November 13, 2013
If your company imports or exports food products, you will soon be subject to new regulations that will be developed over the next 18 months. The Canadian Food Inspection Agency (CFIA) is currently consulting with the food industry to help create these regulations under new legislation passed in November 2012. Food importers and exporters will need to be ready when these regulations take effect to avoid having their food products held up at the border, denied entry or subject to penalties for non-compliance.
New outcome-based regulations
The CFIA recently released information on the general design of the forthcoming regulations, which will use an "outcome-based" approach where possible. This approach is based on a set of required outcomes or levels of performance as opposed to prescriptive regulations. Outcome-based regulations will allow the CFIA and the food industry to be more flexible with new technologies and cost-saving initiatives. When an outcome-based approach to regulation is not feasible, a prescriptive and system-based approach will be used instead.
Commodity-specific regulations to remain
Commodity-specific food safety requirements and trade requirements will remain, for example, for fresh fruit and vegetables. The CFIA is attempting to incorporate the 13 current commodity-specific regulations into a single regulation.
License requirements to be broadened
Licensing regulations will be broadened so that every company that imports or prepares food for inter-provincial trade will be required to have a license. This license will be valid for two years and the current proposed cost is about $250.
Licenses will also be required for companies importing in the Imported Food Sector. These products, which are currently not regulated and do not require a license, include grain products, beverages, confectionary and chocolate, spices, seasoning, dried herbs, vegetable fats and oils, infant formula and meal replacements, and snack foods.
If a company operates in both inter-provincial trade and the Imported Food Sectors, it will be able to get one common license.
All license applications will be made with a company's business number. To register for a license, a company will be required to have a preventative food product control plan. These plans will be focused on describing how the company meets CFIA regulations and what steps will be taken in the event of an emergency.
Non-compliance penalties to be introduced
CFIA will implement an Administrative Monetary Penalty System to ensure compliance with the regulations. As well, licenses will be suspended for companies that do not meet the regulations. If a company has multiple licenses to cover multiple facilities and one is suspended, all licenses the company holds may be affected.
Many details about the upcoming regulations remain unknown. For example, we currently know very little about the rules that food importers and exporters will need to follow in developing their preventative control plans. The CFIA indicates that it intends to consult the food industry on how the regulations should be constructed, with the goal of allowing for achievable results in safeguarding Canadians' food while promoting due diligence among all levels of government and industry. Once the regulations are created, the CFIA intends to release guidance and templates to show the desired outcomes for preventative control plans.
Download KPMG’s Tax Hub Canada app
KPMG’s free Tax Hub Canada App for iPads and Blackberrys provides timely, convenient tax news and tax rates to help you respond to changes in tax rules and regulations. Download the app today.
The CFIA has released questionnaires to help it gather input from companies in the food industry for assistance in creating the new regulations. If you would like assistance in completing a response to the CFIA questionnaires or would like further information on the proposed regulations, please contact your local KPMG Trade and Customs adviser.
Information is current to November 12, 2013. The information contained in this TaxNewsFlash-Canada is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG’s National Tax Centre at 416.777.8500.
KPMG LLP, an Audit, Tax and Advisory firm (kpmg.ca) and a Canadian limited liability partnership established under the laws of Ontario, is the Canadian member firm of KPMG International Cooperative (“KPMG International”). KPMG member firms around the world have 145,000 professionals, in 152 countries.
The independent member firms of the KPMG network are affiliated with KPMG International, a Swiss entity. Each KPMG firm is a legally distinct and separate entity, and describes itself as such.
KPMG's Canadian web site is located at http://www.kpmg.ca/
© 2013 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.