On January 1, 2026, the rules that govern who is legally on the hook when something goes wrong with a Canadian import changed. The amendments to Section 17 of the Customs Act — specifically subsection 17(3) — came into force by order of the Governor in Council, making the "importer of record" jointly and severally liable with the owner and importer of the goods for all duties, taxes, and reassessed amounts after final accounting.
If you're a Canadian supply chain manager, a small business owner who imports, a non-resident importer (NRI) shipping into Canada, or a bookkeeper trying to understand what your client's exposure actually is, this change matters. A lot of the importers I've spoken to in the past few months don't fully grasp what it means. Some have heard "Section 17" referenced in a broker email or at an industry event without understanding the mechanics. Others assume their broker is shielding them from liability the way the old system sometimes did.
They're not.
This article walks through what Section 17 actually says, how the liability works in practice, what triggers a reassessment, what the penalties look like, the four-year window that matters more than anything else, and the concrete steps an importer can take right now to protect themselves.
What Section 17(3) actually says
Before the January 2026 amendments, Section 17 of the Customs Act established that the importer or owner of the goods was liable for duties. Who counted as "the importer" could be ambiguous in certain scenarios — particularly in e-commerce arrangements where a customs broker or courier acting as importer of record could absorb liability and leave CBSA with limited recovery options if things went wrong.
The amendments changed that. Under the new Section 17(3), the importer of record — defined as the entity identified as the importer at the time of accounting on the Commercial Accounting Declaration (CAD) — is jointly and severally liable with the importer and owner of the goods for:
- Any amounts owing in duties and taxes at the time of accounting, and
- Any post-accounting duties determined as a result of verifications, trade compliance audits, or reassessments — or any amount the importer has "reason to believe" is owed due to an error at the time of accounting.
CBSA's governing guidance on this is Memorandum D17-2-5 (Duty Liability of Importer of Record), which came into effect January 1, 2026.
"Jointly and severally liable" is a legal term that deserves explanation because it shapes everything that follows. It means CBSA can pursue the full amount owed from any one of the parties, not a proportional share. If duty is reassessed at $80,000 and the importer of record, the owner, and the importer are all liable, CBSA can collect the full $80,000 from whichever party they can most easily recover from — and that party has to sort out the allocation among themselves afterward.
In practice, for almost all commercial import scenarios in Canada, the importer of record is the Canadian business with the Canadian business number. Which means when CBSA comes asking, they're coming to you.
Why this change happened
The Section 17 amendments aren't random. They're the legal backbone that makes CARM enforceable.
Under the old regime, a foreign e-commerce merchant could ship goods into Canada with a customs broker acting as importer of record. If the broker's immunity from liability held up, and the merchant disappeared, CBSA had limited ways to collect unpaid duties or correct underclassifications. Billions of dollars in import value were moving through arrangements where no clearly liable Canadian party existed at the endpoint.
The 2022 Budget Implementation Act contained the amendments (Section 307) that would fix this. The Governor in Council fixed January 1, 2026 as the coming-into-force date, giving the CARM system time to launch and the trade community time to adjust. Now that the date has passed, every entity that appears as importer of record on a CAD — whether that's a Canadian importer, a non-resident importer, or in rare circumstances a customs broker — is directly liable for what was filed.
The practical effect: CBSA now has a clear, enforceable, named party for every commercial import into Canada. The revenue they assess is recoverable. The errors they find are attributable. The penalties they issue have a valid target. That's the point of the change.
The four-year reassessment window
This is the part of Section 17 that creates the most long-term exposure and that most importers underestimate.
CBSA has the authority, under the Customs Act and detailed in Memorandum D11-6-10 (Reassessment Policy), to reassess declarations of origin, tariff classification, or value for duty up to four years after the date of accounting. That means a shipment filed today — April 2026 — can be reassessed until April 2030. A shipment filed in January 2022 can be reassessed until January 2026.
