CBSA announces Phase 1 2016 audit Tax Insights from Indirect Tax Services

Tax Insights
from Indirect Tax Services
Issue 2016-01
CBSA announces Phase 1 2016 audit
priorities: What they mean for importers
January 15, 2016
In brief
The Canada Border Services Agency (CBSA) recently released its Phase 1 (January), 2016 national trade
verification (Audit) priorities (see page 2).
If your business imports goods listed as an Audit priority, it is likely to be audited by the CBSA. If the
audit uncovers non-compliance and results in a negative audit finding, your business can be charged
punitive interest and assessed penalties, not to mention assessments for any additional duty owing.
Avoid these potential customs risks by planning and implementing appropriate compliance measures —
before you are audited. Correcting import mistakes before the commencement of an audit will normally
result in no penalties assessed and also avoids a 6% punitive interest assessment penalty.
Also beware — CBSA audits are not only in respect of the national priority categories listed in this
Tax Insights. It also conducts random audits.
In detail
What importers can do
(the 3Ps)
Importers can take measures to
reduce the likelihood of a
negative CBSA audit finding by
considering the 3Ps that follow:
The present
You should:


know what your business
actually imports, and
determine your level of
compliance with the law
These steps must be undertaken
to get a sense of the current
compliance levels.
While the current state does not
necessarily speak to past issues,
it will help frame the next steps
to deal with potential customs
issues — if any.
We note that a negative audit
finding can hurt your business
financially — it could lead to a
reassessment or even supply
chain disruptions due to closer
CBSA scrutiny.
The past
You should take steps to correct
past errors in import
declarations — before being
notified of a CBSA audit.
If you discover an error before
being notified of a CBSA audit,
you can make a simple
correction in many cases or file
a voluntary disclosure, if needed
when eligible.
In either case, both penalties
and punitive interest will
normally be eliminated,
resulting in significant potential
savings.
Commencement of an audit may
prevent reliance on a voluntary
disclosure.
How can PwC help?
We can work with you to
determine if a voluntary
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Tax Insights
disclosure is permitted. If it is, we can
help you file and complete it.
The positive
both current and past transactions to
identify opportunities relating to your
import declarations, including refund
possibilities.
In addition to identifying errors, you
should be mindful of duty
overpayments. You should also review
Tariff classification
Harmonized
System
Number(s)
Tariff classification
Harmonized
System
Number(s)
Curling Irons (Round 2)
8516.32.10
Cereals
Heading 10.08
Spectacle Lenses (Round 2)
9001.40.10 and
9001.50.10
Articles of Apparel and Clothing Accessories
Heading 39.26
Bicycle Parts
Heading 87.14
Furniture for Non-Domestic Purposes
Various goods of
Headings 94.01 and
94.03
Articles of Plastics
Subheading 3926.90
Articles of Iron or Steel
Heading 73.26
Palm Oil (Round 2)
1511.90.10 and
1511.90.20
Vices and Clamps
Heading 82.05
Safety Headgear (Round 2)
6506.10.10.90
Parts for Use with Machinery of Chapter 84
Heading 84.31
1212.21.00 and
1212.29.00
Tubes, Pipes and Hoses (new)
Heading 39.17
Seaweed (Round 2)
Parts of Lamps (new)
Heading 94.05
Dextrins and Other Modified Starches (Round 3)
3505.10.90
Chemical Products (Round 2)
Heading 38.08
Disposable and Protective Gloves (Round 2)
3926.20.10 and
4015.19.10
Pasta (new)
Heading 19.02
Wheel Rims and Spokes (Round 2)
8714.92.00
Hair Dryers and Electric Smoothing Irons (new)
Heading 85.16
Coconut Milk from Asian Countries (Round 2)
1106.30.00,
2008.19.90 and
2106.90.10.90
Valuation
Harmonized
System
Number(s)
Apparel (Round 2)
Various goods of
Chapters 61 and 62
Footwear
Various goods of
Chapter 64
Origin
Harmonized
System
Number(s)
T-Shirts
Heading 61.09
Jewelry
7113.11.90, 7113.19.90
and 7113.20.90
Batteries
2
8506.10.10 and
8506.50.10
Gazebos (Round 2)
9406.00.90.20
Apparel Samples
9936.00.00
Bags of Polymers of Ethylene
3923.21.90
Footwear ($30 or more per pair)
6403.59.20 and
6403.99.30
Hair Extensions (Round 2)
6703.00.00
Machinery for Public Works
8479.10.00
Sacks and Bags under Tariff Item 9903.00.00
3923.21.90,
6305.32.00 and
6305.33.00
Special Purpose Motor Vehicles
8705.90.90.90
Polyurethanes in Primary Forms
3909.50.00
Parts for Power Trains
Heading 87.08
Generating Sets
Heading 85.02
Geophysical and Oceanographic Instruments
Heading 90.15
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Tax Insights
Let’s talk
For a deeper discussion of how these issues might affect you, please contact the following:
Jaime Seidner, Tax, Customs & International Trade
+1 (416) 687 8492
[email protected]
Mario Seyer, National Indirect Tax Leader
+1 (514) 205 5285
[email protected]
Jody McLean, Tax, Customs & International Trade
+1 (416) 869 2459
[email protected]
Quentin Vander Schueren, Tax, Customs & International
Trade
+1 (416) 941 8383 ext. 16009
[email protected]
This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisers.
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