Tax & Trade Blog

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BEST PRACTICES FOR FORCED LABOUR REPORTING

CANADA PUBLISHED BEST PRACTICES ADVICE FOR FORCED LABOUR REPORTING

As we wrote here, Canada joined the United Kingdom and Australia last year in adopting a joint global reporting template for forced labour and child labour disclosures. The new template consolidates the legislative reporting requirements of all three countries and is intended to simplify reporting for organizations operating across multiple jurisdictions.

In practice, Canadian reporting entities often face challenges in producing properly scoped reports that align with Public Safety Canada’s expectations. In response, Public Safety Canada (“PSC”) has published "Best Practices" tips and updated resources, aimed at improving report quality and supporting ongoing compliance under the Supply Chains Act.

In 2024, the Fighting Against Forced Labour and Child Labour in Supply Chains Act (the “FALC”) came into force, which imposed annual reporting obligations for certain entities.  While the 2024 reports were due last year, this is a recurring obligation with significant penalties for non-compliance.

Recently, the Canadian government issued its Report to Parliament summarizing the submissions received for the 2024 reporting cycle.  This Report serves as a reminder of the ongoing importance of timely compliance with the reporting obligations, with the next reporting deadline on May 31, 2025.

On March 20, 2024, Public Safety Canada (“PSC”) released updated guidance (“Guidance”) on the application of the Fighting Against Forced Labour and Child Labour in Supply Chains Act (the “FCLA”).

While PSC’s update is aimed to provide clarity, it left many ambiguities, particularly regarding the definitions of “consolidated financial statements”, “asset” and “control”.  These terms play a critical role in determining whether a foreign entity may fall within the reporting requirements of the FCLA.