Last Updated on April 2, 2013 by Steven Meurrens
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.