Canada – Customs Revenue And Taxation

A LARGE proportion of the current revenue of Canada is obtained from Customs taxation, as is shown by the fact that out of the total revenue on account of the Consolidated Fund for the year ended March 31st, 1909, of 85,000,000 dollars, the receipts from Customs Taxes amounted to over 47,000,000 dollars, which latter figure grew to 61,000,000 dollars in 1909-10.

The power of raising money by any system of taxation was declared by the British North America Act of 1867 to be within the legislative authority of the Parliament of Canada, and customs duties are accordingly levied under the authority of an Act of the Dominion entitled the Customs Tariff. The control and management of the collection of the duties of customs and all matters incident thereto, as well as of the officers and persons employed in the service, is vested in a Department of the Civil Service at Ottawa called the Department of Customs, presided over by a Minister of Customs who is a member of the Dominion Cabinet appointed by the Governor-General, by commission under the Great Seal. There is also a Commissioner of Customs acting as the deputy of the Minister who ranks with the Deputy Ministers and other chief officers in the Civil Service.

A Board of Customs, consisting of the Commissioner, Customs Appraisers and such other duly qualified officers as may be appointed from time to time, sits at Ottawa for the purpose of deciding any points that may arise in connection with the administration of the Tariff.

Under the control of the Department there are at all the leading ports of entry officers known as Collectors of Customs, with staffs of appraisers, clerks, landing waiters, examining officers and preventive officers varying in number with the requirements of the port.

The Department is charged not only with the collection of customs revenues and the administration of customs laws, but with the maintenance of a preventive service, the administration of marine coasting, the registration of shipping and the compilation and publication of statistics relating to Trade and Navigation.

The law provides that all goods imported into Canada, whether by sea, land, coastwise, or by inland navigation, whether dutiable or not, shall be brought in at a port of entry where a Customs House is established. There are about one hundred and forty customs ports comprising all the leading places to which merchandise is directed, and under the survey of these ports of entry there are a number of out-ports at many of which warehousing accommodation is provided on a larger or smaller scale in the same manner as at leading ports. In addition there are a limited number of preventive stations to which goods may also be manifested.

The general administration of the law relating to customs is carried on under the provisions of the Customs Act, which provides for the methods by which goods are entered and warehoused, and valued for duty purposes, the revenue protected, and for the precedure to be adopted by the officers of the department in carrying out the law.

Goods imported by sea or from any place out of Canada must, within three days after the arrival of the vessel, be entered inwards and landed. An invoice of such goods showing the place and date of purchase and the name or style of the firm or person from whom they were purchased, with other necessary particulars must be delivered to the customs officer. If the goods are not to be warehoused, the importer is required to pay all duties upon such goods whereupon the officer grants his warrant for unlading, and permit for their continuance further into Canada if required. In default of such entry, the goods may be taken to a customs warehouse and kept there at the risk and charge of the owner. If unentered within a month from the date of their being warehoused and all charges paid, the goods may be sold by public auction, the proceeds to be applied to the payment of duties and charges, and any overplus paid to the owner of the goods or his agent. If the goods cannot be sold for a sum sufficient to pay the duties and charges they are destroyed.

The importer may enter goods for exportation or for warehouse without payment of duty, but if they are unlawfully removed from the warehouse they may be seized until the payment of double duty has been made.

An owner of warehoused goods may sort, pack, repack or make any arrangements respecting the goods ware-housed in order to ensure the preservation or lawful disposal of them, and may take moderate samples, without immediate payment of duty, but duties are payable in all cases on the quantity and the value of goods in the warehouse as stated on first entry or as originally warehoused.

Warehoused goods may be removed in bond under authority of the customs officers from any warehousing port to any other warehousing port in Canada, or to any other warehouse in the same port. Goods may also be passed in bond from one port of entry to another port or in transit through Canada. Warehouse rent and all expenses connected with the unshipping, carrying and landing of goods, are borne by the importer, and ware-housed goods must be finally cleared for exportation or home consumption within two years from the date of the first entry, in default of which they may be sold for the payment of duty, warehouse rent, etc.

