Tax & Trade Blog

The Canada Border Services Agency’s (“CBSA”) Administrative Monetary Penalty System (AMPS) imposes monetary penalties (“AMPs”) for non-compliance with trade rules. AMPs levied are proportionate to the type, severity, and frequency of the infraction. According to the government, the goal of the system is to create a level playing field for Canadian businesses by ensuring that there is a cost for non-compliance with trade rules.

A (fairly) recent announcement from the CBSA has indicated that the AMPs associated with 22 different contraventions related to commercial trade will be increased, effective April 1, 2019.

With all of the concerns that businesses engaged in the import/export of products in the United States and Canada face (increased global competition, currency fluctuations and product quality), one of the least considered but most important involves the often confusing world of customs compliance.

While it is inevitable that errors or omissions may occur in customs compliance, errors can be expensive. To avoid customs assessments, and attendant interest and penalties (not to mention potential prosecution), constant vigilance of one's customs obligations is required.

Whenever a person imports commercial goods into Canada they are required to pay the GST at the border at the time of importation pursuant to Division III of Part IX of the Excise Tax Act (the “ETA”).   This GST rate is currently set at 5%. 

Those who are insufficiently familiar with Canada’s GST/HST system may find themselves treating this tax as a hard cost, or charging the GST/HST to Canadian customers and then keeping it as a form of reimbursement for the tax previously paid at the border.  Neither approach is correct.