Presenting The Customs Enforcement Manual

The Canada Border Services Agency is responsible for the detection and prevention of border-related offences such as smuggling, fraud, and wilful non-compliance with immigration, trade, and tax law.  The CBSA Enforcement Manual, also known as the Customs Enforcement Manual, serves as the guide for CBSA officers in the execution of their enforcement related responsibilities.  It has been relied upon in several court challenges.

To the best of my knowledge, the CBSA Enforcement Manual is not publicly available.  However, we have obtained a copy of it through an Access to Information and Privacy Act request and have made it available for purchase on this blog.   The price for this document, which is a massive 1,274 pages, is $4.95.  Our goal in providing the CBSA Enforcement Manual is to help you save valuable research time, and to provide you with a comprehensive understanding of how the CBSA operates.

We have provided as a free preview the first page of the CBSA Enforcement Manual.  We have also provided an outline of all of the information, policies, and guides which are found in it.

The Customs Enforcement Manual is divided into parts as outlined below.

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Understanding the Three Levels of Customs Infractions

When a person has goods (as distinguished from monetary instruments and conveyances  seized at customs, the Canada Border Services Agency (“CBSA“) has established three “levels” or “degrees” of breach for the purpose of determining the penalty.  These levels are described in Part 5 Chapter 2 of the Customs Enforcement Manual.

Level 1

Level 1 applies to violations of lesser culpability.  It will be applied where a person’s efforts to hide something from CBSA were initial and effectual.  It is generally applied to offences of omission rather than commission.

In the context of Non-Report and Inaccurate Information, Level 1 will be applied when:

  • goods are not reported to CBSA or goods are reported to CBSA but inaccurate information is given concerning acquisition, entitlements, or description;
  • the goods are not concealed; and
  • a full disclosure of the true facts concerning the goods is made at the time of discovery.

In the context of Undervaluation, Level 1 is applied when:

  • goods are reported for a value less than their actual transaction value but no falsified documents were presented; and
  • full disclosure is made prior to the discovery of documentary evidence.

Level 2

Level 2 applies to violations where the circumstances demonstrate that the individual actively attempted to breach Canadian customs law.  It is also applicable to people who repeatedly omit information.

In the context of Non-Report and Inaccurate Information, it will be applied when the circumstances are the same as for level 1, but in addition:

  • the goods are concealed or disguised; 
  • inaccurate information is given concerning the goods following their discovery; or
  • the person has been the subject of a previous seizure action.

In the context of Undervaluation, Level 2 is applied when:

  • no falsified documents were presented however documentary evidence is found, revealing the actual value of the goods is more than reported before full disclosure is made; or
  • the person has been the subject of a previous enforcement action.

Level 3

Level 3 applies to circumstances where the evidence exists of a more sophisticated scheme involving devices to facilitate the violation or where the individual has been the subject of a previous seizure.

In the context of Non-Report and Inaccurate Information, it will be applied when the circumstances are the same as for level 2, but in addition:

  • false documents or receipts are presented for the goods; 
  • the goods are concealed within false compartments; or
  • the person has been subject to previous seizure action.

In the context of Undervaluation, Level 3 is applied when:

  • falsified documents were presented in an attempt to support the undervaluation; or
  • the person has been the subject of a previous enforcement action.

Penalties

The following two tables show the penalty amounts for each level.

Non-Report and Inaccurate Information

Good

Level 1

Level 2

Level 3

Clothing, footwear, textiles, towels, bedding, curtains, carpets, jewelry, and watches

30% of value

50% of value

70% of value

All other goods, except alcohol and tobacco

25% of value

40% of value

55% of value

 

Undervaluation

Good

Level 1

Level 2

Level 3

Clothing, footwear, textiles, towels, bedding, curtains, carpets, jewelry, and watches

30% of undervalued amount

50% of undervalued amount

70% of undervalued amount

All other goods, except alcohol and tobacco

25% of undervalued amount

40% of undervalued amount

55% of undervalued amount

The Customs Enforcement Manual contains several useful examples of undervaluation.

