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Standing Committee on Public Accounts: Office of the Auditor General Audit on Taxation of E-Commerce ()
Statistics
Document navigation for "PACP: OAG Audit on Taxation of E-Commerce (December 3, 2020)"
2019 E-Commerce statistics
Speaking points
It should be noted that E-Commerce shipments arrive in Canada through all the modes but mainly in Courier Low Value Shipment (CLVS) and Postal modes.
To keep track of the E-Commerce purchases, the Agency acquires data by mode of transport (marine, air, rail and highway) and the CLVS and the regular commercial stream, which usually consists of high value shipments made up of goods for sale or for any commercial, industrial, occupational, institutional, or other similar use. Canada Post Corporation (CPC) also provides the Agency with postal volumetric data.
CLVS volumetric trends
There was a year-over-year increase of 49% in CLVS volumes for the six months of the fiscal year from April to to April to .
The monthly CLVS volume reached a peak of 8.9 million shipments in and has stayed above 7 million since. As a comparison, the peaks in 2018 and 2019 were both about 7 million in December. The e-Commerce industry has confirmed that forecasted volumes have materialized during COVID-19 and are now considered the new normal. In other words, the volumes are not anticipated to decrease.
Due to the increase demand for online shopping, some courier companies report significant increase in volumes due to E-Commerce, especially since the COVID-19 protective measures were established. The increase could also be the result of China Post redirecting mail to courier. The CBSA has noted that the majority of E-Commerce growth is attributable to Amazon, which is growing at above-market rates.
The Agency has tracked an increase of 15% in total duty and taxes collected during the same period as last year (April to ).
As way of reminder, the Postal program was out of scope of the E-Commerce Taxation OAG Audit.
Anticipated questions and answers
1. What trends has CBSA seen in E-Commerce transactions in 2019? Is it still the case?
The E-Commerce business models are experiencing a highly accelerated evolution. The industry is evolving to an almost real time business model with E-Commerce goods whereby the client sees almost no difference between buying in a store or online (for example: delivery at any address, warehouse to reduce delivery time and meet commitment for delivery in less than 24 hours).
With these changes, the CBSA has noted an increase in the relocation in the fulfillment centres closer to local markets and a reduction in the average size of the packages, this has led to an increase in the volumes of shipments to be processed at the border. The frequency of importation has increased and has been combined with a larger number of goods.
These trends of increasing volumes have continued in 2020 even throughout the pandemic.
2. In 2019, can you confirm that the revenue collected has increased at the same rate as the volumes of goods imported ? Is it still the case?
There was a year-over-year increase of 15% in the duty and taxes collected through CLVS from April to to April to . During the same period, CLVS volume increased by 49%.
To a larger extent, the slower revenue growth can be attributed to the increasing proportion of Courier Imports Remission Order (CIRO) shipments, which rose from 38% to 65% during the period. A CIRO shipment is a shipment with a value for duty below an applicable threshold and hence the benefit of non-taxable status can be claimed. With proportionately more shipments not generating duty and tax revenues, revenue growth was not able to catch up with shipment growth. The implementation of the Canada-United States-Mexico Agreement (CUSMA) De Minimis Thresholds with Respect to Customs Duties and Taxes for Courier Imports in , which expanded the range of eligible CIRO shipments, further contributed to the discrepancy between shipment growth and revenue growth.
3. E-Commerce companies have experienced delays in the delivery of their orders. Did CBSA experience the same issue?
Yes. The COVID-19 measures in place by the CBSA in all our ports of operations to protect our officers' health and safety had an impact on our processing capabilities.
The CBSA issued guidance to its front-line officers earlier his year on "Safety Measures for Processing Commercial Clients". Special measures included:
- Unique and frequent cleaning procedure for all work stations including PIL booths (affects overall processing availability)
- Commercial driver interaction protocols for officers that include explanations of health and safety measures, such as different approaches for the exchange of paperwork at the PIL booth
- New requirements that drivers remove any items from the cab of the truck on request by a BSO during searches (adds to search time)
Key statistics
CLVS volumes
| Month | 2019 | 2020 | % Difference |
|---|---|---|---|
| April | 5,286,396 | 6,325,716 | 20 |
| May | 5,266,984 | 8,922,383 | 69 |
| June | 5,088,740 | 7,916,999 | 56 |
| July | 5,214,103 | 7,912,060 | 52 |
| August | 5,226,317 | 7,878,096 | 51 |
| September | 5,132,756 | 7,522,984 | 47 |
| 2019 | 2020 | % Change | |
|---|---|---|---|
| Total | 31,215,296 | 46,478,238 | 48.9 |
Source: CBSA ORA data, pulled on .
| 2019 | 2020 | % Change | |
|---|---|---|---|
| Total | 419,037,653 | 480,238,836 | 14.6 |
Source: CBSA Entries Accepted Prior to Adjustment data, pulled on .