Any customs duty overpaid or charged under an erroneous misinterpretation of the law, is not returnable after the lapse of three years from date of payment, unless application for repayment has been previously made. A refund of duty is not allowed after fourteen days from the time of entry for any misdescription of such goods by the importer. Invoices must be made out in the currency of the country from which the goods are imported, and contain a true statement of the value of the goods.

The customs tariff at present in force is that passed by the Canadian Parliament in 1907. This is divided into three schedules :

(a) containing the list of goods subject to duty, and those which enter duty free ;

(b) containing the list of goods subject to drawback for home consumption ;

(c) a list of prohibited goods.

The tariff of 1897, while providing a general tariff rate of duty on various classes of goods, extended a flat rate reduction of one-third in favour of goods of British origin and manufacture with a few exceptions, such as alcoholic liquors, liquid medicines, tobacco, cigars and cigarettes.

In the present tariff this method has been departed from, and there is now a tariff column in which every item is set forth with the exact rate of duty. There is a second column containing an intermediate tariff containing rates of duty somewhat below the rates in the general tariff ; and thirdly, the general tariff. The intermediate tariff was adopted as an instrument to enable negotiations to be conducted from time to time with any country willing to extend particularly favourable conditions to Canada, thereby enabling the Dominion to find new and large markets for her products.

The rates of customs duty under the British Preferential Tariff apply to goods of British origin or manufacture of the following British countries when imported direct from any British country : the United Kingdom ; the British colony of Bermuda ; the British colonies commonly called the British West Indies, including the following :—the Bahamas, Jamaica, Turks and Caicos Islands ; the Leeward Islands (Antigua, St. Christopher-Nevis, Dominica, Montserrat, and the Virgin Islands) ; the Windward Islands (Grenada, St. Vincent and St. Lucia) ; Barbados ; Trinadad and Tobago ; British Guiana ; British India ; Ceylon ; Straits Settlements ; New Zealand ; Cape of Good Hope ; Natal ; Orange River Colony ; Transvaal ; Southern Rhodesia ; and any other British colony or possession admitted to the benefit of the British Preferential Tariff in Canada by Order in Council.

Every manufactured article to be admitted under the British Preferential Tariff must be bona fide the manufacture of a British country entitled to the benefits of the British Preferential Tariff, and a substantial portion of the value of the manufactured article must have been produced by labour in one or more of such countries.

In order to obtain entry of goods under the British Preferential Tariff, an exporter must furnish a separate invoice therefor to the Customs authorities and the requisite certificates of origin must be written, printed or stamped on the front or back of the invoice. The certificate prescribed lays it down ” that each manufactured article on the invoice in its present form ready for export to Canada has been finished by a substantial amount of labour in such country, and not less than one-fourth the cost of production of each article has been produced through the industry of one or more British countries.”

The British Preferential Tariff may be extended by Order in Council to any British country not specified above, or its benefit may be withdrawn by the same means from any British country (other than the United Kingdom).

It is laid down that the rates of duty under the Intermediate Tariff shall apply to goods the produce or manufacture of any British or Foreign country to which the benefits of such Intermediate Tariff shall have been extended, when imported direct from such foreign country or from a British country.

The benefit of the Intermediate Tariff may be with drawn by Order in Council from any country to which it has been extended, in which case (as also in the event of the withdrawal of the benefit of the British Preferential Tariff by the same means) the rates of customs duties set forth in the General Tariff would apply to the country affected.

The General Tariff applies to all goods not entitled to admission under the Intermediate or under the British Preferential Tariff.

Invoices of goods imported are required to be furnished in duplicate to the customs authorities. It is not necessary for these to be delivered to the carrier trans-porting the goods into Canada, but they may be forwarded by mail to the importer, or his agent, for use in making entry of the goods at the customs port of destination in Canada. A third copy should be supplied to the importer for his own use.

