Memorandum D17-1-21

In Brief

Ottawa, June 28, 2000

Subject

Maintenance of records and books in Canada by importers

1. This Memorandum supersedes Memorandum D17-1-21, Maintenance of Records and Books in Canada by Importers, dated November 15, 1993.

2. This Memorandum was revised to reflect changes to the Imported Goods Records Regulations.

3. This Memorandum was also revised to clarify customs' policy with regard to the retention of records in electronic format.

Memorandum D17-1-21

Ottawa, June 28, 2000

Subject

Maintenance of records and books in Canada by importers

This Memorandum provides information relative to the records and books that must be maintained in Canada by importers.

TABLE OF CONTENTS

• Guidelines and General Information
  • Who's Concerned? 1
  • Microfilmed Records 2
  • Electronic Data Processed Records 3
  • Availability for Inspection and Delivery 4
  • Non-Compliance 4
  • Additional Information 5
  • Appendix - Statutory Instrument

GUIDELINES AND GENERAL INFORMATION

Who's Concerned?

1. These requirements are equally applicable to both non-resident and resident importers, including exporters abroad who ship to themselves in Canada. Non-resident importers generally do not maintain an office in this country but forward invoices and shipping documents to a licensed customs broker who, under authority of the importer, prepares accounting documents, pays duties, takes delivery of the goods, and forwards them or has delivery made to those designated in instructions from his client.

2. If the importer does not maintain an office in Canada, a customs broker, accountant, or some other authorized agent may be designated by the importer to maintain the appropriate records, on the distinct understanding that it is obligatory that the books and records required by subsections 40(1) and 43(1) of the Customs Act (hereafter referred to as "the Act") must be maintained in Canada.

3. Requests for permission to maintain records at locations in Canada, at a place other than the importer's place of business, where only one customs region is involved, are to be forwarded to the Regional Director, Customs, for the region concerned. Requests which involve more than one region, are to be addressed to the Director, Compliance Management Division, Ottawa ON  K1A 0L5.

Microfilmed Records

4. In accordance with the policy of the Canada Customs and Revenue Agency (CCRA) pertaining to the retention and disposal of records and books of account in microfilmed form, every importer who keeps records in this format is required to have an acceptable microfilm program. The important factors which are necessary for the implementation of a credible program are:

5. Permission to microfilm books and records of account must be obtained by importers from the Regional Director, Customs, in the region concerned, to ensure that they can meet the standards of an acceptable microfilm program. Requests which involve more than one region, are to be addressed to the Director, Compliance Management Division, Ottawa ON  K1A 0L5.

Electronic Data Processed Records

6. Books and records maintained in machine-sensible data medium are recognized as records and books of account, provided the medium can be related back to the supporting source documents or hard copy documents and is supported by a system capable of producing accessible and readable copy.

7. All records and books of account (including source documents) that originate in paper format have to be kept, except where an acceptable imaging or microfilming program, as discussed in paragraph 6, is in place.

Availability for Inspection and Delivery

8. The records referred to in sections 2 and 3 of the Imported Goods Records Regulations (hereafter referred to as the Regulations) shall be kept in such a manner as to enable an officer to perform detailed audits of the records and to obtain or verify the information on which a determination of the amount of the duties paid or payable was made.

9. As authorized by subsection 43(1) of the Act, the Minister may require from any person the production of any books, letters, accounts, invoices, statements (financial or otherwise), or other documents for any purpose related to the administration or enforcement of the Act, within such reasonable time as stipulated by a registered letter or a demand served personally.

Non-Compliance

10. Where it is determined that an importer has failed to comply with any or all of the requirements for the maintenance of records in Canada, the importer will be requested to fulfill these requirements within a reasonable period of time. If the importer does not comply with the requirements of record maintenance under subsections 40(1) of the Act, the CCRA has the authority as prescribed under section 41 of the Act to detain any further goods imported by the importer until the importer has complied with the requirements. In addition, the penalty provisions of section 109.1 of the Act may also be applied.