Background information
E-Commerce shipments mainly enter Canada through the Postal and CLVS streams. The major Canadian cross-border courier companies for E-Commerce are Canada Post, DHL, FedEx, Purolator and UPS.
Monthly CLVS volumes in fiscal year 2019 to 2020 were on average about 5.4 million releases respectively, while monthly releases in the regular Commercial stream (all modes), which usually includes high value commercial shipments made up of goods for sale or for any commercial, industrial, occupational, institutional, or other similar use, was on average about 1.7 million.
CLVS volumes were trending upward before the COVID-19 pandemic.
| 2015 to 2016 | 2016 to 2017 | 2017 to 2018 | 2018 to 2019 | 2019 to 2020 | |
|---|---|---|---|---|---|
| Total | 39,228,919 | 40,085,889 | 46,063,390 | 57,411,970 | 65,373,404 |
The courier program has continued to see increased volumes since the pandemic with CLVS volumes rising by 49% when compared to 2019 levels for the six months from April to September.
E-Commerce is expected to nearly double existing levels by 2023.
2019 to 2020 Agency statistics
| Subject | 2018 to 2019 | 2019 to 2020 | Variance (%) | Branch |
|---|---|---|---|---|
| Traveller: land | 57,685,754 | 55,801,390 | -3.27 | TB |
| Traveller: air | 35,728,438 | 35,390,271 | -0.95 | TB |
| Traveller: marine | 2,877,949 | 3,183,973 | 10.63 | TB |
| Traveller: rail | 225,637 | 236,880 | 4.98 | TB |
| Total travellers entering Canada | 96,517,778 | 94,612,514 | -1.97 | TB |
| NEXUS membership | 1,779,314 | 1,900,760 | 6.83 | TB |
| FAST membership | 57,025 | 55,505 | -2.67 | TB |
| CANPASS membership | 12,610 | 10,726 | -14.94 | TB |
| Commercial: highway releases | 13,657,131 | 14,180,865 | 3.83 | CTB |
| Commercial: air releases | 4,935,450 | 4,228,084 | -14.33 | CTB |
| Commercial: marine releases | 754,162 | 1,282,342 | 70.04 | CTB |
| Commercial: rail releases | 431,827 | 516,410 | 19.59 | CTB |
| Total commercial releases | 19,778,560 | 20,207,701 | 2.17 | CTB |
| Commercial: postal (Postal volumes are Canada Post proprietary information and should not be released publically without their consent) |
[Redacted] | [Redacted] | [Redacted] | CTB |
| Commercial: courier (CLVS) | 55,612,497 | 60,816,911 | 9.36 | CTB |
| Partners in protection membership | 1,758 | 1,842 | 4.78 | CTB |
| Customs self-assessment membership | 1,102 | 1,153 | 19.52 | CTB |
| Subject | 2018 to 2019 | 2019 to 2020 | Variance (%) | Branch |
|---|---|---|---|---|
| Traveller: land | 1,392,787 | 1,193,805 | -14.29 | TB |
| Traveller: air | 1,907,623 | 1,697,031 | -11.04 | TB |
| Traveller: marine | 43,226 | 41,592 | -3.78 | TB |
| Traveller: rail | 6,403 | 9,719 | 51.79 | TB |
| Commercial: highway mode (Exam numbers are not usually released publically. When combined with volumes they can reveal the examination rate and criminal elements could determine the risk of detection) |
[Redacted] | [Redacted] | [Redacted] | CTB |
| Commercial: air mode (combines compliance and health, safety and security exams) |
[Redacted] | [Redacted] | [Redacted] | CTB |
| Commercial: marine mode (combines compliance and health, safety and security exams) |
[Redacted] | [Redacted] | [Redacted] | CTB |
| Commercial: rail mode | [Redacted] | [Redacted] | [Redacted] | CTB |
| Commercial: postal (Montreal and Toronto only) (Postal volumes are Canada Post proprietary information and should not be released publically without their consent) |
[Redacted] | [Redacted] | [Redacted] | CTB |
| Commercial: courier (CLVS) | [Redacted] | [Redacted] | [Redacted] | CTB |
| Subject | 2018 to 2019 | 2019 to 2020 | Variance (%) | Branch |
|---|---|---|---|---|
| Number of total asylum claims (IRCC website) | 55,040 | 63,525 | 15.42 | IRCC (external) |
| Number of asylum claims processed by CBSA (IRCC website) | 29,435 | 29,590 | 0.53 | IRCC (external) |
| Number of irregular migrants (IRCC website) | 19,419 | 16,846 | -13.25 | IRCC (external) |
| Total number of removals | 9,691 | 11,313 | 16.74 | IEB |
