CANADA CUSTOM DUTIES
Implementation of the Canada-Panama Free Trade Agreement (CPAFTA)
1. This customs notice is to inform you that the Canada-Panama Free Trade Agreement (CPAFTA) will be implemented on April 1, 2013. With the exception of a few agricultural goods, the CPAFTA will essentially eliminate the customs duties on all imports from Panama, either immediately upon implementation of the agreement, or through a tariff phase-out.
2. Information regarding the CPAFTA and the text of the agreement can be found on the Foreign Affairs and International Trade Canada website at: www.international.gc.ca.
3. The CPAFTA implementing legislation, Bill C-24, received Royal Assent on December 14, 2012, and is scheduled to come into force on April 1, 2013. Bill C-24 can be found on the Parliament of Canada website at: www.parl.gc.ca.
4. Proposed regulatory amendments and a new regulation under the Customs Act related to the CPAFTA will be announced in a separate customs notice at a later date.
Tariff treatment of MP3 players
Ottawa, Ontario, April 5, 2013 — Recently, there has been significant media attention on the tariff treatment of MP3 players, such as iPods. The Canada Border Services Agency (CBSA) would like to clarify.
Importers of MP3 players continue to be eligible to apply for tariff relief under Tariff Item 9948.00.00.
Customs duty will be relieved on those imported goods that meet the requirements of tariff item 9948.00.00.
UNITED STATES CUSTOM DUTIES
United States Harmonizes its Threshold Value for Low Value Commercial Shipments with Canada
Washington— The United States Government announced that it is delivering on a key commitment under the U.S.-Canada Beyond the Border Action Plan through the publication of a final rule in the Federal Register titled “Informal Entry Limit and Removal of a Formal Entry Requirement.” The rule increases and harmonizes the value thresholds for expedited customs clearance to $2,500. This change would harmonize the value threshold for both countries, from the current levels of $2,000 in the United States and $1,600 in Canada.
United States and Republic of Nigeria Sign Customs Mutual
Washington— On behalf of the United States and the Federal Republic of Nigeria, U.S. Customs and Border Protection (CBP) Acting Commissioner Winkowski and Nigeria Customs Service Comptroller General Abdullahi Dikko Inde signed a Customs Mutual Assistance Agreement (CMAA) today, which marks a significant milestone in collaboration between the two countries.
The bilateral agreement is a valuable tool for CBP and U.S. Immigration and Customs Enforcement (ICE) in cooperation with the Nigeria Customs Service to prevent, repress, and, investigate customs offenses. CMAAs provide for mutual assistance to ensure the accurate assessment of customs duties and taxes, and in efforts to combat illicit cross-border activities to include contraband smuggling, financial crimes such as customs fraud and money laundering, and international terrorism.
SCIENTIFIC RESEARCH AND EXPERIMENTAL DEVELOPMENT (SR&ED) TAX INCENTIVE PROGRAM
To access SR&ED tax incentives, Form T661,
Scientific Research and Experimental Development (SR&ED) Expenditures Claim, must be completed and submitted to the CRA by the reporting deadline. Taxpayers are currently requested to only provide limited information to the CRA about the external consultants that prepared certain parts of their SR&ED tax incentive program claim.
For claims filed on or after the later of January 1, 2014, and the date of Royal Assent, the budget announces that the CRA will require additional prescribed information in respect of tax preparers (including external consultants) who have assisted with the preparation of an SR&ED tax incentive program claim. The budget also proposes to introduce a penalty in respect of each SR&ED tax incentive program claim if prescribed information is missing, incomplete or inaccurate.
Q1. What information is currently requested on Form T661 in respect of the preparers that assisted in the preparation of an SR&ED tax incentive program claim?
A1. Currently, the taxpayer is only required to provide the name (or the firm’s name) of the external consultant that prepared the response for section B or section C of Part 2 of Form T661 and the name of the person or firm who completed Form T661.
Q2. What additional prescribed information will be requested on Form T661 in respect of the preparers that assisted in the preparation of an SR&ED tax incentive program claim?
A2. Form T661 will be revised to require the business number of each preparer and details about the billing arrangements, including whether contingency fees were used and the amount of the fees payable. In instances where no preparer was involved, the taxpayer will be required to certify that no preparer assisted in any aspect of the preparation of the
SR&ED tax incentive program claim.
Q3. What is the amount of the new penalty that will be applied if prescribed information is missing, incomplete or inaccurate?
A3. The budget proposes to introduce a penalty of $1,000 in respect of each SR&ED tax incentive program claim made by a taxpayer for which prescribed information in respect of the preparation is missing, incomplete or inaccurate.
Q4. Who will be liable for the new penalty?
A4. Where a preparer participates in the preparation of an SR&ED tax incentive program claim, the taxpayer and the preparer will be jointly and severally, or solidarily, liable for the penalty.
Q5. Where can I get more information about the changes to the SR&ED tax incentive program?
A5. The CRA is committed to providing taxpayers with up-to-date information. The CRA encourages taxpayers to check its Web site often. All new forms, policies, and guidelines will be posted as they become available.
Home care services
Supplies of basic health care services and certain health-related assistive services are generally exempt from the GST/HST. Budget 2013 proposes amendments to expand the exemption for homemaker services to reflect current provincial and territorial practices for health-related assistive services delivered to persons in their homes.
Currently, publicly subsidized or funded homemaker services, such as cleaning, laundering, meal preparation and child care rendered to an individual who, due to age, infirmity or disability, requires assistance in his or her home, are exempt from the GST/HST. This exemption does not cover personal care services such as bathing, feeding, and assistance with activities of daily living.
Effective for supplies made after March 21, 2013, the budget proposes to expand the exemption for homemaker services to include publicly subsidized or funded personal care services, rendered to an individual who, due to age, infirmity or disability requires such assistance at home. Accordingly, it is proposed that the definition of “homemaker service” be repealed and the new definition of “home care service” be added. The new definition will include personal care services such as bathing, feeding and assistance with dressing and taking medication as well as household services, such as cleaning, laundering, meal preparation and child care.
Where a service provider charges GST/HST on an exempt supply of a home care service made after March 21, 2013, the supplier may refund or credit the GST/HST to the purchaser. Alternatively, purchasers who have paid an amount as GST/HST on exempt supplies may claim a rebate of tax paid in error using Form GST189, General Application for Rebate of GST/HST. The Canada Revenue Agency (CRA) will not pay rebates in respect of claims for GST/HST paid on supplies of exempt home care services made after March 21, 2013 until after the proposed amendments receive Royal Assent.
Regulations Amending Various GST/HST Regulations, No. 4
The Regulations Amending Various GST/HST Regulations, No. 4 were adopted on April 18, 2013 and were published in the Canada Gazette on May 8, 2013. These regulations include amendments to the Selected Listed Financial Institutions Attribution Method (GST/HST) Regulations and to other regulations relating to financial institutions, to implement the new rules for financial institutions outstanding from the introduction of the HST in Ontario and British Columbia. These regulations also implement rules for financial institutions related to the winding down of the HST in British Columbia.
Reminder – changes to harmonized sales tax in Prince Edward Island and British Columbia
Effective April 1, 2013, Prince Edward Island (P.E.I.) has an HST. The HST rate in P.E.I. is 14% of which 5% represents the federal part and 9% the provincial part.
Effective April 1, 2013, the 12% HST, consisting of a 5% federal part and a 7% provincial part, no longer applies in British Columbia (B.C.). Instead, the GST at 5% and a provincial sales tax apply.
Please go to the CRA “Changes to the Harmonized Sales Tax (HST)” Web page for a complete list of technical publications on these changes for both B.C. and P.E.I.