Example A

A traveller declares at primary that he bought a car for $1,000 and does not present a receipt.  At the secondary examination, the officer questions the traveller on the purchase.  The traveller admits that the car is undervalued, and voluntarily discloses that the actual value is $4,000.  This would be a Level 1 violation, and the amount of duty owing (assuming the correct duty had been paid on the $1,000) would be 25% of 3,000.

Example B

A traveller does not declare at secondary that be bought a boat even though it is on the back of his car.  The officer finds a receipt in the car’s dashboard for $418,000.  This would be a Level 2 violation, and the amount of duty owing would be 40% of $418,000.

To the best of my knowledge, the CBSA Enforcement Manual is not publicly available.  However, we have obtained a copy of it through an Access to Information and Privacy Act request and have made it available for purchase on this blog.   The price for this document, which is a massive 1,274 pages, is $32.95.  Our goal in providing the CBSA Enforcement Manual is to help you save valuable research time, and to provide you with a comprehensive understanding of how the CBSA operates.  Please note, however, that this document is current only as of 2012.

© All rights reserved. Canada Border Services Agency. Reproduced with the permission of the Minister of Public Works and Government Services Canada, 2013.


Wave Throughs at CBSA

Canada Border Services Agency (“CBSA“) officers at land border crossings are faced with an impossible task.  They have to interdict individuals who may be a public or health risk, process hundreds of thousands of foreign nationals and permanent residents who have assorted applications and immigration requirements which must be assessed, and collect taxes.  CBSA Officers have to do all of this while somehow maintaining a balance between ensuring compliance with the law and ensuring that wait times at the border are not unnecessarily long.  The failure to do either perfectly without disrupting the other will result in negative media scrutiny.

Of all of CBSA’s roles, it is perhaps the enforcement of Canada’s customs laws that is the most difficult to manage.  Memorandum R17-1-3, found in People Processing Manual Part 5: Accounting for Casual Importations: Chapter 11: Waiver Policy (the “People’ Processing Manual“), explains the conditions under which the CBSA may waive nominal assessments and accounting requirements on casual goods.  In brief, casual goods imported by an individual may be released without assessment when the federal duties and GST/HST owing (as well as any provincial taxes, excluding PST) do not exceed a threshold of $3.00.

The Manual contains the following useful example (paraphrased):

Children’s toys valued at CAN$40 are imported by a resident of Ontario through a CBSA office in Ontario.  The goods qualify under the United States Tariff.

The amount of duty is accordingly zero.  GST would be $2.00.

Because the amount of the federal duty is less than $3.00, the goods qualify under the wave-through policy, and the individual would not pay the duty.

Officers are only supposed to waive amounts higher than $3.00 in cases where the volume of collections would result in unacceptable delays, when interdiction activities are in progress, or for other reasons determined by local management.  Practical factors which impact the decision to waive the $3.00 limit include levels of traffic in the secondary area, available parking spaces, available staff, etc.  It is generally superintendents who will modify the $3.00 rule.

Complicating factors for individual CBSA officers in determining whether to wave someone through are scenarios where GST is exempt (groceries), when officers have to try to determine where a good was produced for the purpose of determining the applicable duty, constantly changing tariff rates, and of course, the increase in the personal exemptions contained in the 2012 Budget.

The purpose of this post is not to provide individuals with some secret amount to declare so that they are waived through.  Such a number does not exist, and failure to accurately declare is a breach of the Customs Act.  Rather, it is to explain the existence of Memorandum R17-1-3 so that people understand that there is a method behind what can seem to some individuals like blind luck.  As well, it is to show the challenges which CBSA Officers face so that people understand why the 100% collection of taxes at the border isn’t possible. 

The internal CBSA PowerPoint below highlights some of the issues that CBSA faces.  Please note that the PowerPoint below is a copy of an official work by the Government of Canada which was obtained through an Access to Information and Privacy Act Request, and to my knowledge is not otherwise publicly available.  While I believe that the content is still accurate, I cannot be assured of this.  The reproduction of this document has not occurred with the affiliation of the Government of Canada, nor with the endorsement of the Government of Canada.