| Number of removals (failed irregular migrants) | 461 | 564 | 22.34 | IEB |
| Number of removals (serious inadmissibility including criminality) | 906 | 996 | 9.93 | IEB |
| Number of removals (all other failed claimants) | 4626 | 6143 | 32.79 | IEB |
| Number of removals (all other inadmissibility) | 3698 | 3610 | -2.38 | IEB |
| Number of flagpolers (overall) | 87,371 | 95,762 | 9.60 | TB |
| Subject | 2018 to 2019 | 2019 to 2020 | Variance (%) | Branch |
|---|---|---|---|---|
| Total number of adults detained | 8,781 | 8,825 | 0.50 | IEB |
| Average length of detention (in days) | 13.8 | 13.9 | 0.72 | IEB |
| Total number of minors detained | 16 detained 103 housed |
2 detained 136 housed |
n/a | IEB |
| Average length of detention (in days) | 18.6 | 2.5 detained 16.9 housed |
n/a | IEB |
| Number of individuals released on alternatives to detention | 2041 | 2611 | 27.93 | IEB |
| Subject | 2018 to 2019 | 2019 to 2020 | Variance (%) | Branch |
|---|---|---|---|---|
| Duties and taxes collected (in billions) | 35.35 | 32.48 | -8.12 | CTB |
| Subject | 2018 to 2019 | 2019 to 2020 | Variance (%) | Branch |
|---|---|---|---|---|
| Firearms seized (includes restricted, non-restricted and prohibited) |
696 | 753 | 8.19 | TB |
| Prohibited weapons seized (does not include firearms) |
22,263 | 18,966 | -14.81 | TB |
| Number of tobacco seizures | 1,409 | 1,283 | -8.94 | TB |
| Number of drug seizures (overall) | 24,564 | 29,247 | 19.06 | TB |
| Value of drugs seized (in millions) | $344.58 | $519.30 | 50.71 | TB |
| Number of fentanyl seizures | 66 | 36 | -45.45 | CTB |
| Number of opioid and opioid-related seizures (includes heroin, methadone, morrphine, morphine base and opium) | 386 | 438 | 13.47 | CTB |
| Currency and monetary instruments seized | 2,070 | 1,694 | -18.16 | TB |
| Total value of currency/monetary seizures (in millions) | $32.97 | $27.67 | -16.08 | TB |
| Suspected proceeds of crime | 127 | 136 | 7.09 | TB |
| Value of suspected proceeds of crime (in millions) | $2.72 | $3.22 | 18.38 | TB |
| Child pornography seized | 134 | 132 | -1.49 | TB |
| Total food, plant and animal seizures (in thousands) | 34.1 | 43.5 | 27.57 | CTB |
| Subject | 2018 to 2019 | 2019 to 2020 | Variance (%) | Branch |
|---|---|---|---|---|
| Number of full-time equivalents | 13,996 | 14,475 | 3.42 | HRB |
| Number of uniformed officers (includes BSOs, inland enforcement, superintendents, chiefs, hearings officers, detector dog handlers, etc.) |
8,491 | 8,567 | 0.90 | HRB |
| Number of Border Services Officers (includes officer trainees) |
5,800 | 5,808 | 0.14 | HRB |
| Number of non-uniformed officers | 7,088 | 7,697 | 8.59 | HRB |
| Number of CBSA officials abroad | 56 | 52 | -7.14 | SPB |
| Female workforce | 7,674 | 7,997 | 4.21 | HRB |
| Male workforce | 7,905 | 8,267 | 4.58 | HRB |
| Subject | 2018 to 2019 | 2019 to 2020 | Variance (%) | Branch |
|---|---|---|---|---|
| Land border crossings | 117 | 117 | 0.00 | FCMB |
| Customs bonded warehouses | 264 | 277 | 4.92 | CTB |
| Sufferance warehouses | 960 | 973 | 1.35 | CTB |
| Rail offices | 27 | 26 | -3.70 | TB |
| Airports | 223 | 209 | -6.28 | TB |
| Small vessel reporting sites | 800 | 409 | -48.88 | TB |
| Ferry terminals | 9 | 10 | 11.11 | TB |
| Cruise ship operations | 10 | 10 | 0.00 | TB |
| Commercial vessel clearance facilities | 212 | 213 | 0.47 | TB |
| Mail processing centres | 3 | 3 | 0.00 | CTB |
| International offices | 36 | 36 | 0.00 | SPB |
| Immigration holding centres | 3 | 3 | 0.00 | IEB |
| Subject | 2018 to 2019 | 2019 to 2020 | Variance (%) | Branch |
|---|---|---|---|---|
| Number of overall complaints | 3353 | 3689 | 10.02 | FCMB |
| Number of traveller related complaints | 1960 | 1650 | -15.82 | FCMB |
| Number of complaints regarding officer conduct | 1090 | 1055 | -3.21 | FCMB |
| Number of founded complaints regarding officer conduct | 132 | 121 | -8.33 | FCMB |
Document navigation for PACP: OAG Audit on Taxation of E-Commerce (December 3, 2020)"
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