MEMORANDUM D5-1-1

Ottawa, September 23, 2002

Subject

CUSTOMS INTERNATIONAL MAIL PROCESSING SYSTEM

This Memorandum outlines and explains the legislation authorizing the examination of international mail and provides an overview of the processing and handling of both commercial and non-commercial importations. It also outlines the obligations of the importing public to pay the duties and taxes assessed.

TABLE OF CONTENTS

• Legislation
• Regulations
• Guidelines and General Information
  • Definitions
  • Postal Imports Remission Order (CAN$20 or Less)
  • Gift Exemptions - Tariff Item no. 9816.00.00 (CAN$60)
  • Arrival of Inbound International Mail
  • Processing International Mail
    • Customs Primary Inspection
    • Canada Post Data Entry
    • Customs Secondary Processing
    • Duties and Taxes Owing on Mail
    • $5 Handling Fee
    • Customs Postal Import Form
    • Commercial Goods
  • Customs Adjustments
    • Adjustments Before Payment of Duties and Taxes
    • Adjustments After Payment of Duties and Taxes
  • Voluntary Accounting
  • Multiple, Lot, or Split Shipments
  • Firearms
  • Your Rights
  • Appendix A - Form E14, Customs Postal Import Form Form B2G, Requesting Refund of Duties and Taxes on "Non-Commercial Importations" (Reverse of Form E14)
  • Appendix B - Form B2G, Customs Informal Adjustment Request
  • Appendix C - Transborder Exchange Point Offices
  • Appendix D - Form E608, Sealing Tape - Opened by Customs
  • Appendix E - Form E605, Your Package Has Been Examined, a Canada Customs and Revenue Agency insert

Legislation

Customs Act

Powers of Customs Officers

The "Powers of Officers" section of the Customs Act related to the authority to examine and/or open mail items reads:

99. (1) An officer may

(2) An officer may not open or cause to be opened an imported mail item that weighs thirty grams or less unless the person to whom it is addressed consents or the person who sent it has completed and attached to the mail a label in accordance with article RE 601 of the Letter Post Regulations of the Universal Postal Union.

The "Powers of Officers" sections of the Customs Act related to the detention and disposition of postal importations read:

101. Goods that have been imported or are about to be exported may be detained by an officer until he is satisfied that the goods have been dealt with in accordance with this Act, and any other Act of Parliament that prohibits, controls or regulates the importation or exportation of goods, and any regulations made thereunder.

102. (1) Goods that have been imported in contravention of this or any other Act of Parliament, or any other regulation made thereunder, and that have been detained under section 101 shall be disposed of in accordance with that Act or regulation, but, where there is no provision in that Act or regulation for the disposition of such goods, the importer may abandon the goods to Her Majesty in right of Canada in accordance with section 36 or export them.

Report of Goods

The "Report of Goods" section of the Customs Act related to postal importations reads:

12. (1) Subject to this section, all goods that are imported shall, except in such circumstances and subject to such conditions as may be prescribed, be reported at the nearest customs office designated for that purpose that is open for business.

(2) Goods shall be reported under subsection (1) at such time and in such manner as the Governor in Council may prescribe.

(3) Goods shall be reported under subsection (1)

Accounting and Payment of Duties

The "Release of Mail" subsections of the Customs Act related to postal importations read:

32. (1) Subject to subsections (2) and (4) and any regulations made under subsection (6), and to section 33, no goods shall be released until

(4) In such circumstances, and under such conditions, as may be prescribed, goods imported by courier or as mail may be released prior to the accounting required under subsection (1) and prior to the payment of duties thereon.

(5) Where goods are released under subsection (4),

(5.1) Except in prescribed circumstances, where the importer or owner of mail that has been released as mail under subsection (4) takes delivery of the mail, the mail shall be deemed to have been accounted for under subsection (5) at the time of its release.

Collection of Duties on Mail

The "Collection of Duties" subsections related to postal importations under the Customs Act read:

147.1 (3) The Minister and the Corporation may enter into an agreement in writing whereby the Minister authorizes the Corporation to collect, as agent of the Minister, duties in respect of mail and the Corporation agrees to collect the duties as agent of the Minister.

Canada Post Corporation Fees for Collection of Duties and Taxes

147.1 (10) Subject to any regulations made under subsection (14), mail is charged with the prescribed fees from the time of its importation until such time as the fees are paid or as the fees are otherwise removed.

(11) The importer or owner of mail that is charged with fees under subsection (10) shall pay the fees at the time of the payment of the duties on the mail.

