Canada Border Services Agency Publishes Update of Trade Verification Priorities

Written By Sabrina A. Bandali and Kathleen Wang

The Canada Border Services Agency (CBSA) has released an updated list of trade compliance verification priorities effective July 2024. The CBSA periodically sets verification priorities which reflect its evaluation of the risk of non-compliance with customs regulations concerning the importation of specific categories of goods or supply chains. New targets and priorities may be added throughout the year. The current verification priorities are set out in the table below.

Businesses that import goods listed as verification priority items should be prepared for the possibility of a CBSA trade compliance verification in the near future. If non-compliance is discovered, CBSA trade compliance verifications may result in payment of additional duties, GST, interest and penalties against businesses.

Trade verification audits usually focus on one of three "programs": (1) tariff classification, (2) customs valuation, and (3) origin. Audits may be desk-based or involve on-site visits, focusing on importations that occurred during a specified "verification period," which is typically the importer's last complete fiscal year. Following an audit by CBSA, an importer may be required to modify past import entry declarations that were non-compliant within a period of up to four years prior to the date of amendment. The following tables summarize the CBSA's current verification priorities. Additional details regarding the CBSA's current verification priorities are available on the CBSA website.

In addition to these program-based priorities, the CBSA has identified other priorities related to trade incentives and compliance with areas of regulation administered by other government departments, specifically:

• tariff rate quota and classification of supply managed goods, specifically frozen desserts containing 5 percent of dairy products;
• use of GST exemption codes and review of vaping products subject to excise duties and taxes;
• import origin verifications under the Canada-European Union Comprehensive Economic and Trade Agreement and the Canada-United Kingdom Trade Continuity Agreement;
• verifications of licensees importing supply managed goods under the Duties Relief Program; and
• monitoring and assessing products of iron or steel, fertilizer, petroleum, non-ferrous metals, and tires to ensure goods originating from Russia and Belarus do not enter Canada under the Most-Favoured-Nation (MFN) tariff treatment.

With this update, the following are no longer identified as priority targets (all in respect of tariff classification):

• cell phone cases under Headings 39.26, 42.02, and 85.17;
• safety headgear under Subheading 6506.10;
• parts for use with machinery of Chapter 84 under Heading 84.31;
• parts of machines and mechanical appliances under Heading 84.79; and
• parts of lamps under Heading 94.05.

Notwithstanding the priorities that the CBSA articulates, all importers are at risk of random or compliance-based verifications. It is important to note that not all audits are based on verification priorities. Importers of goods not listed should still be mindful that the CBSA also carries out verifications based on complaints or through random selection. It is advised that importers remain vigilant in reviewing their customs compliance practices to ensure they adhere to current regulations and can withstand CBSA audits.

The Bennett Jones International Trade and Investment group is available to help client importers assess their compliance/non-compliance and to assist them in the steps that should be undertaken to correct errors resulting from past non-compliant practices and improve these practices going forward.

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