The proper commercial designation of the goods must be set forth in all invoices as well as the marks and numbers on the packages. Every invoice must contain a sufficient and correct description of the goods, and in respect of goods sold by the exporter, must show in one column the actual price at which the articles have been sold to the importer, and in a separate column the fair market value of each article as sold for home consumption in the country of export.

In fixing the value for duty of goods subject to ad valorem duties (” the fair market value thereof, when sold for home consumption, in the principal markets of the country whence and at the time when the same were exported directly to Canada “), the Customs Act lays it down that ” Such market value shall be the fair market value of such goods, in the usual and ordinary commercial acceptation of the term, and as sold in the ordinary course of trade : Provided that a discount for cash, for duty purposes, shall not exceed two and one-half per cent., and shall not be allowed unless it has been actually allowed and deducted by the exporter on the invoice to the importer.”

The officers whose duty it is to appraise the value of imported goods according to the true intent and meaning of the law must, by all reasonable ways ‘in their power, ascertain, estimate and appraise the true and fair market value of the goods at the time of exportation in the principal markets of the country from which they are exported. Information is regularly supplied to them by the authorities to enable them to secure proper valuation of such goods. The customs department adopts all possible means of becoming acquainted with the fair market value of goods when sold for home consumption in the countries of export.

To prevent undervaluation of imported goods of a class or kind made or produced in Canada, the Customs Tariff of 1907 contained the provision that ” if the export or actual selling price to an importer in Canada is less than the fair market value of the same article when sold for home consumption in the usual and ordinary course in the country whence exported to Canada, at the time of its exportation to Canada, there shall, in addition to the duties otherwise established, be levied, collected and paid on such article, on its importation into Canada, a special duty (or dumping duty) equal to the difference between the said selling price of the article for export and the said fair market value thereof for home consumption ; and such special duty (or dumping duty) shall be levied, collected and paid on such article, although it is not otherwise dutiable.

Provided also that the following goods shall be exempt from such special duty, viz. :

(a) goods whereon the duties otherwise established are equal to fifty per cent. ad valorem ;

(b) goods of a class subject to excise duty in Canada ;

(c) sugar refined in the United Kingdom ;

(d) binder twine or twine for harvest binders manufactured from New Zealand hemp, istle or tampico fibre, sisal grass or sunn, or a mixture of any two of them, of single ply and measuring not exceeding six hundred feet to the pound.

Provided further that excise duties shall be disregarded in estimating the market value of goods for the purposes of special duty when the goods are entitled to entry under the British Preferential Tariff.

The Minister of Customs is empowered to make regulations for carrying out the provisions of this section of the Act, and such regulations may provide for the temporary exemption from special duty of any article or class of articles, when it is established to the satisfaction of the Minister that such articles are not made or sold in Canada in substantial quantities and offered for sale to all purchasers on equal terms, under like conditions, having regard to custom and usage of trade. They may also provide for the exemption from special duty any article when the difference between the fair market value and the selling price thereof to the importer amounts only to a small percentage of its fair market value.

The Customs Tariff provides for the imposition of a surtax of one third of the duty specified in the General Tariff on articles which are the produce or manufacture of any foreign country which treats imports from Canada less favourably than those from other countries. This surtax was applied to German goods from November, 1906, to the 1st of March, 1910, when it was suspended and such goods became subject to the duties of the General Tariff.

On February 1st, 1910, a Convention respecting the commercial relations between Canada and France came into force. This Convention, which was signed on September 19th, 1907, and the Supplementary Convention of January 23rd, 1909, terminated the Agreement of February 6th, 1893, which had formerly been in operation. It provided for the application of the Intermediate Tariff to a number of natural and manufactured products enumerated in a Schedule (B) to the Convention, originating in France, Algeria, the French colonies and possessions and the territories of the Protectorate of Indo-China, imported into Canada in the manner provided in the Convention. There is a second Schedule (C) of such natural and manufactured products originating and imported in the same manner in which special rates of duties are set opposite to each item.