Under the new Section 17, any reassessed amount during that four-year window — additional duty, additional GST, AMPS penalties, accumulated interest — is the joint liability of the importer of record.
What that means in practice: you cannot clear your compliance exposure by filing a shipment and moving on. Every CAD you file today is a potentially open case until four years after its accounting date. If CBSA conducts a trade compliance verification in 2028 and finds that classification errors were made on your 2026 shipments, you owe the difference plus penalties plus interest on shipments you'd already forgotten about.
Most importers don't think about this. They treat customs filing as a transactional event — goods clear, duty gets paid, done. Under Section 17 with a four-year window, that's the wrong mental model. Customs filing is a declaration that remains open for four years, and your liability is dormant but active the entire time.
The "reason to believe" trigger and the 90-day correction window
Here's a subtlety that has outsized importance: under Section 32.2 of the Customs Act, importers have a legal obligation to correct declarations within 90 days of having "reason to believe" that an error was made.
"Reason to believe" is defined in Memorandum D11-6-6. It includes situations like:
- An importer-initiated internal audit or external audit identifies an error
- A CBSA ruling (advance ruling on classification, origin, or valuation) is issued that contradicts previous filings
- A trade compliance verification final report is received
- An official notification from CBSA as a result of an exporter origin verification arrives
- Written communication from CBSA flags an issue
Once any of these trigger events occurs, the 90-day clock starts. If the importer doesn't file a correction within those 90 days, they're exposed to AMPS penalties — even if the original error was made in good faith and even if the correction would eventually have been filed voluntarily.
The importance of "reason to believe" under Section 17 is that it creates a duty to self-report. You can't sit on information you have. If you know about an error — or if you should have known — you have 90 days to act. After that, the penalties escalate.
AMPS penalties: what failure actually costs
The Administrative Monetary Penalty System (AMPS) is how CBSA enforces compliance errors. Under the post-CARM framework, AMPS penalties tied to Section 17 liability come in three levels that escalate with repeat offenses.
For errors in tariff classification (contravention C082) not corrected within 90 days of "reason to believe":
- First level: $500 per occurrence, up to $25,000 maximum for the reassessment period
- Second level: $750 per occurrence, up to $200,000 maximum
- Third level: $1,500 per occurrence, up to $400,000 maximum
Similar tiered structures apply for errors in origin declarations (C080, C081) and value for duty errors.
A third-level penalty is triggered when the importer has been previously penalized at second level for the same or similar goods in a subsequent verification. In other words, the penalty system is designed to escalate dramatically for importers who are given a warning, don't fix the problem, and get caught again on the same issue.
Layered on top of AMPS are:
- Interest on reassessed duties and taxes — compounds monthly from the date the duty was originally owed
- Late Accounting Penalties (LAPs) — if the CAD wasn't filed within 5 business days of release
- Late Payment Penalties — if the SOA wasn't paid within the billing cycle deadline, now being enforced again as of January 2026 after the transition waiver ended
For a mid-sized importer moving 200 shipments a year over a four-year window — 800 total declarations — a systematic classification error discovered in year three can result in:
- Additional duty owed on all 800 declarations
- GST on that additional duty
- Interest compounding for up to four years on each declaration
- AMPS penalties at $500 per occurrence up to $25,000 (first verification) or up to $400,000 (repeat)
- Potential loss of Release Prior to Payment privileges
The six-figure exposure scenarios are not hypothetical. CBSA publishes verification priority lists every six months naming specific HS codes and product categories they're targeting. Food imports, apparel, consumer electronics, and steel and aluminum products have appeared on those lists repeatedly.
Who the importer of record actually is
A lot of confusion comes from the assumption that "my broker handles all this." The broker files the CAD on your behalf, but they file it with your business number as the importer of record. You — the Canadian business — are named on the declaration. The broker is the authorized agent; they're not the importer.