(14) The Governor in Council may make regulations

When duties and/or taxes are applicable, a $5 handling fee will be assessed by customs and collected by Canada Post Corporation. Priority Post items are subject to an $8 handling fee when duties and taxes are assessed.

Regulations

Accounting for Imported Goods and Payment of Duties Regulations

Release of goods imported as mail sections of the Regulations for postal importations read:

8. Goods imported as mail may be released under subsection 32(4) of the Act prior to the accounting required under subsection 32(5) of the Act and prior to the payment of duties thereon and without the giving of security pursuant to section 35 of the Act, except where the goods

8.2 Subsections 147.1(3) to (13) of the Act do not apply to mail where the goods imported as mail are

GUIDELINES AND GENERAL INFORMATION

1. The following information is of a general nature only and is not a substitute for relevant legislation and regulations. The Customs Act, the Canada Post Corporation Act, and other acts and regulations relating to the international movement of mail and goods, should also be consulted when interpreting and applying the law.

2. The postal system is designed to expedite delivery of imported mail items to addressees by allowing Canada Post Corporation to deliver and collect duties and taxes for imported mail items.

3. Customs examines international mail to determine the quantity, value, type, and admissibility of the goods in relation to the Customs Act, the Customs Tariff, the Special Import Measures Act, the Excise Act, the Excise Tax Act, and various acts administered by the Canada Customs and Revenue Agency (CCRA) on behalf of other government departments.

4. The Customs Act authorizes the CCRA to detain imported goods that are prohibited, controlled, regulated by, or under any Act of Parliament. The Memoranda D19 series, Acts and Regulations of Other Government Departments, outlines the CCRA's responsibilities in this regard.

5. Most countries, including Canada, have imposed prohibitions or special restrictions to control the importation of certain articles to protect the country's safety, environment, and socio-economic life. These controls are the result of international treaties, conventions, and various Acts and Regulations issued and authorized by the Federal and Provincial legislatures of Canada. This includes goods imported by mail.

DEFINITIONS

POSTAL IMPORTS REMISSION ORDER (CAN$20 OR LESS)

7. The Postal Imports Remission Order (PIRO) grants remission of all customs and excise duties and taxes paid or payable on goods imported by mail on which the value for duty does not exceed CAN$20.

8. The benefits of the remission order cannot be claimed if the value of the purchase exceeds CAN$20, even though the goods have been split or disassembled into several packages that individually have a value of less than CAN$20.

9. For a mail item valued at CAN$20 or less to receive the benefit of the remission order, it must be the only shipment resulting from a transaction or one of a series of shipments for which the total value of the goods in the single transaction does not exceed CAN$20.

10. In this Order, "goods" excludes alcoholic beverages, cigars, cigarettes, manufactured tobacco, goods classified under tariff item No. 9816.00.00 (gifts), and publications where the supplier is required to register under Subdivision of Division V of part IX of the Excise Tax Act and is not so registered.

11. This Order does not apply to imported goods purchased from a retailer in Canada and mailed from out of Canada directly to the purchaser, or to imported goods purchased or ordered through or from a person in Canada who is acting for or on behalf of a person outside of Canada who is selling the goods.

GIFT EXEMPTIONS - TARIFF ITEM NO. 9816.00.00 (CAN$60)

12. Individuals may receive casual donations, commonly referred to as "gift items" from abroad when the value does not exceed CAN$60 as duty- and tax-free importations under the provisions of the casual donations tariff item No. 9816.00.00. For gifts valued at more than CAN$60, that portion of a gift's value exceeding CAN$60 is subject to duty and taxes at the appropriate rate.

13. The benefits of PIRO for CAN$20 cannot be combined with the gift exemption of CAN$60.

14. To qualify as a gift, a mail item must be wrapped and/or be accompanied by a gift card stating, "to addressee from sender."

15. No single gift may exceed CAN$60 regardless of the number of joint recipients. When more than one gift is shipped in a single container, the customs inspector must be satisfied that each gift does not exceed CAN$60. This applies regardless of the number of recipients.

16. Companies, business concerns and associations of any sort do not qualify as donors or recipients for the purposes of tariff item No. 9816.00.00.

17. The benefits of the gift exemption do not apply to importations of advertising matter, tobacco, and alcoholic beverages.

ARRIVAL OF INBOUND INTERNATIONAL MAIL

18. International mail arrives in Canada from other countries by marine, rail, highway, and air modes of transport. The mail is received in Canada at Canada Post processing facilities where it is sorted for movement within Canada. International mail is then directed for customs processing to one of the five CMCs that are located in Vancouver, Calgary, Winnipeg, Toronto, and Montréal.