11. The penalty provisions of section 109.1 of the Act will result in a monetary penalty of not less than $1,000 and not more than $25,000 being applied. The following are the minimum penalties that will be applied per occurrence:

12. Where a person who is required by subsection 40(1) of the Act to keep records, other than a person referred to in section 3.1 of the Regulations, has not kept records in accordance with these Regulations, preferential tariff treatment may be denied or withdrawn in respect of the commercial goods that are the subject of those records.

13. Where a person who is required by subsection 40(1) of the Act to keep records, other than a person referred to in section 3.1 of the Regulations, who is required and requested to produce records in accordance with subsection 43(1) of the Act fails to do so, preferential tariff treatment may be denied or withdrawn in respect of the commercial goods that are the subject of those records.

Additional Information

14. Where the importer is confronted with difficulty in adequately observing these requirements, questions may be directed to the Regional Director, Customs, of the nearest office, or to the Director, Compliance Management Division, Ottawa ON  K1A 0L5.

APPENDIX

Statutory Instrument

Regulations respecting the keeping of records by persons who import commercial goods or cause such goods to be imported, by persons who are issued a licence under Section 24 of the Customs Act or Subsection 91(1) of the Customs Tariff and by persons who are issued a certificate under Subsection 90(1) of the Customs Tariff

Short Title

1. These Regulations may be cited as the Imported Goods Records Regulations.

Interpretation

1.1 In these Regulations,

General

2. Every person who is required by subsection 40(1) of the Act to keep records in respect of commercial goods shall keep, for the period of six years following the importation of the commercial goods, all records that relate to

3. In addition to the records referred to in section 2, a person who imports or causes to be imported commercial goods that have been released free of duty or at a reduced rate of duty because of their intended use or because they were intended to be used by a specific person shall keep, for the same period of time referred to in that section,

3.1 Every person who is required by subsection 40(3) of the Act to keep records in respect of commercial goods shall

4. The records referred to in sections 2 to 3.1 shall be kept in such a manner as to enable an officer to perform detailed audits of the records and to obtain or verify the information on which a determination of the amount of the duties paid, payable, deferred or relieved was made.

5. The records referred to in sections 2 to 3.1 may be copied by means of any photographic, micro-photographic or image processing process that is in accordance with National Standard of Canada CAN/CGSB-72.11-93, Microfilm and Electronic Imaging as Documentary Evidence, published by the Canadian General Standards Board in November 1993, as amended from time to time, and kept in that format for the period prescribed in those sections.

6. The records referred to in sections 2 to 3.1 may be kept on machine-sensible data media if the media can be related back to the supporting source documents and are supported by a system capable of producing accessible and readable copy.

Enforcement

7. Where a person, other than a person referred to in section 3.1, has not kept records in accordance with these Regulations, preferential tariff treatment under NAFTA or preferential tariff treatment under CCFTA, as the case may be, may be denied or withdrawn in respect of the commercial goods that are the subject of those records.

8. Where a person, other than a person referred to in section 3.1, who is required to produce records in accordance with subsection 43(1) of the Act fails to do so, preferential tariff treatment under NAFTA or preferential tariff treatment under CCFTA, as the case may be, may be denied or withdrawn in respect of the commercial goods that are the subject of those records.

REFERENCES

ISSUING OFFICE -

Compliance Management Division

LEGISLATIVE REFERENCES -

Customs Act, sections 40, 41, 43, and 109.1

HEADQUARTERS FILE -

7635-4

SUPERSEDED MEMORANDA "D" -

D17-1-21, November 15, 1993

OTHER REFERENCES -

D7-4-1, D17-1-22

Services provided by the Canada Customs and Revenue Agency are available in both official languages.

This Memorandum is issued under the authority of the Commissioner of Customs and Revenue.