Tax & Trade Blog
CBSA Audit Priorities - January 2023 Update!
Canada Border Services Agency (“CBSA”) resets its “audit priority areas” twice per year. Essentially, CBSA designates certain tariff classification codes as CBSA’s priority areas for customs verifications (i.e., “audits”), which is based on the program areas which CBSA believes pose significant risk for import non-compliance in tariff classification, valuation, and origin of goods.
CBSA has now released its January 2023 Trade Compliance Verification priorities, setting the stage for the next six (6) months. As is often the case, most of the focus is on tariff classification!
Tariff Classification Priorities
CBSA will be focusing on nineteen (19) types of goods for tariff classification verification. We encourage importers to review the list in full, but have picked out the following as of particular interest:
- Spent Fowl – Headings 02.07, 16.01 and 16.02 – The latest round of audits in this area showed a significant improvement in terms of compliance when compared with the first round (29% vs 44% non-compliance, respectively). Nonetheless, since the subject goods should often be classified as chicken, CBSA looks set to keep auditing the area – likely because of the huge duties that apply to Tariff Rate Quota (“TRQ”) controlled items like poultry (which we blogged on here).
- LED Lamps, Parts of Lamps, and Flashlights and miners’ safety lamps – Headings 85.39, 94.05 and 85.13 (respectively) – CBSA is continuing to audit imported lights, which are subject to three (3) separate but related audit priorities. This can be a confusing area for importers – especially in light of recent changes to the Customs Tariff – so legal advice is recommended!
- Furniture for Non-Domestic Purposes – Headings 94.01 and 94.03 – This is an evergreen priority for CBSA, going back to January 2013. Despite CBSA finding a very high level of non-compliance, it is often worth taking a second look because the test for determining whether a particular piece of furniture is “for domestic purposes” or not is not clean-cut!
- Batteries – Heading 85.06 – This verification priority goes back to 2013 as well but – given that the latest round of audits found a 100% level of non-compliance – it will likely be around for some time to come. Beware!
- Safety Headgear – Subheading 6506.10 – CBSA is again investigating safety headgear. CBSA believes that these goods are being improperly classified under duty-free tariff items whereas they should fall under the residual category (which is unusual) – attracting an 8.5% tariff!
CBSA is currently focusing (again) on auditing imports of apparel under Chapters 61 and 62 of the HS. This is the fourth round of verifications – so importers of apparel should expect CBSA will be looking at valuation of goods imported under Chapters 61 and 62 very closely!
As usual, CBSA does not have any active origin priorities at this time. However, that does not mean that importers should be complacent about product origin requirements!
What Does this Mean for Me?
While importers should always think twice when importing their goods (and get things like value, tariff class and origin correct the first time), CBSA’s audit priorities are special targets because of high levels of non-compliance already identified. Anyone importing goods subject to CBSA’s “targets” should undertake a thorough review (including legal advice) to consider their options – especially because there is an ongoing self-correction requirement!
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