There are narrow exceptions. Customs brokers can, in specific scenarios, identify themselves as the importer of record — typically for trade show imports, auction house scenarios, or certain Courier Low Value Shipment (CLVS) program flows where the importer hasn't yet registered in CARM. CBSA has indicated that scenario-specific exemptions for these edge cases may be expanded through regulatory consultation (the 2025 consultation on broker BN usage is ongoing as of publication).
But for commercial imports under normal CARM workflows, the broker is not the importer of record. You are. And the liability under Section 17(3) attaches to you.
This is especially important for non-resident importers (NRIs) — foreign businesses shipping DDP into Canada with a Canadian broker handling clearance. Under the new framework, the NRI is the importer of record. The NRI is liable under Section 17. The NRI's broker does not absorb or transfer that liability, regardless of what the broker's engagement letter says.
The "reasonable care" defense
If CBSA reassesses and you disagree, or if you're facing an AMPS penalty, one of the most important defensive concepts in customs law is reasonable care. The principle — imported from US customs law where it's more formally codified — is that an importer who exercised reasonable care in making a declaration should not be penalized for good-faith errors that turn out to be wrong.
Canadian practice isn't identical to the US Modernization Act framework, but CBSA and the Canadian International Trade Tribunal (CITT) give weight to evidence that an importer took reasonable steps to verify their filings. Reasonable care looks like:
- Documented processes for reviewing CADs filed by the broker
- A record of questions asked of the broker when classifications looked ambiguous
- Maintenance of supporting documents (commercial invoices, Certificates of Origin, technical specifications, product samples where applicable)
- Periodic internal audits or reviews of classification accuracy
- Consultation with customs counsel or licensed customs specialists when complex issues arise
- Advance rulings requested from CBSA on genuinely ambiguous classifications
The absence of these things looks like negligence. The presence of them — documented, dated, retrievable — is your defense.
An importer who can produce a clear paper trail showing they reviewed their broker's classifications, asked questions when things looked off, and kept supporting documentation is in a fundamentally different position than an importer who just paid the SOA every month and never looked at a single CAD.
Practical steps to protect yourself under Section 17
Given everything above, here's what responsible Section 17 preparedness looks like in practice.
1. Download every CAD your broker files on your behalf
Most importers never look at their CADs. They get the broker's invoice, pay it, move on. Under Section 17, this is a mistake. The CAD is the declaration that carries your liability. You need to see it.
In the CARM Client Portal, you can access your transaction history, which lists every CAD filed under your business number. Download the CADs regularly — weekly or monthly — and store them systematically. The CAD shows the HS classification, value for duty, origin declaration, trade agreement claimed (if any), and duty and GST calculated. These are the four elements CBSA will reassess: classification, value, origin, tariff treatment.
2. Review classifications against your product knowledge
You don't need to be a licensed customs specialist to review classifications. You know your products better than anyone. When your broker files a CAD with a classification code, check that it matches what you understand your product to be.
A classification that changes from one shipment to the next for the same product is a flag. A classification under a residual "other" category when a more specific heading exists is a flag. A classification that carries a duty rate higher than you'd expect for the product type is a flag. Flags don't mean the broker is wrong — they mean ask.
3. Know what trade agreements you're eligible for
Canada has free trade agreements with roughly 50 countries. If you're importing from a CPTPP, CUSMA, CETA, Canada-Korea, Canada-Israel, Canada-Chile, Canada-Colombia, or LDCT-eligible country, preferential duty rates may apply. Claiming them requires a valid Certificate of Origin.
Under Section 17, failing to claim a preferential rate doesn't expose you to a penalty — you just overpaid duty. But incorrectly claiming one (say, claiming CPTPP when the Certificate of Origin isn't valid or the product doesn't meet rules of origin) triggers reassessment, back-duty, and AMPS. This is one of the most common audit findings.
Know which agreements apply to your supply chain, know where your Certificates of Origin are, and know when the broker should be claiming preferential rates vs. MFN.
