Voluntary Disclosure: Your Safety Net When Peak Season Entries Go Wrong

Key Takeaways

• Voluntary disclosure filed before CBSA audit can reduce or eliminate AMPS penalties under the Administrative Monetary Penalty System.
• Peak season rush increases CAD filing errors—misclassified HS codes, undervalued transactions, and missed CUSMA origin claims are the most common.
• You have 90 days to amend a straightforward error via CARM Client Portal; after that window closes, voluntary disclosure is your only penalty-reduction path.
• CBSA’s four-year assessment window means errors from 2022 Q4 peak season are still discoverable—and actionable—in 2026.

When Rush Season Entries Need a Second Look

Peak season import volumes create operational pressure that increases declaration errors. Rushed CAD filings during high-throughput weeks mean misclassified HS codes, undervalued transactions, and missed preferential origin claims slip through. CBSA’s voluntary disclosure program exists for exactly this scenario—it lets you self-report mistakes before audit, and in many cases eliminates or sharply reduces penalties under the Administrative Monetary Penalty System (AMPS).

Voluntary disclosure is not an amnesty program. It is a structured mechanism outlined in CBSA’s D11-6-4 memorandum that rewards importers who identify and correct their own errors. The trade-off is straightforward: you pay the duty shortfall plus interest, CBSA considers waiving or reducing the penalty.

We see this most often after a busy quarter when internal audits surface systemic issues—an ERP migration that dropped assists from valuations, a supplier invoice template that omitted royalties, or a batch of entries filed under the wrong CUSMA origin rule. If your compliance team just flagged something similar, the voluntary disclosure window is open now.

What Qualifies as a Voluntary Disclosure

CBSA accepts voluntary disclosures for any contravention of the Customs Act or related regulations, provided the importer reports it before CBSA discovers the issue. Common disclosures we file include:

• Incorrect HS 6-digit classification that resulted in lower duty rates
• Undervalued transactions (unreported assists, royalties, freight adjustments)
• Missed CUSMA or CETA preferential origin claims (or incorrectly claimed preferences)
• Incorrect tariff treatment under SIMA (Special Import Measures Act) for goods subject to anti-dumping or countervailing duties
• Regulatory non-compliance (CFIA import permits, incorrect country of origin declarations)

The disclosure must be voluntary—if CBSA has already initiated a verification, sent a request for information under section 42 of the Customs Act, or opened an enforcement file, the window has closed. That is why internal audit timing matters. Run your compliance reviews before CBSA’s audit desk runs theirs.

AMPS Penalty Relief Under Voluntary Disclosure

The Administrative Monetary Penalty System assigns contraventions to five levels (A through E) based on severity. Baseline penalties range from CAD 250 for a Level A infraction to CAD 25,000 for Level E. A compliant voluntary disclosure can:

• Eliminate penalties entirely for Level A contraventions (minor infractions such as late-filed corrections or administrative errors)
• Reduce Level B and C penalties by 50% to 80%, depending on cooperation and payment of the duty shortfall
• Mitigate Level D and E penalties (serious infractions like deliberate misclassification or smuggling) on a case-by-case basis, though full elimination is rare

The penalty relief calculation considers whether the importer paid the full duty shortfall with interest, whether the disclosure included all affected entries, and whether the importer implemented corrective measures to prevent recurrence. CBSA wants to see process fixes, not just a cheque.

For context, we routinely see Q4 peak season entries flagged during annual compliance reviews the following spring. If those entries are still within CBSA’s four-year assessment window under section 59 of the Customs Act, they remain discoverable. A 2022 Q4 entry is assessable until late 2026. That is a long time for a misclassification or valuation error to sit in the system.

How Voluntary Disclosure Differs from a Regular CAD Amendment

If you catch an error within 90 days of release, you can file a routine amendment via the CARM Client Portal without triggering a penalty review. This is a straightforward administrative correction—update the CAD, pay any duty shortfall, move on.

After the 90-day window closes, or if the entry was selected for CBSA verification, you must use the formal voluntary disclosure process under D11-6-4. The submission includes:

• A written disclosure letter explaining what went wrong and why
• Corrected CAD data for all affected entries
• Payment of the duty shortfall plus interest (calculated from the original accounting date)
• Evidence of process changes to prevent recurrence

CBSA reviews the disclosure, confirms the penalty mitigation level, and issues a final assessment. The review can take 60 to 120 days depending on the complexity and volume of entries involved. During that period, the importer’s compliance file is effectively on hold—no new enforcement action will be initiated for the disclosed issues.

When to File: Timing and Trigger Events

Common triggers for voluntary disclosure include:

• Post-quarter internal audits that surface HS classification drift (your supplier changed product specs, but your broker kept filing under the old code)
• ERP or WMS migrations that dropped data fields from invoices (assists, tooling charges, design fees)
• Supplier invoice template changes that buried royalties or license fees in lump-sum line items
• Regulatory updates that changed tariff treatment mid-year (SIMA dumping margins adjusted, CUSMA regional value content thresholds clarified)
• CBSA request-for-information letters that arrive before an audit officially opens—if you catch additional errors during your response preparation, you can still file a voluntary disclosure for those items

The worst time to file is after CBSA has already sent a verification notice. At that point, the disclosure is not voluntary, and penalty relief is off the table. If your compliance program includes quarterly CAD reviews, you will catch these issues early.