19. Some international letter mail is transferred at Transborder Exchange Points. Transborder Exchange Points are offices authorized to receive all classes of United States and Greenland letter mail directly from specific communities situated near a border crossing. This does not include imported mail that is dutiable, controlled, or restricted. Transborder Exchange Points are listed in Appendix C.

20. A distinction is made between non-commercial or casual importations and commercial importations. Commercial importers are required to keep books and records of all importation transactions, whereas non-commercial or casual importers are required to keep a copy of the "Customs Postal Import Form" (Form E14) for adjustment purposes.

PROCESSING INTERNATIONAL MAIL

Customs Primary Inspection

21. The CCRA reviews all classes of mail received from Canada Post to identify and segregate all items requiring further examination. The review includes Priority Post, first class, registered, and parcel mail. Canada Post maintains and controls registered and Priority Post mail in separate mail streams.

22. During primary inspection, the customs inspector screens the mail items to determine which are duty-free and non-taxable importations, and ensures that goods which require no further customs control are stamped "Cleared Customs" and released to Canada Post for immediate delivery. These include goods released under the Postal Imports Remission Order (PIRO) and those released as gifts under tariff item No. 9816.00.00.

23. All mail items containing goods that may be prohibited, subject to controls, dutiable, taxable, goods requiring examination by another government department or agency are separated and forwarded to the Canada Post bar-coding and data input area, in preparation for customs secondary processing.

Canada Post Data Entry

24. A Canada Post employee will place a unique bar-coded inventory number onto each mail item being directed to the customs secondary processing area and input the importer/exporter information into the Customs Postal Import Control System (PICS).

25. The mail items are then directed to the customs inspector for secondary inspection and assessment of duties and/or taxes.

Customs Secondary Processing

26. Secondary customs inspectors review mail items to determine whether they are subject to duties, controls, such as permits or certificates, enforcement measures, or if they require inspection by another government department. Should the information on the customs declaration attached to the shipment not be sufficient, the inspector may open the mail item, retrieve the invoice information, or physically examine the contents of the package.

28. Examination or review of the declaration may reveal that mail items sent for secondary inspection fall into the category of duty-free and non-taxable importations or can be released in accordance with PIRO or the gift exemption. The CCRA policy requires all mail items that are opened by the CCRA and subsequently released to be clearly stamped "Examined" and/or "Released By Customs."

Duties and Taxes Owing on Mail

29. It is the responsibility of the exporter to accurately report the value and description of the contents of the mail item.

30. Customs inspectors are encouraged to open the mail item and review invoices, especially for commercial goods, to ensure the most accurate assessment is made. These mail items that are opened by customs for verification or examination purposes and subsequently assessed duties and taxes or released for delivery are to be closed with customs tape, Form E608, Opened by Customs. If the customs officer uses clear sealing tape to close the item, the mail item must be stamped "Examined by Customs." A copy of Form E608 can be found in Appendix D.

31. For mail items that are opened due to lack of information on the declaration, Form E605, Your Package Has Been Examined, is included. The insert advises importers of the CCRA's requirements to ensure future shipments are properly declared. Mail items that are subsequently released for delivery or assessed duties and or taxes are to be closed by the customs officer with customs tape Form E608, then resealed with clear sealing tape. If the customs officer uses clear sealing tape to close the item, the item must be stamped "Examined by Customs." A copy of Form E605 can be found in Appendix E.

32. The customs inspector determines the tariff classification and value based on information from the customs declaration, invoices attached to the item, or an examination to appraise the value of the goods. This information is entered into PICS. The system then automatically calculates the amount of duties and taxes assessed.

33. Under the North American Free Trade Agreement (NAFTA), customs duties on various goods imported from the United States and Mexico have been either reduced or eliminated. The NAFTA duty rates apply only when the imported goods are manufactured in the United States or Mexico. NAFTA does not exempt the GST from imported goods.

34. The GST is applied to most mail items imported into Canada and is calculated on the item's value for tax, which is the total of the foreign value converted to Canadian funds plus any customs duties.

35. In the provinces of Nova Scotia, New Brunswick, and Newfoundland and Labrador, the federal-based GST and the provincial sales tax have been combined to create the Harmonized Sales Tax (HST). The 15% HST is applied to non-commercial goods which are destined to these provinces. Imported commercial goods destined to these provinces are only subject to the 7% federal portion of the HST. The remaining 8% provincial component is payable through the self-assessment provisions of the legislation.

