliance
  • Determine your current level of compliance, and identify any shortcomings in your systems or processes that you need to address.  Understand your responsibilities as the “Importer of Record”.  Read and ask questions if need be concerning Customs Memorandum D11-6-6 at the link below: http://www.cbsa-asfc.gc.ca/publications/dm-md/d11/d11-6-6-eng.pdf

 

  1. Develop and implement a compliance plan
  • Develop a plan to address any shortcomings you identified in your systems or processes.
  • Ensure your plan includes a strategy for monitoring compliance over time.

 

Avoiding Penalties and Delays

  • Ensure documentation is complete, legible and detailed.
  • Ensure goods are properly marked with country of origin.
  • Ensure goods meet Other Government Department (OGD) requirements – CFIA, FDA, etc.
  • Work closely with your experts – customs broker, shipping company, attorney and U.S. Customs.
  • Ensure your customs broker is notified of your shipments.
  • Consider a PIP membership.
  • Understand your obligations as an Importer of Record.
  • Ensure you maintain records as required by Customs.
  • Prior Disclosure.

 

Industry Links:

 

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