Trade compliance is mandatory within Canada, and it refers to the rules and regulations importers and exporters must adhere to, to move commercial goods in and out of Canada. The responsibility of compliance is shifted to the importer & exporter of the goods where they are required to report accurate information about their shipments to the Canada Border Service Agency (CBSA).
CBSA monitors compliance in two ways.
- Performing random customs audits
- Target specific product audits
Performing random customs audits are meant to assess the voluntary compliance of Canadian importers and exporters. Targeted audits are based on risk assessment of specific products which are then selected for audit in January and July of each year.
When a product is identified for a risk-based assessment, the CBSA will examine these goods based on the following factors:
- Tariff Classification code
- Valuation
- Origin of the product
- Free trade certification
A targeted audits is represented in this chart (please note this is CBSA example)
- Targeted goods: Cell Phone case
Risk identified: Cell Phone case can be incorrectly classified under various tariff items within headings 39.26, 42.02 and 85.17, whereas the goods could potentially be properly classified under tariff item 4202.32.90 (articles of a kind normally carried in the pocket or in the handbag; with outer surface of sheeting of plastics or of textile materials; other), and be subject to a duty rate of 8%. This example was taken from the CBSA website, to find more click here.
Based on the finding from the initial three rounds, it was determined that the majority of the misclassified goods were successfully reclassified under the tariff item 4202.32.90.
If you would like to learn more about how customs audits work please contact DTS Advance Logistics.
To download the Canadian Customs Audit document please press the download button
