Expect CBSA To Increase Monetary Penalties In 2018

Expect CBSA To Increase Monetary Penalties In 2018

An audit of CBSA has uncovered they have been too kind to importers who are non-compliant. Starting in 2018 there will be an increase in monetary penalties. Why? To encourage importers to become compliant, as well as capitalize on the added revenue provided by importer's who continue to stay non-compliant.

The Report

In March of 2017 the Office of the Auditor General of Canada (OAG) prepared an Independent Assurance Report on the management of customs duties. This Report was presented to the Parliament of Canada.

The Report covered a number of topics related to the collection of Customs Duties.

Specifically the OAG found that the "descriptions of goods on import forms were often incomplete or incorrect, making it more difficult for the Agency to know exactly what was imported."  The CBSA through compliance verifications estimates that importers misclassified about 20% of goods coming into Canada and may have ended up paying a lesser amount of duty as was owed.

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CBSA's Lost Revenue

The OAG warns in this report that CBSA reported losses of $42 million or more in revenue in fiscal 2015-16 due to misclassification by importers.

Improve Importer Compliance

The OAG acknowledges in the report that CBSA can charge a penalty to non-compliant importers. They singled out the Administrative Monetary Penalty C005 for importers who do not provide true, accurate or complete information on permits, certificates, licenses, documents, or declarations of imported goods. The three levels are $150 for first offense; $225 for second offense; $450 for third and subsequent offenses. The OAG found the penalties were too low to improve importer compliance. The Report states that in Fiscal year 2014-15 the CBSA charged 16,000 penalties, which represented less than 0.1% percent of the transactions for that year. In fact for the 2015-16 fiscal year total revenue from penalties was $4.4 million for an average penalty of $151.00. This pales in comparison to the $42 million lost in revenue for misclassification by importers.

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Review Penalty System

The OAG recommended CBSA review their penalty system so that it ensures compliance with trade programs.

The CBSA has agreed and is in the process of reviewing their Administrative Monetary Penalty System (AMPS). Their view is to make the system a "meaningful deterrent to importer non-compliance related to the evasion of import revenues and ensuring compliance with trade programs." CBSA says they will complete the system by June 2018.

What You Can Expect

If you are not compliant with customs they will be more likely to assess you a monetary penalty. This is the time for you to review and assess your operational plans for classifying goods. If you need assistance with reviewing and assessing your customs compliance, the trusted experts at Pacific Customs Brokers can help ensure you are compliant with customs.

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About the Author
Jan Brock

Jan Brock joined PCB Customs Brokers in 2015 as a Senior Trade Advisor. She retired from Canada Border Services Agency (CBSA) in 2015 after serving more than 37 years. Jan started her career with CBSA as a summer student in 1976 and worked part-time until she graduated from U.B.C. with a Bachelor of Education Degree in 1980 . Shortly after graduating from U.B.C. Jan worked full time as an inspector with CBSA and within three years was promoted to Superintendent. She served some time in the Regional Operations office as an Operations Review Officer before she was promoted to Chief of Operations first at the Customs Mail Centre, then in the Metro District as the Commercial Chief and ending her career as a Chief at Pacific Highway Commercial Operations where she served as Chief from 1992 to 2015. During her career she was a member of the Customs Drug Team and a trainer in the National Enforcement Program. Jan also served as the Regional Coordinator Officer Powers and Use of Force for the Pacific Region. Jan served on many Commercial Program Reviews and committees both national and regional during her career and possesses an expansive knowledge of importing and exporting into and from Canada.

While we strive for accuracy in all our communications, as the Importer of Record it is incumbent upon your company to ensure that you are aware of the requirements under the new regulations so that you maintain compliance as always.