Tax & Trade Blog

Following the United Kingdom’s (“UK”) exit from the European Union earlier this year, Canada had agreed to allow its current free-trade agreement with the EU continue to apply to the UK.  That agreement is called the Comprehensive Economic and Trade Agreement (“CETA”), and Canada’s agreement to continue providing similar benefits to the UK was set to expire at the end of 2020.

Canada and the UK have now agreed on a new interim trade deal, titled the Canada-United Kingdom Trade Continuity Agreement (“TCA”).

A sad and unfortunate situation for an online shopper in Australia highlights the importance of import and export permits and licenses in international trade.

While the purchaser in this particular situation was engaged in a B2C transaction, import and export permits and licenses are often required in B2B transactions, and can give rise to seizure and confiscation of goods being imported or exported from Canada in a variety of different contexts.

In this case, the purchaser was in Australia and paid over AUD $26,000 for an alligator-skin handbag – ordered online from a boutique in France.  When the handbag arrived in Australia, it was seized by customs officials and subsequently destroyed – all because it lacked the proper import permit!

Importers of goods have both current and ongoing responsibility and obligations under the Customs Act (the “Act”) and its Regulations. On a “current” basis (i.e., at time of importation), include reporting the goods for import, and proper declarations of value, tariff class and origin, and payment of applicable duties and other taxes. On an “ongoing basis”, the importer is required to correct errors in those declarations up to four years after the time of importation.

What if an “importer” is neither the owner nor purchaser of the goods?  Does that “importer” escape liability for the duties and GST imposed under the Act?

The Canada Border Services Agency (CBSA) is responsible for reviewing imports to ensure compliance with Canada’s trade laws. In doing so, the CBSA sometimes focuses on what it deems “audit priority” areas. These are tariff classification codes where the agency believes that there is significant risk for misclassified imports under the Customs Tariff, which leads to the unlawful evasion of duties on those goods.

The CBSA recently released a new round of 2020 Trade Compliance Verifications, which dealt with a number of these priority areas.

In the report, the following “audit priority” areas had updated enforcement information, leading to several million dollars in fines and penalties for importers who misclassified their goods.

Exporters of goods from Canada may be surprised to receive a Notice of Detention from the Canada Border Services Agency (CBSA), indicating that their goods have been detained on the way out of the country.

Under section 101 of the Customs Act, goods that are about to be exported may be detained by a border services officer “until he is satisfied that the goods have been appropriately dealt with in accordance with this Act, and any other Act of Parliament that prohibits, controls or regulates the importation or exportation of goods, and any regulations made thereunder”. 

There are a number of possible reasons for a “detention”, ranging from errors on export forms to exports contary to Canadian export controls.