Canada Customs 101: The CBSA basics
The Canada Border Services Agency (CBSA) is part of Canada’s fabric. It’s the gatekeeper: Letting in the stuff we want and keeping out the things we’d rather stayed away. But maybe you’ve asked yourself…
- What is Canada Customs, anyway?
- Why do I pay duty on some items I bring into Canada and not others?
- Who makes the rules… and how?
- Do the rules ever change? How can I find the latest information?
- What about audits?
Most people have wondered one or more of these things at some point, and we’d like to break it down and help make it understandable in a way that government websites don't always do.
Customs rules are entrenched in laws and enforced. No one wants to come face-to-face with a customs officer or be handed an audit notice. But this stuff doesn’t have to be confusing and intimidating. While it is very important to abide by the rules, doing so doesn’t have to cause stress or added expenses. In fact, getting the customs process right will increase your company’s financial success and further ease the process with each trouble-free experience.
Here at Cole, we excel in providing support to importers and exporters through our decades of experience navigating the customs world. So sit back, learn the basics with us, and enjoy the ease and satisfaction of entrusting your business to professionals who care about making every customs interaction a success.
Lesson 1: CBSA
The Canada Border Services Agency (CBSA) facilitates and oversees international travel and trade across Canada's border, with the goal of ensuring Canada’s security and prosperity.
Every item that crosses the Canadian border – from a labradoodle puppy bred in Oregon to a baseball glove you bought on Amazon for your nephew – must pass through the CBSA. The exact process will vary, depending on what the item is, where it’s going, how it will be used, what other government agencies are involved – and so on.
Lesson 2: The rule-makers
Customs rules are made by the people working CBSA in partnership with many other Canadian government agencies overseeing areas such as food safety, agricultural safety and revenue, to name a few. In fact, CBSA is responsible for administering over 90 federal acts and regulations, in addition to numerous international agreements (think free trade agreements).
Lesson 3: Duty (and taxes)
When importing items into Canada, some will require you to pay duty, surtaxes and/or GST. The decision on whether duty is owed – and how much – will depend on where the item comes from and its HS (or “tariff”) classification*. The duty on products can also vary based on quotas, international markets and competition with domestic products. These taxes generate revenue for the federal government, and protect Canadian industries. When we have trade agreements with other countries, duties are not owed on various items traded between those countries covered by the agreement, the details of which are specified in each one.
Lesson 4: Things can change
Rules and regulations can change due to factors such as a change of government, shifts in manufacturing priorities, changes to international or domestic market forces, global financial changes and many more. There are several ways to keep up to date:
- check in with the CBSA website: www.cbsa-asfc.gc.ca
- attend webinars or industry events
- sign up for online updates through industry websites
- maintain regular communication with your customs broker
Lesson 5: Audits
Don’t worry, audits are a fact of life for active importers. There’s a very good chance you’ll be asked by CBSA one day to prove you’re following all the rules. The key is to be prepared when that call comes. You’ll hear terms like “risk reduction” and “compliance verification” and all this just refers back to the need to follow the rules.
Do so and a) you’ll be less of a target since you’ll be known for your rock-solid import record and b) you’ll have no worries if you are audited because you’ve accurately tracked and documented all your customs activity and can easily provide any information to keep your good name squeaky clean.
What’s all this knowledge good for, though? Being a savvy importer has so many benefits!
- You’ll be in good stead with the powers that be. You can bet CBSA is paying attention to every importer’s activities. The more positive, hiccup-free transactions you have, the less attention you’ll attract from auditors. If your customs compliance is on-point, there’s a very high chance you’ll continue to enjoy quick, easy and hassle-free transitions through the border. And that will benefit your company’s reputation with government agencies and existing and potential customers.
- You will save money. If you keep consistently accurate records and always apply the correct HS/tariff classification to your imports, you will not risk incurring additional costs down the road to correct your errors. You’ll also reduce your risk of customs exams or audits which can lead to fines or penalties for inaccuracies.
- Your life will be easier. If you understand the basics of importing into Canada and how the CBSA works, your business and its supply chain to run more efficiently. Ease of business; fewer headaches. Enough said.
Here at Cole, our trained professionals stay up to date with all the rules and regulations importers and exporters need to follow so we can keep our clients informed and we happily provide all manner of advice and support along the way.
* CBSA uses the HS (Harmonized System) code administered by the World Customs Organization. This is an international coding system used around the world to apply rules for importing and taxing goods as they move across international borders. The HS code database is comprised of over 5,000 commodity groups, each identified by a unique 10-digit code. The system is arranged in a logical structure and is supported by well-defined rules and regulations to provide a uniform classification system that’s recognized across the globe.
Information provided by: Customs Brokerage Dept. - Cole International