Cross-Border Warehouse Coordination

If your inbound side runs through a Montreal sufferance facility like FENGYE LOGISTICS, coordination between the dock and the brokerage desk matters. Voluntary disclosure often surfaces when warehouse inventory reconciliation flags quantity discrepancies, damaged-in-transit units that were released but not declared, or mismatched packing lists.

We’ve filed disclosures where a bonded warehouse inventory count revealed short shipments that were declared and duty-paid at full quantity. The duty overpayment is recoverable via drawback, but the failure to amend the CAD within 90 days requires a disclosure to document the correction.

Filing Process and Penalty Outcome

A compliant voluntary disclosure submission to CBSA includes:

1. Disclosure letter (what happened, how you discovered it, what you fixed)
2. Corrected CADs for all affected entries (re-classified HS codes, adjusted valuations, corrected origin claims)
3. Duty and interest payment (calculated from the original accounting date to the disclosure date)
4. Supporting documentation (invoices, origin certificates, technical specs, supplier correspondence)
5. Remediation plan (process changes, staff training, system controls to prevent recurrence)

CBSA reviews the package, confirms the penalty relief level, and issues a final assessment. If accepted, the penalty reduction is immediate. If CBSA requests additional information or disputes the corrected classification, the review extends, but the disclosure remains open and penalty relief remains available.

We track disclosure outcomes by contravention type. HS classification errors where the importer can document a good-faith attempt to classify correctly (technical product specs, CBSA rulings for similar goods) routinely receive 80% to 100% penalty relief. Valuation errors tied to supplier invoice format changes receive similar relief if the importer demonstrates internal controls were in place. Deliberate undervaluation or quota evasion receives minimal relief, and Level D or E contraventions may still result in substantial penalties even under voluntary disclosure.

What Happens If You Don’t Disclose

CBSA’s audit desk uses risk-based targeting to select entries for post-release verification. High-value shipments, first-time importers, high-risk commodity codes (textiles, electronics, auto parts subject to SIMA), and importers with prior contraventions all receive elevated scrutiny. If CBSA selects your entry for verification and discovers an underpayment, you face:

• Full AMPS penalty at baseline rates (no mitigation)
• Duty shortfall plus interest
• Potential for Level B or C contravention if the error pattern suggests negligence
• Increased audit frequency for future entries

The penalty spread is significant. A Level C contravention for misclassification can reach CAD 5,000 per entry. If the same error pattern affects 200 entries across a quarter, that is a CAD 1,000,000 exposure before you add the duty shortfall. Voluntary disclosure caps that exposure at the duty shortfall plus interest, and potentially eliminates the penalty entirely.

If your last quarter’s CADs have classification gaps, missed assists, or unreported royalties, file the disclosure before CBSA’s verification desk pulls the file. The D11-6-4 submission window closes the moment CBSA initiates contact. Submit a disclosure.

Frequently Asked Questions

What is voluntary disclosure under CBSA rules?

Voluntary disclosure is a program outlined in CBSA’s D11-6-4 memorandum that allows importers to self-report past customs errors before CBSA discovers them. If accepted, penalties under the Administrative Monetary Penalty System (AMPS) may be reduced or waived entirely.

How long do I have to file a voluntary disclosure with CBSA?

CBSA can assess import entries for up to four years from the date of accounting under section 59 of the Customs Act. You can file a voluntary disclosure any time within that window, provided CBSA has not already initiated an audit or verification of the entries in question.

What types of errors qualify for voluntary disclosure?

Common disclosures we file include incorrect HS 6-digit classification, undervalued transactions, missed CUSMA or CETA origin claims, unreported assists or royalties, and incorrect tariff treatment. If duties or revenue were underpaid or regulatory requirements were missed, it typically qualifies.

Can voluntary disclosure eliminate AMPS penalties completely?

Yes. Under CBSA’s penalty mitigation framework, a compliant voluntary disclosure can reduce Level A contraventions (minor infractions, CAD 250–450 baseline penalty per entry) to zero, and significantly reduce Level B through E penalties depending on cooperation and payment of the duty shortfall.

How does voluntary disclosure differ from a regular CAD amendment in CARM?

A CAD amendment filed within 90 days of release via the CARM Client Portal is a routine correction with no penalty exposure. After 90 days, or if CBSA has already flagged the entry, you must use the formal voluntary disclosure process under D11-6-4 to request penalty relief.

What happens if I don’t file voluntary disclosure and CBSA finds the error?

CBSA will assess the duty shortfall plus interest, and issue an AMPS penalty at full tariff. Level A contraventions start at CAD 250 per entry; Level C and above can reach CAD 5,000 to CAD 25,000 per contravention depending on the infraction type and whether it’s a repeat issue.

Do I need a customs broker to file voluntary disclosure?

No, but brokers licensed by CBSA understand the D11-6-4 submission format, penalty calculation, and how to frame the disclosure to maximize relief. We routinely file disclosures on behalf of importers who discovered errors during internal audits or ERP migrations.

Can I file voluntary disclosure for entries older than one year?

Yes, as long as the entries fall within CBSA’s four-year assessment window and CBSA has not yet started a verification. We’ve filed disclosures for entries two to three years old when clients discovered systemic classification errors during annual compliance reviews.

Source: Supply Chain Dive