Tax & Trade Blog
CBSA Audit Priorities
Canada Border Services Agency (“CBSA”) resets its “audit priority areas” twice per year – designating certain tariff classification codes as priority areas for customs verifications.
Priorities are based on CBSA’s work in certain industries or on CBSA’s view of “significant risk” importations from a tariff classification, valuation, and origin compliance perspective.
With the January 2024 audit priorities around the corner, it is a good time to review the outcomes from the July 2023 update.
Tariff Classification Priorities
CBSA is focussing on 14 types of goods for tariff class verification. Importers should review the full list linked above for updates on existing priorities, but two *new* priorities announced in the July 2023 update are of particular interest:
- Freezers and Other Freezing Equipment – Heading 84.18 – CBSA has identified a risk that these goods may be improperly classified under certain tariff items within this heading which are duty-free. For example, 8418.30.90 which is for “chest type” freezers not exceeding 800 litres capacity, compared to 8418.30.10 which is for household “chest type” freezers of the same capacity, which carries an 8% MFN duty rate.
- Washers and Dryers – Headings 84.50 and 84.51 – Similarly, CBSA has identified another duty-free tariff item risk for washers and dryers. For example, 8450.20.00 which is for washers/dryers with a dry linen capacity exceeding 10 kg, compared to 8450.11.10 for “household type” washers/dryers with a capacity not exceeding 10 kg, which carries another 8% MFN duty rate.
Since these priorities were only released in May 2023, results have not been released, but the January 2024 update may have further news.
Several audit priorities also announced results for further rounds of verifications, including Spent Fowl, LED Lamps, Furniture for non-domestic purposes, Parts of Lamps, Cell phone cases, and Pickled vegetables among others.
Importers should also note that the 2024 Customs Tariff has also been released and will become effective January 1, 2024!
CBSA does not have any active origin priorities at this time.
There has been no change in the number of valuation priorities this year. CBSA continues to focus on apparel imports under Chapters 61 and 62 given the high rates of duty associated with this industry. The fourth round of verifications is currently underway: yielding a 42% non-compliance rate resulting in an additional $2,690,158 in duties and $59,400 in penalties.
Anyone importing goods in the CBSA “Priority Spotlight” ought to have a customs advisor thoroughly review their Canadian import systems to ensure compliance with applicable customs rules. A Customs Systems and Sampling analysis is advisable.
If you are interested in our Import/Export Comprehensive Program & Systems Review, please review a copy of its scope here.