SWLN52 - Expiry of the Softwood Lumber Agreement, 2006

October 2015

Background

The Softwood Lumber Agreement between the Government of Canada and the Government of the United States of America (the Agreement) came into force on October 12, 2006 for an initial term of seven years and was subsequently extended for two additional years. It contains export measures that include an export charge on softwood lumber products originating in Canada and shipped to the U.S. The Canada Revenue Agency (the CRA) administers and collects this export charge under the authority of the Softwood Lumber Products Export Charge Act, 2006 (the Act). The Agreement is due to expire on October 12, 2015.

Current status

Upon the expiry of the Agreement, the Minister of National Revenue will recommend to the Governor in Council a regulation under the Act whereby the export charge imposition provisions will cease to be in force effective October 13, 2015. However, registrants will continue to be subject to certain obligations under the Act after the Agreement expires. The impact of the expiry of the Agreement on these obligations is outlined below.

For more information on the proposed regulation that would declare that sections 10 to 15 of the Act cease to be in force, see Softwood Lumber Products Export Charge Notice SWLN51, Termination of the Export Charge Imposed under the Softwood Lumber Products Export Charge Act, 2006.

Softwood lumber accounts

Effective October 13, 2015, the CRA will no longer process new requests for registration of exporters and certification of independent manufacturers.

Returns and refunds

• Final monthly return
  All exporters of softwood lumber will be required to file a final monthly return for the period of October 1 to October 12, 2015. They will need to complete and file Form B275, Softwood Lumber Products Export Charge Return, by November 30, 2015. Under sections 64 and 65 of the Act, penalties may be levied for failing to file a return.
• “Nil” return
  It should be noted that a return must be filed even where there are no taxes payable. If, during the above-mentioned period, any of the following situations occur, exporters are still required to file a return:
  • the export charge rate is 0%,
  • there are no exports for the period or
  • exports are excluded from the export charge.
• Surge charge
  If exporters are required to report a surge charge for an Option A region for September and/or October 2015, they will be required to complete and file Form B279, Softwood Lumber Products Surge Charge Return. Pursuant to section 26 of the Act, exporters must report and remit the surge charge owing by the end of the month following the month in which it became payable. If necessary, a Softwood Lumber Products Export Charge Notice (SWLN) on the surge charge will be published at a later date.
• Refunds
  Exporters may claim a refund within two years after the amount of the export charge was paid, by filing Form B278, Softwood Lumber Products Export Charge – Application for a Refund. Subsection 51(4) of the Act does not permit a refund to be paid until all returns and other records have been filed with the CRA.

Registrants may file corrected returns or refund applications as provided for under the Act.

Date of shipment

The last reporting day ends at midnight, October 12, 2015.

The cut-off for the date on which the export charge becomes payable is established in section 5 of the Act. It states that the time of export is considered to be the time at which an exported softwood lumber product was last loaded aboard a conveyance for export. However, if the softwood lumber product is exported by rail, the time of export is the time at which the railcar containing the product was released to the railway for assembly to form part of a train for export. Registrants will need to ensure that shipments are properly recorded and reported as required under the Act, up to and including October 12, 2015.

Audits

Registrants will continue to be subject to audits under the Act after October 12, 2015. Any audits after that date will only cover shipments up to and including October 12, 2015. Any assessments or refunds will be processed as necessary. The administration and enforcement provisions of the Act (e.g., penalties, collection, confidentiality of information) will continue to apply.

Non-resident security

The CRA will return security to registrants that were required to provide it as a condition of registration. It is important to note that accounts must be in good standing under the requirements of the Act before security can be returned.

Books and records

Section 48 of the Act states that every person required to pay an amount under the Act must retain all records for a period of six years after the end of the year to which the documents relate.

Enquiries

Questions related to the Softwood Lumber Products Export Charge Act, 2006 may be referred to the following office:

Excise and GST/HST Rulings Directorate
Excise Duties and Taxes Division
Place de Ville, Tower A
320 Queen Street, 20th floor
Ottawa ON K1A 0L5
Telephone: 1-866-330-3304
Fax: 613-954-2226

Further information

Date modified:

2015-10-09