Understanding Canadian Audit Priorities: What You Need to Know and How to Prepare

The CBSA frequently conducts audits of importer transactions. These audits help the CBSA review and confirm levels of compliance with the Customs Act. If it is determined that an importer is non-compliant, these verification audit findings may result in administrative monetary penalties (AMPS), corrections to be filed, potentially underpaid duties, as well as GST tax owed on imported goods. Address non-compliant areas prior to an audit to help save time and money and prevent headaches.

The Canada Border Services Agency (CBSA) issued their mid-year audit list-and it's catching quite a bit of attention. Twice a year, the CBSA provides their Verification Priorities list, which serves as an informative tool importers use to review and address specific areas of their customs compliance programs that may need refining. Other areas of focus by the CBSA may include compliance and accuracy in conducting duty relief programs or other special programs and customs requirements.

When the CBSA conducts importer audits, the companies are often selected at random, but the priority list is anything but random. It is laser-focused on specific goods that are at issue. If you are a medium or large importer of any goods on the current list, the likelihood of receiving an audit letter is quite high.

CBSA's focus areas as of July 2024

The latest list from the CBSA focuses on the following goods:

• Frozen desserts containing 5% dairy products: Tariff rate quota compliance and appropriate classification
• Gloves: Tariff classification
• Supply-managed goods: Duties Relief Program scrutiny
• Vaping products: Certain GST exemption codes and focus for application of excise duty and tax

The latest list from the CBSA focuses on goods that fall under the following trade agreements:

• Canada-European Union Comprehensive Economic and Trade Agreement
• Canada-United Kingdom Trade Continuity Agreement

The latest list from the CBSA also focuses on the removal of Most Favored Nation (MFN) treatment for goods originating from Russia and Belarus in whole or in part. These measures came into effect on March 2, 2022.

For more details, visit the CBSA trade compliance verification web page.

Details about the goods in question

Below is the most recent list published by the CBSA including HS classification items, valuation, and an origin priority.

How will CARM be used for compliance?

The CBSA will use the CBSA Assessment Revenue Management (CARM) system to further validate duties and taxes, identifying potential compliance issues to be addressed.

Importers with goods listed above should consider a proactive approach in reviewing, assessing, and potentially correcting highlighted areas of concern. Often, a simple correction is the answer, but may involve the option of a voluntary disclosure to the CBSA. While this comes with some cost, the potential AMPS penalties from a future audit can often be minimized by addressing corrections in a timely and proactive way.

Are your goods on the CBSA targeted priorities list?

Find an experienced, compliance-minded consulting provider to help you navigate your next steps. The C.H. Robinson trade policy team has the unmatched expertise to guide you through a strategic review and assessment of your potential import transactions. We can help identify your risk exposures and provide a plan of action to maintain your compliance. Connect with our trade policy experts today.

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