On November 15, Public Safety Canada updated its online guidance for entities that report under the Canadian Fighting Against Forced Labour and Child Labour in Supply Chains Act. The updated guidance includes important changes and clarifications that will impact compliance and reporting in the current period. The next reports under the Act are due on May 31, 2025.

The Act is often referred to as Canada’s modern slavery reporting statute, although in some respects it is broader than modern slavery reporting requirements in other jurisdictions. The requirements of the Act are discussed in our earlier Alert and see also on GRIP Canada adopts new forced labor law. In another recent post, we discussed the benchmarking data for the first year of reporting published by Public Safety Canada last month.

The updated guidance clarifies key aspects of the reporting process, including the following:

• how to determine if an organization is a reporting entity under the Act;
• factors to consider when assessing whether an entity has a business presence in Canada;
• which business activities trigger a reporting obligation;
• determining if an entity is importing goods into Canada; and
• submitting a report that was originally developed to satisfy reporting obligations in another jurisdiction.

More specifically, the substantive updates and clarifications discussed below are reflected in the updated guidance.

Treatment of intangible assets

The updated guidance indicates that having assets in Canada refers to tangible property in Canada. Previously, the guidance indicated that assets may include intangibles such as goodwill. The guidance now explicitly indicates that intangibles such as intellectual property, securities and goodwill should not be included in the assessment when determining whether an entity has assets in Canada.

In addition, the guidance indicates that, for purposes of the asset threshold, assets are understood as tangible property.

Meaning of “goods”

Previously, the guidance indicated that “goods” referred to goods that are the subject of trade and commerce, as understood in the ordinary sense of the word. The updated guidance indicates that goods refers to tangible physical property that is the subject of trade and commerce, understood in the ordinary sense of the word. Real property, electricity, software services and insurance plans are explicitly excluded from this definition.

Importing goods into Canada

The updated guidance also provides more specificity around what it means to be importing goods into Canada. Previously, the guidance indicated that an entity is importing goods if it is responsible for accounting for those goods under the Customs Act. 

Under the updated guidance, an entity is importing goods if the entity is the true importer that, in reality, caused the goods to be brought into Canada. The guidance indicates that this is generally the entity that accounts for or pays the duties on the goods being imported. Customs brokers, express couriers, trade consultants and other third-parties authorized to transact business on behalf of the importer, or to account for goods in lieu of the importer, are generally not be considered importers (because they usually will not be the person that, in reality, caused the goods to be imported). 

Consistent with the prior guidance, the updated guidance indicates that purchasing goods produced outside Canada from a third party, where that third party is considered to be the importer, does not count as importing goods.

Distributing and selling

The updated guidance indicates that entities solely involved in distributing and selling are not expected to report under the Act and that PSC will not seek enforcement action in those instances.

Meaning of “control”

An entity may consider the Office of the Superintendent of Financial Institutions’ guidance on the concept of control to assess whether it controls another entity for the purposes of the Act.

De minimis activities

Consistent with the prior guidance, the updated guidance indicates that there is no prescribed threshold for the minimum value of goods that an entity must produce or import to be subject to reporting. Also consistent with the prior guidance, the updated guidance indicates that the terms as they are used in the Act should be understood as excluding “very minor dealings.”

The updated guidance clarifies that this may be interpreted in accordance with generally accepted principles of de minimis and evaluated within the context of each entity’s business.

Multi-jurisdiction reports

A substantial number of US-based reporting entities also are required to prepare a report under one or more of the other modern slavery statutes, for example, those in effect in California, the United Kingdom and Australia. Both for efficiency and to ensure consistency in disclosure, many of these entities prepare a single combined statement to address all of their modern slavery reporting requirements (and in many cases also to address Norwegian Transparency Act reporting). Consistent with this approach, in the first year of Canadian reporting, many US-based multinationals included Canada in their global statement. 

The updated guidance explicitly indicates that entities may use the same report produced for other jurisdictions. However, the guidance still indicates that all reporting requirements of the Act must be included and the report must cover the appropriate reporting period dictated by the Act.

As a result of this additional clarity, we expect that for 2025 most US-based multinationals that are subject to multiple modern slavery reporting requirements will fold their Canadian reporting into their global statement. We generally recommend this approach. 

Reporting year

Reports are due on May 31. For a company with a May 31 financial year end, the prior guidance suggested that a report submitted on May 31 needed to cover the activities of the financial year that ended on that day. The updated guidance clarifies that the financial year for which the report is to be submitted is the entity’s previous financial year ending before May 31. 

Report length

The recommendation that the report not exceed 10 pages has been removed. However, it is still a requirement that the PDF file not exceed 100mb in size.

Attestation

Minor changes have been made to the form of attestation included in the guidance. It now reads as follows:

“In accordance with the requirements of the Fighting Against Forced Labour and Child Labour in Supply Chains Act (Act), and in particular section 11 thereof, I, in the capacity of [title], attest that I have reviewed the information contained in the report on behalf of the governing body of the entity [or entities] listed above. Based on my knowledge, and having exercised reasonable diligence, I attest that the information in the report is true, accurate and complete in all material respects for the purposes of the Act, for the reporting year listed within this report.

• Full name
• Title
• Date
• Signature, accompanied by the statement, I have the authority to bind ‘Name of Entity’.”

In addition, the guidance previously indicated the attestation should follow the format indicated in the guidance. The attestation is now characterized as an example that can be used.

The updated guidance indicates that typing “signed” in the attestation signature block does not constitute a signature.

Joint reports

In the case of a joint report, the questionnaire only needs to be completed by the entity that submits the report. 

Website posting

The updated guidance more strongly suggests that, when the report is submitted to PSC, it should at the same time be published in a prominent place on the reporting entity’s website. Previously, the guidance indicated that reporting entities should do so at their earliest convenience.