The advantages granted in the Convention extend to the United Kingdom and the several British Colonies and possessions with respect to their commerce with Canada, and any advantage which the United Kingdom and British colonies may enjoy under the British Preferential Tariff is not diminished by anything contained in the Convention.

The following countries accorded Most Favoured Nation Treatment in Tariff matters by Canada are also granted the benefit of the Convention :—Argentine Republic, Austria-Hungary, Bolivia, Columbia, Denmark, Japan, Norway, Russia, Spain, Sweden, Switzerland, Venezuela.

Dutiable goods serving as patterns or samples from any British country or from any country entitled in Canada to the advantages of the Franco-Canadian Convention of 1907, are subject to refund of duty on exportation from Canada, provided the goods be (a) bona fide samples or patterns, (b) marked by customs officer at the time of entry, (c) identified by a customs officer on exportation, and (d) be exported within twelve months from the time of entry.

By an Order-in-Council dated June 10th, 1910, the benefit of the Intermediate Tariff was extended to certain Schedules of goods, the produce or manufacture of Belgium, the Netherlands and Italy. Power to extend the benefits of the Intermediate Tariff, in whole or in part in this manner is vested in the Governor in Council in consideration of satisfactory benefits, with the proviso that the goods entitled to enter at the lower rates of duty must be imported direct from such foreign countries or from a British country.

Among other articles in the Tariff which are declared to be free of duty the following are included

(1) Articles for the use of the Governor-General.

(2) Arms, military stores, munitions of war, and other articles, the property of the Imperial Government, and to remain the property of such Government.

(3) Settlers’ Effects, viz., wearing apparel, books, usual and reasonable household furniture and other household effects ; instruments and tools of trade, occupation or employment, guns, musical instruments, domestic sewing machines, typewriters, bicycles, carts, wagons, and other highway vehicles, agricultural implements and live stock for the farm (not including live stock or articles for sale or for use as a contractor’s outfit, nor vehicles nor implements moved by mechanical power, nor machinery for use in any manufacturing establishment) provided that all the foregoing have been actually owned by the settler for at least six months before his removal to Canada, and subject to regulations prescribed by the .Minister of Customs ; and further, that any dutiable article entered as ” Settlers’ Effects ” may not be so entered unless brought by the settler on his first arrival, and shall not be sold or otherwise disposed of without payment of duty until after twelve months’ actual use in Canada.

(4) Articles consigned direct to officers and men of His Majesty’s Imperial Navy, for their own personal use or consumption on board their own ships.

(5) Articles the growth, produce, or manufacture of Canada, returned, under certain conditions, to the exporter thereof after having been exported without having been advanced in value or improved in condition by any process of manufacture or other means.

(6) Articles brought into Canada temporarily and for a period not exceeding three months, for the purpose of exhibition or of competition for prizes offered by any agricultural or other association, provided that full duty is payable in case of sale or if not re-exported within the specified time.

(7) Articles for the personal or official use of Consuls-General who are natives or citizens of the country they represent, and who are not otherwise engaged in any business or profession.

(8) Articles of Canadian manufacture returned for repairs, provided they are identified to the satisfaction of the Collector of Customs, and that a sufficient bond for double the amount of duty is delivered to the Collector as security for their exportation within six months of entry.

The baggage of travellers entering Canada wearing apparel, articles of personal adornment, toilet articles and similar personal effects may be passed free, without entry at customs, but this provision only includes such articles as actually accompany, and are in the use of such travellers for the immediate purpose of their journey and their present comfort and convenience, and is, of course, not intended to apply to merchandise or articles intended for other persons or for sale.

Tourists and sportsmen visiting Canada for a limited space of time, for health or pleasure may take with them such guns, canoes, tents, cooking utensils, camp equipment, musical instruments, kodaks, etc., as they require for their own use upon reporting the articles to the customs at the port of entry and depositing a sum of money equal to the duty. The tourist is required to furnish an invoice of his outfit in duplicate, one copy of which, signed by the customs officer and marked with the amount deposited, he retains. The money thus deposited may be refunded if the articles are exported at any customs port from which the tourist may leave within six months from the time of his entry.