Tax Insights: Supreme Court of Canada ruling in Daishowa-Marubeni — Tax treatment of reforestation obligations on sale of forestry assets

View this page in: Français

Issue 2013-03

The Supreme Court of Canada (SCC) ruled in favour of the taxpayer in Daishowa-Marubeni International Ltd. v. The Queen (DMI). The SCC released its unanimous decision today.

Imports into Canada that qualify for GPT treatment may be subject to Canadian customs duty at a preferential duty rate, i.e. a reduced or duty-free rate, depending on the type of goods.

To claim GPT benefits when applicable, importers must ensure the goods are:

  • eligible
  • qualifying goods
  • documented (certifed), and
  • shipped directly to Canada

In addition, they normally must:

  • maintain evidence of eligibility (e.g. exporter/producer certificates/statements)
  • demonstrate that the goods were shipped directly from the GPT country to Canada (i.e. by providing shipping documents, such as a through bill of lading), and
  • make the claim on their Customs import accounting (customs entry)

In certain cases, GPT claims may be made retroactively, up to four years, if a GPT claim was not made at the time of import accounting and all other requirements are met.

Generally, the Canada Border Services Agency (CBSA) can audit/verify importers that have made GPT import claims for up to four years after import. The CBSA may ask to review the documentation noted above.

The table on page 2 lists the 72 countries that no longer benefit from GPT treatment. Starting January 1, 2015, Canadian importers may be required to pay more duty on goods they import from these 72 countries – especially if no other tariff preferences are available and the goods are otherwise subject to customs duty.