4. Maintain supporting documentation for 6 years
CBSA regulations require importers to retain records for 6 years following the date of importation. This includes:
- Commercial invoices from suppliers
- Bills of lading
- Packing lists
- Certificates of origin
- Permits and licenses where applicable
- CADs filed and any subsequent corrections or adjustments
- Broker invoices
- Statements of Account
- Any correspondence with CBSA
The 6-year retention requirement exists specifically to support potential reassessments under the 4-year window plus time for review and appeal. Store everything. Know where to find it. In 2029, when CBSA asks about a shipment from 2026, you should be able to produce the full record in an afternoon, not a week of searching email archives.
5. File corrections promptly when you find errors
The 90-day rule under Section 32.2 is strict. If you discover an error — your own product team identifies a classification mistake, your broker flags a misfiled declaration, a supplier informs you the country of origin was wrong — the clock starts from the date of discovery.
Corrections filed within 90 days are penalty-free (though interest on any additional duty still applies). Corrections filed after 90 days expose you to AMPS penalties under C080, C081, C082, or C350, C351, C352 depending on the nature of the error.
Most brokers will file corrections on your behalf if you direct them to. Some will flag corrections proactively. Either way, the legal obligation to ensure corrections happen within 90 days is yours, not theirs.
6. Request advance rulings for genuinely ambiguous classifications
If a product could reasonably fall under two or more HS classifications, you don't have to guess — and you shouldn't. CBSA offers the Advance Ruling program under Section 43.1 of the Customs Act. You submit a request describing the product, and CBSA issues a binding ruling on the correct classification.
Advance rulings take several months, so they're not practical for every shipment. But for high-volume or high-value products where classification is genuinely uncertain, an advance ruling moves the classification risk from you to CBSA's own determination. If CBSA later changes its position, that's CBSA's problem, not yours.
7. Build monthly reconciliation into your workflow
Your SOA, your broker invoices, and your CADs should all reconcile every month. If they don't, you need to understand why — every month, not at year-end when the accountant tries to piece it together.
Monthly reconciliation is also your monthly opportunity to catch errors while they're still inside the correction window. The CAD correction window is open from CAD submission to payment due date. If you reconcile on the 25th when the SOA drops and find a classification issue, you have days, not months, to fix it penalty-free.
8. Consider the Voluntary Disclosures Program for older errors
If you discover errors on filings that are past the 90-day correction window — say, you do an internal audit and find classification problems stretching back 2 or 3 years — the Voluntary Disclosures Program (described in Memorandum D11-6-4) offers a path to correct the record with reduced penalty exposure.
Voluntary disclosure requires that you come to CBSA before they come to you. If CBSA initiates a verification first, the voluntary disclosure option is off the table. This is one reason proactive self-auditing matters: the cost of finding your own errors is far lower than the cost of CBSA finding them.
9. Document your processes
If CBSA challenges a classification in 2029, your reasonable care defense depends on what you can prove about your 2026 processes. "We had a process" isn't a defense. "We have a written process, training records, audit logs, and decision memos from 2026 that show how we classified this product" is.
Written processes for:
- How product descriptions are gathered from suppliers
- How classifications are requested from the broker
- How classifications are reviewed internally
- How Certificates of Origin are obtained and validated
- How corrections are identified and filed
- How documentation is stored and retrieved
You don't need a 50-page policy manual. A 3-page SOP that's actually followed is worth more than a thick manual that isn't.
What the next 3 years will look like
Section 17 came into force January 1, 2026. CBSA's enforcement of the new liability framework is ramping up through 2026 and into 2027. Several things will unfold over that window:
The first waves of reassessments under Section 17 will land in 2027-2029. Trade compliance verifications typically follow shipments by 18-36 months. That means shipments filed in early 2026 are likely candidates for verification starting in late 2027. The importers who get caught in that first wave will set precedents — in terms of how CBSA approaches verification, how penalties are calibrated, and what CITT decisions say about "reasonable care" under the new framework.