36. Provincial sales taxes (PST) are also collected on non-commercial mail items on behalf of the provinces of British Columbia, Manitoba, Ontario, Quebec, and Saskatchewan. For British Columbia, we collect PST on all goods that are taxable under British Columbia's tax base. Examples of goods exempt PST are books, children's footwear, and children's clothing. For Ontario, we collect PST on all goods that are taxable under Ontario's tax base. Examples of goods that are not taxed PST are books, footwear under $30 and children's clothing. For Manitoba, we collect PST on all items except books, footwear, and clothing. For Quebec, we collect PST on all items except books. For Saskatchewan, we collect PST on all goods that are taxable under Saskatchewan's tax base. Examples of goods that are exempt PST are books, children's footwear and children's clothing. The PST rate applicable on imports is the provincial tax rate for the province. Further information is available on the appropriate Web site of the following provincial finance departments:

British Columbia
Manitoba
Ontario
Quebec
Saskatchewan

37. For tobacco products, provincial tobacco taxes are also collected in New Brunswick, Manitoba, and Quebec. The tobacco tax rate is based on the provincial tax rate.

$5 Handling Fee

38. The importer or the importer's agent or carrier is responsible for providing the information and documentation required to obtain release of the imported goods, for presenting the goods for examination, and for paying any duties and taxes that may apply. Should an agent or carrier perform these functions on behalf of an importer, a fee is charged. In the case of goods imported by mail, the Canada Post Corporation performs these functions on behalf of the importer, who is then charged the $5 handling fee to offset the costs incurred by Canada Post.

Customs Postal Import Form

39. Details of the assessment of the duties, taxes, and the $5 handling fee are printed on Form E14, Customs Postal Import Form, which is then affixed to the mail item by Canada Post for delivery to the addressee. Canada Post is responsible for the delivery of mail items to the addressee and collection of duties and taxes.

Commercial Goods

40. In the case of commercial importations where goods are valued at CAN$1600 or more, the importer will be advised that a mail shipment has arrived; the importer will then be required to present the appropriate customs documentation to obtain release of the goods from customs. Release on Minimum Documentation (RMD) is allowed, provided the importer/owner or customs broker has posted the required security for release prior to payment privileges. Form B3, Canada Customs Coding Form, Type M (Mail) cash entries will be required for importers who have not posted security for release prior to payment. Once the release documentation has been approved, the customs office will advise the applicable CMC to release the mail shipment to Canada Post for delivery.

CUSTOMS ADJUSTMENTS

Adjustments Before Payment of Duties and Taxes

41. An importer, either commercial or non-commercial, who does not agree with the assessment of duties and taxes, may request an adjustment before payment of duties and taxes by checking the "Return to customs" box of Form E14.

42. The mail item will be returned to the CMC located closest to the addressee. Customs will contact the addressee to discuss the request for adjustment and, if duties and taxes still apply, an adjusted Form E14 will be generated and attached to the mail item. If the goods are deemed duty-free and non-taxable, the mail item will be released by customs for delivery to the addressee by Canada Post.

43. An importer, either commercial or non-commercial, may refuse the mail item by checking the "Return to Sender" box of Form E14. Canada Post will stamp the mail item and return it to the sender.

44. Mail which Canada Post cannot deliver to the addressee will be moved to a Canada Post exchange office for return to the sender.

Adjustments After Payment of Duties and Taxes

45. A commercial importer may request an adjustment or refund after payment of duties and taxes for imported goods using a Form B2, Canada Customs - Adjustment Request. The completed Form B2 and supporting documentation should be submitted to the Customs Assessment Division, which processes adjustments and refunds for commercial importations. For more details regarding Form B2 processing, refer to Memorandum D17-2-2, Processing of Adjustment Request Forms.

46. A non-commercial importer may request an adjustment or refund after payment of duties and taxes using Form B2G, Customs Informal Adjustment Request, located on the reverse side of the importer's copy of Form E14. Form B2G should then be submitted to the customs Casual Refund Centre with supporting documentation, such as a credit note or any other documentation pertaining to the request for adjustment or refund.

47. The Casual Refund Centre will process the Form B2G claim and refund, where applicable, any duty, excise tax, goods and services tax, harmonized sales tax, provincial sales tax and/or tobacco taxes.

48. The $5 handling fee, which is assessed on postal shipments will be refunded when it has been determined that the goods should have been duty free and tax exempt at the time of importation. The CCRA will not refund any part of the $8 handling fee for priority post (EMS) items or any other broker's fee or shipping or handling fees.

