In the 2017 Auditor General Report on customs duties, it was recommended that the CBSA conduct a review of the shared liability of licensed customs brokers and importers to comply with import requirements, and paying duties and taxes. This makes it vital for importers to understand what tasks fall to them, and what can be done by a customs broker.
What are importer responsibilities in Canada?
Importers are responsible for correctly classifying and valuing the goods they bring into Canada so that the CBSA can properly assess duties, collect statistics, and determine whether all legal requirements are met. They are also responsible for the accuracy and completeness of their import and export transactions, as well as any AMPS penalties that may be issued for non-compliance. These responsibilities include the following:
Obtaining release of imported goods
There are two options importers can use for getting their goods released. With both options, you may prepare the release documents yourself or you may hire a licensed customs broker to do so on your behalf.
Method 1) Full accounting and payment of duties for the release of goods
The importer must complete and present a B3 Form in person at a CBSA office, along with various other forms. You will also be required to pay your duties and taxes at that time. You can learn more at the CBSA’s Step-by-Step Import Guide.
Method 2) Release of goods prior to the payment of duties
Release on Minimum Documentation (RMD) allows the release of goods prior to the payment of duties and taxes. To take advantage of this privilege, you must follow an application process, which includes posting an approved amount of security with the CBSA. This option is generally used by established importers with high import volumes. You can learn more at the CBSA’s Step-by-Step Import Guide.
Classification, Valuation, and Country of Origin
In order to determine the correct duty and taxes and ensure your products cross the border without issue, you must ensure that your goods are classified correctly and are given the proper value, as well that your goods have the correct country of origin on the customs release documents.
Classification is determined by understanding the goods being imported and interpreting the Harmonized Tariff Schedule correctly. This determines the import duties, but this can be a rather complex process. In order to properly classify a good, it’s important to know as much as possible about it.
There are specific rules and methods for valuation, the most common of which is transaction value. For customs purposes, the value is not just price paid for the good. Non-invoice payments such as royalties, R&D costs, commissions, assists, and some transportation costs must be added to the customs value of that good.
Unless an exception applies, all products must be marked with the country of origin. Each imported product can only have one country of origin and the importer has the burden of ensuring that the country of origin is correct. If your products are being assembled in multiple countries, do not assume that country of export is the country of origin.
Paying any duties that apply
The importer must ensure that all related duties are paid on time. The CBSA states that all monthly customs account balances are due to the last business day of the month of by 16:00 Eastern time.
If you import on a regular basis, all payment due dates are communicated to customs account holders at the beginning of the calendar year.
If full payment has not been received by the CBSA’s deadline, an AMPS penalty may be issued.
Obtaining, preparing, presenting or transmitting the necessary documents or data
Whenever a shipment is cleared through Customs, an electronic transaction is presented to the CBSA which provides information they need, such as the quantity, description, tariff classification, and value of each product in that particular shipment. For an importer, this means you must know as much about your product as possible and be aware of any tariff changes that occur for any products that you regularly import before you ship them.
Regulations require that records must be kept for 7 years – 6 years plus the current year. If asked, you must produce documentation from any entry that occurred within that time period. Customs will advise their expected date of receipt of all requested documentation. You must comply within that time frame or penalties will apply.
Voluntarily Reporting Corrections to an Original Declaration
Whenever a shipment is cleared through Customs, an electronic transaction is presented to the CBSA which provides information they need, such as the quantity, description, tariff classification, and value of each product in that particular shipment. If it becomes apparent that there is an error after the original declaration has been submitted, the importer is required to correct any discrepancies on import documentation.
Responding to any CBSA concerns after payment
If the CBSA finds any errors or issues with your imported goods, they will reach out to the importer to clarify any inconsistencies they may encounter. If Customs feels that there are any grave errors or consistent mistakes, they may either issue an AMPS penalty or do a full customs audit.
What are the responsibilities of a Customs Broker?
Customs brokers are licensed by the CBSA to carry out customs-related responsibilities on behalf of importers. A customs broker advises their clients on the procedures for import and the export into Canada. A broker must possess a valid license and also keep it current. A broker can be issued penalties and fines in case they violate trade laws or neglects their duties as a customs broker.
A customs broker is responsible for obtaining a valid power of attorney on behalf of their importer clients. It is also the responsibility of the broker to verify the identity of the importer who is issuing the power of attorney, and their authority to sign legal documents.
To learn more about the role of the importer and customs broker, take a look at our infographic.