AMPS penalty revenue will increase. CBSA has published verification priority lists targeting specific HS chapters and product categories. Enforcement will be focused there first. If you're importing food, textiles, consumer electronics, steel, aluminum, or products from countries on tariff watch lists, expect higher verification rates.
The Office of the Auditor General is auditing CARM itself. That audit, expected to be tabled in Parliament sometime in 2026-2027, may result in recommendations that change how CBSA monitors importer compliance. Several potential outcomes would increase the operational pressure on importers further.
Trade war instability will compound the risk. With the US-Canada trade relationship under continued tariff pressure, CUSMA review scheduled for July 2026, and surtax regimes in flux, classifications that were straightforward 2 years ago may carry significant tariff differentials. Missing a preferential rate claim or miscategorizing origin country under today's tariff structure can mean the difference between 0% and 35% duty on some products.
The importers who do well in the next 3 years are the ones who treat Section 17 as a standing operational obligation, not a one-time compliance event.
How ClearBorder helps
This is what we built ClearBorder to address. Under Section 17, every importer needs three things: visibility into what their broker is actually filing, a systematic review process for every CAD, and a defensible paper trail that proves they exercised reasonable care.
ClearBorder pulls the CADs your broker files from your CARM portal data and presents them in a single monthly report. It flags classifications that changed from previous shipments for the same product. It identifies missed preferential rates with dollar amounts. It tracks correction window deadlines before they close. And it archives every document needed for a Section 17 defense in a CBSA-ready audit file.
If CBSA comes asking about a shipment in 2028, a 2029 ClearBorder subscriber doesn't scramble to reconstruct the file. They open ClearBorder, pull the archive, and show CBSA exactly what was reviewed, when, and by whom.
You can try it for free. Upload your CADs, SOA, and broker invoice for a month, get back a full report in about 60 seconds. No signup required to generate the report.
The bottom line
Section 17(3) of the Customs Act, as amended January 1, 2026, makes Canadian importers of record personally and jointly liable for duties, taxes, penalties, and interest on every commercial import for a four-year reassessment window. The old protective layer that some importers assumed their broker provided is gone. The broker files on your behalf; the liability stays with you.
Preparing for this doesn't require becoming a customs expert. It requires:
- Seeing every CAD filed on your behalf
- Reviewing classifications against your product knowledge
- Knowing which trade agreements apply and claiming them correctly
- Keeping documentation for 6 years in a retrievable format
- Filing corrections within 90 days of discovering errors
- Reconciling your SOA against your broker's invoice monthly
- Requesting advance rulings on genuinely ambiguous classifications
- Using the Voluntary Disclosures Program for older errors found in self-audit
- Documenting your processes so you can prove reasonable care
The importers who do these things will be fine. The ones who don't — who keep paying the SOA without looking at what's being filed on their behalf — are building an exposure they won't see until CBSA's verification letter arrives in 2028.
Section 17 isn't about punishing importers. It's about making sure the Canadian import system has a clearly liable party at the endpoint of every transaction. Under CARM, that party is you. The work is just to be ready when it matters.
Sources and references:
- Customs Act, Section 17 as amended by Section 307 of the Budget Implementation Act, 2022 No. 1
- Canada Gazette, Part 2, Volume 158, Number 22: Order Fixing January 1, 2026
- CBSA Customs Notice 25-32: End of CARM Transition Measures and Coming Into Force of Importer of Record Changes
- CBSA Memorandum D17-2-5: Duty Liability of Importer of Record (in force January 1, 2026)
- CBSA Memorandum D11-6-10: Reassessment Policy
- CBSA Memorandum D11-6-6: Reason to Believe and Corrections to the Declaration
- CBSA Memorandum D22-1-1: Administrative Monetary Penalty System
- CBSA Memorandum D11-6-4: Relief of Interest and/or Penalties Including Voluntary Disclosure
This article is not legal advice. For specific situations, consult a customs lawyer or licensed Canadian customs broker.
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