VOLUNTARY ACCOUNTING

49. Voluntary accounting is accepted when an importer reports to the CCRA that dutiable goods have been released in Canada without the issuance of Form E14 and payment of duties and taxes. The importer should prepare a Form B3, Canada Customs Coding Form, V type document for commercial goods, or Form B15, Casual Goods Accounting Document, for non-commercial goods, and duties and taxes owing will be collected. The documents will bear the notation "Voluntary Accounting" in the field reserved for the cargo control document number. Refer to Memorandum D17-1-3, Casual Importations, for Form B15 instructions, and Memorandum D17-1-10, Coding of Customs Accounting Documents, for Form B3 instructions.

50. Importers who receive mail items with Form E14 attached, without having paid the applicable duties and taxes indicated, should remit payment to:

Commercial Revenue Section
Canada Post Corporation
Suite E0640
2701 Riverside Drive
Ottawa ON  K1A 0B1

51. Importers who determine that insufficient duties and taxes were assessed on Form E14 may request an adjustment by submitting Form B2G for non-commercial goods to the nearest casual refund centre to account for payment of additional duties and taxes. For commercial goods, Form B2 is submitted to the Regional Customs Assessment Division to account for the additional payment of duties and taxes. These are considered adjustments and not voluntary accounts, as an original assessment was done by customs and a control document issued.

MULTIPLE, LOT, OR SPLIT SHIPMENTS

52. When more than one mail item is required to make up a complete order, customs will attempt to assess duties and taxes on one Form E14. However, if the shipments are not presented or arrive at customs together, there may be more than one Form E14 issued. If this is the case, the importer may wish to pay for each item and then submit a refund request for the duplicate payment.

FIREARMS

53. Only non-restricted firearms can be imported by mail. Non-restricted firearms must be sent to Canada by the most secure service offered by the post office, which requires a signature upon delivery. Restricted firearms sent to Canada by mail will be returned to the sender. Prohibited firearms sent to Canada by mail will be detained by customs and disposed of in accordance with the law.

54. Commercial importations of firearms must be accompanied with a copy of your valid Firearms Business Licence.

55. All military weapons require an import/export permit, which can be obtained from the Department of Foreign Affairs and International Trade. For more information visit their Web site.

56. For more information on firearms, please contact the Canadian Firearms Centre by phone at 1-800-731-4000 or visit their Web site.

YOUR RIGHTS

57. It is your right to expect us to apply the law fairly and impartially. If you feel we have not applied the laws fairly, we want you to let us know.

58. If you disagree with the amount of duties and taxes shown on the Form E14, you can ask for either a reassessment, which is a review of the amount charged before you pay it, or an adjustment, which is a review conducted after you pay.

59. If you are not satisfied with the reassessment or adjustment, you should send a letter to us stating your reasons for asking for a review and all the relevant facts and documentation. Send your request to:

Director
Import Process Division
Operational Policy and Coordination Directorate
Customs Branch
8th floor
Sir Richard Scott Building
191 Laurier Avenue West
Ottawa ON  K1A 0L5

60. For a copy of the guide, Your Rights, or for more information on fairness and clients' rights, contact our National Distribution Centre at 1-800-959-2221 or visit the Fairness and Clients' Rights page on our Web site.

APPENDIX A

FORM E14, CUSTOMS POSTAL IMPORT FORM

FORM B2G REQUESTING REFUND OF DUTIES AND TAXES ON "NON-COMMERCIAL IMPORTATIONS" (Reverse side of Form E14)

APPENDIX B

FORM B2G, CUSTOMS INFORMAL ADJUSTMENT REQUEST

APPENDIX C

TRANSBORDER EXCHANGE POINT OFFICES

APPENDIX D

FORM E608, SEALING TAPE - OPENED BY CUSTOMS

APPENDIX E

FORM E605, YOUR PACKAGE HAS BEEN EXAMINED

REFERENCES

ISSUING OFFICE -

Import Process Division
Operational Policy and Coordination Directorate

HEADQUARTERS FILE -

7980-1

LEGISLATIVE REFERENCES -

Customs Act, sections 12, 32, 99, 101, 102, and 147
Canada Post Corporation Act
Customs Tariff
Special Import Measures Act
Excise Act
Excise Tax Act
Goods and Services Tax Act

OTHER REFERENCES -

D2-1-4, D5-1-4, D8-2-2, D17-1-3, D17-1-10, D17-2-1, and D17-2-2

SUPERSEDED MEMORANDA "D" -

D5-1-1, April 17, 2000

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.