Most importers in Canada will have experienced going through a “compliance verification” or “customs audit” by the Canada Border Services Agency (CBSA). Given the four year limitation period for the CBSA to issue assessments to importers, larger importers can usually expect to undergo a CBSA customs audit at least every four years.
Twice a year, once in January and again in July, the CBSA issues its trade compliance verifications priorities. This is a good resource for importers to review as it will indicate the types of goods the CBSA is most concerned about and is actively auditing. A compliance verification could result in assessments of additional customs duties, Goods and Services Tax and other import levies, plus interest and administrative monetary penalties (AMPS). Compliance verifications are also time consuming for the importer’s compliance professional who must assemble all the documentation from sample import transactions selected by the CBSA officer conducting the audit, and potentially file correcting entries should the CBSA determine that errors occurred during the verification period.
Importer Best Practices
An importer who takes the initiative to conduct their own internal reviews or audits before the CBSA commences an audit, can enjoy certain benefits. For example, such an importer has the opportunity to file a voluntary disclosure and avoid any AMPS penalties. Alternatively, the importer may in certain circumstances benefit from the CBSA’s reassessment policy which permits such an importer to be exempt from having to make correcting entries for past errors, so long as the entries are corrected going forward.
The January 2023 Verification Targets List
This year’s verification priorities list looks very similar to that published in 2022. Most of the 2022 priorities continue to be listed in 2023. A few of the targeted priorities no longer appear on the list, namely:
Pasta (19.02)
Other chemical products (38.24)
Stone table and counter tops (9403.90.00)
There are a few new targets included in the list, as follows:
Disposable and protective gloves (3926.20 and 4015.19)
Safety headgear (6506.10)
Indicator panels and light-emitting diodes (LED) (85.31 and 85.41)
Parts of machines and mechanical appliances (84.79)
Importers who import goods under the listed tariff classification numbers are at risk of being subject to a CBSA customs audit during the course of this year.
In terms of valuation, the CBSA has once again indicated that its priority is apparel classified in Chapters 61 and 62, given the high duty rates ranging up to 18%. There were 228 completed cases and a fourth round was initiated and is still ongoing. Footwear has been removed from the list and appears it is no longer a verification priority. Finally, there are no active origin verification priorities listed, same as last year.
The chart below summarizes the various verification targets by tariff classification, description, and an indication of how many companies have been selected for audit to date and the number of active cases for each target.
A. Tariff Classification Targets
| Tariff Classification | Description | Importers Selected – Current Rounds | Active Cases |
| 2.07, 16.01, 16.02 | Spent Fowl | 121 (2 rounds) | 2 |
| 20.01 | Pickled Vegetables | 190 (5 rounds) | 11 |
| 39.26, 42.02, 85.17 | Cell phone cases | 61 (3 rounds) | 12 |
| 39.26, 42.03 | Gloves | 49 (2 rounds) | 1 |
| 3926.20 and 4015.19 | Disposable and Protective Gloves | 62 (4 rounds) plus new 5th round | New |
| 42.02 | Bags | 60 (2 rounds) | 3 |
| 64.03 | Footwear ($30 or more per pair) | 195 (4 rounds) | 1 |
| 6506.10 | Safety Headgear | 59 (4 rounds)plus new 5th round | New |
| 73.22 | Air heaters and hot air distributors | 43 (2 rounds) | 1 |
| 83.02 | Other mountings and fittings, suitable for furniture | 36 (2 rounds) | 2 |
| 84.31 | Parts for use with machinery of Chapter 84 | 25 (2 rounds) plus new round 3 | New |
| 85.06 | Batteries | 45 (4 rounds) | 1 |
| 85.13 | Flashlights and miners’ safety lamps | 37 (2 rounds) | 1 |
| 85.31 and 85.41 | Indicator Panels and Light-Emitting Diodes (LED) | 16 | 14 |
| 85.39 | LED Lamps | 26 (1 round) | 5 |
| 87.14 | Bicycle Parts | 121 (3 rounds) | 15 |
| 84.79 | Parts of machines and mechanical appliances | 14 | 2 |
| 94.01, 94.03 | Furniture for non-domestic purposes | 131 (3 rounds) | 5 |
| 94.05 | Parts of Lamps | 253 (4 rounds) | 16 |
B. Valuation Targets
| Tariff Classification | Description | No. of Audits | Active Cases |
| Chapters 61, 62 | Apparel | 228 (3 rounds) plus new round 4 | New Round |
C. Origin
No active cases.
For further information about the CBSA’s verification procedures and targets, please contact Greg Kanargelidis at 416-624-5182 or greg@gregklaw.com