The Canada Border Services Agency (CBSA) carries out regular verifications (audits) of import activities in order to ensure compliance with requirements for tariff classification, product valuation and country of origin. CBSA identifies specific industries and products as priorities for audits, and updates their verification priority list on an ongoing basis. The up-to-date list of priorities is available on the CBSA website.
Forewarned is forearmed
If you have imported a targeted item, you face a higher likelihood of being audited by the CBSA. This in itself can be manageable, provided you’re adequately prepared. However, if you aren’t prepared and the CBSA finds non-compliance, the duties, taxes and additional penalties assessed can harm your business.
Being prepared means knowing which goods are being targeted and being extra diligent with your customs compliance when importing these goods. Verifying your status as soon as possible will give you the chance to voluntarily comply - reducing potential penalties and enabling you to account for additional costs where needed.
Target update – August, 2018
Our Audit Response Unit has recently seen an increase in verifications relating to customs tariff heading 27.10 gasoline, aviation and diesel fuels, which are subject to excise taxes at the time of import.
CBSA is investigating the possibility that the excise tax is not being paid on shipments of these fuels imported into Canada. Excise tax is applied based on the following rates:
- Unleaded gasoline and unleaded aviation gasoline: $0.10 per litre
- Leaded gasoline and leaded aviation gasoline: $0.11 per litre
- Diesel fuel, aviation fuel and other tank aviation gasoline: $0.04 per litre
If excise tax was not paid upon import but should have been, interest may be charged on the unpaid excise tax from the time the goods were released into Canada until the time it is paid. CBSA may reassess import compliance up to four years after an item enters Canada.
What to do
If you import any of the targeted goods – or think the CBSA could consider your goods to be included in their target list – our audit specialists recommend the following:
- Conduct an internal review to ensure accurate and complete documentation of your imports
- Provide your customs broker or consultant with detailed technical information on your products, and copies of any past rulings, verification results or custom opinions so they can help review your product classifications
- Consider making a voluntary disclosure if that review reveals any errors or omissions
We can help
Our dedicated Audit Response Unit is staffed by professionals with extensive experience managing customs verifications who keep current on audit trends. They understand the potential risks and costs to a business facing an audit and work with clients to both avoid being audited and to respond effectively if an audit does happen.
Information provided by: Audit Response Unit (ARU) - Cole International
Curious about which other compliance verification trends have been identified this year? Check out these blog posts to learn more: