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What Importers Must Know About Reason to Believe

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In 2017, the Government of Canada released the report of the of the Auditor General of Canada which specifically focused on Customs Duties. Importers can read a summary of the report here. One item discussed in the report is an increased focus on Reason to Believe.

What is Reason to Believe?

Reason to Believe occurs whenever an importer has specific information regarding the origin, tariff classification, value for duty, or diversion of imported goods that gives the CBSA reason to believe that a declaration is incorrect.


Whenever a shipment is cleared through Customs, an electronic transaction is presented to the CBSA which provides information they need, such as the quantity, description, tariff classification, and value of each product in that particular shipment. For an importer, this means you must know as much about your product as possible and be aware of any tariff changes that occur for any products that you regularly import before you ship them.

If it becomes apparent that there is an error after the original declaration has been submitted, the importer is required to correct any discrepancies on import documentation. This includes:

  • Incorrect HS tariff classification, Country of Origin, or Value for Duty on entry declarations
  • The Customs declaration was contrary to Customs’ written advice, precedent decisions, or published directives or policies (informed compliance)

If it is found that the importer had reason to believe that the declaration was incorrect and did not correct within 90 days, an AMPS penalty will be applicable. The penalties are:

  • 1st offence: $150 to a maximum of $5000 (per issue) or $25,000 (per occurrence)
  • 2nd offence: $225 to a maximum of $200,000 (per occurrence)
  • 3rd offence and Subsequent: $450 to a maximum of $400,000 (per occurrence)  

How to Avoid Penalties Under Reason to Believe

If 90 days has been exceeded and an error is found, an importer may use “voluntarily disclosure”, which means that clients come forward voluntarily to inform the CBSA of their non-compliance. In cases of an accepted voluntary disclosure, the CBSA will:

(a) Waive penalties and, when interest is to be assessed at a specified rate, reduce it to an amount calculated at the prescribed rate on commercial goods; or

(b) Waive interest in full and opt to not take action against the goods or the person for non-commercial goods (casual goods)

It should be noted that even if your voluntary disclosure is accepted, duties and taxes are still required to be paid. To learn more about voluntary disclosure, you can read CBSA Memo D11-6-4.

To learn more about Reason to Believe, you can read the CBSA D-Memo 11-6-6.

Get Expert Advice

If you still need help understanding what Reason to Believe truly means, contact our trade specialists and they’ll help you out.

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The information contained throughout Farrow’s Website or via Social Media (for eg. webinar, white papers, articles or other communication) is for informational purposes only do not purport to be legal and/or professional advice or a definitive interpretation of any law.. The information contained therein of a general nature and non-binding. No information published on the website or provided via social media constitutes professional or legal advice, a solicitation, an offer, or a recommendation to effect any transactions, or to conclude any legal act of any kind whatsoever. Farrow shall have no liability for the accuracy of the information in relation to any individual business operation and shall not be liable for any loss or damage of whatever nature which may arise as a result of the use of the information provided. Anyone contemplating action in respect of matters set out in this website or as a result of information communicated to you please contact your local Farrow representative for additional information or advice specific to your unique requirements.


 

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