Updated Guidance From Canadian Government on Modern Slavery Act

On March 7, 2024, the Government of Canada (Government) released an update of the Governmental Guidance (Guidance) and answers to several Frequently Asked Questions (FAQs) relating to Canada’s new modern slavery reporting legislation, the Fighting Against Forced Labour and Child Labour in Supply Chains Act (Act). Under the Act, which came into force on January 1, 2024, reporting entities are required to complete and submit to the Government a mandatory online questionnaire (Questionnaire) and report (Report) about the measures they have taken to address and prevent forced and child labour in their supply chains during the previous fiscal year. Initial Reports under the Act are due by May 31, 2024, or earlier for federally incorporated entities that provide their annual financial statements to shareholders before May 31 of each year. 

THE UPDATE

On March 7, 2024, the Government released updates to the December 20, 2023, Guidance (Update). The Update serves as an important reminder of the approaching reporting deadline on May 31, 2024, for those entities with reporting obligations. The Update addressed both the application of the Act and answered some frequently asked questions.

Determining Whether an Entity is a Reporting Entity

The Update revised the Guidance about when an entity has a reporting obligation. Section 9 of the Act refers to a reporting obligation for any entity: (a) “producing, selling or distributing goods in Canada or elsewhere,” (b) importing goods into Canada (i.e., acting as the importer of record), or (c) controlling another entity that does (a) or (b).

The Guidance previously referred to this entire test, but the Update has removed the references to “selling” and “distributing” from the section titled “Determining whether an entity is a reporting entity.” The FAQs, discussed below, also state, “Reporting requirements are for entities producing goods in Canada or elsewhere or importing goods produced outside Canada. Reporting requirements are also for entities controlling other entities engaged in these activities.” Accordingly, the Guidance no longer expressly discusses a reporting obligation for entities that only sell or distribute goods.

The Act itself, however, has not been amended. The references to “selling” and “distributing” have not been removed from the Act. In addition, other parts of the Guidance continue to reference section 9 in its entirety (e.g., “To be required to submit a report, a corporation or a trust, partnership or other unincorporated organization must meet the definition of entity under section 2 of the Act and meet the criteria for being a reporting entity, as per section 9.”) 

There is now an ambiguity within the Guidance and an apparent disconnect between the Guidance and the Act about when a reporting obligation is triggered. Accordingly, entities that sell and distribute goods, but do not produce or import goods, should consider seeking legal advice about their reporting obligations.

Frequently Asked Questions

The Update clarified some explanations in the Guidance. The most salient of these clarifications include confirming that: 

• Entities can use tax and employment-related records, such as T2 corporate returns, to determine whether the entity has a sufficient business presence or is “doing business” in Canada for purposes of the Act.
• Subsidiaries should determine if they have reporting obligations independently from their parent company, notwithstanding that they are included on the parent company’s consolidated financial statements. If a subsidiary does not meet the definition of “entity” under the Act, they do not have reporting obligations. 
• Provincial and municipal governmental institutions are not subject to the reporting requirements under the definition of “government institutions” in the Act. Some provincial Crown corporations, however, may fall under the definition of “entity” and be required to report.
• The “mandatory” page limit of 10 pages has been changed to a recommendation, and the Update clarifies that longer Reports will be accepted. However, Reports must still be in PDF format and must not exceed 100MB in size.
• While entities must submit their report in one of the two Canadian official languages, submitting the report in both English and French is only a recommendation and not a requirement. 

To learn more about the Act and its reporting obligations, see our previous May 2023 Blakes Bulletin: Parliament Passes Bill S-211: The New Forced Labour and Supply Chain Reporting Law, October 2023 Blakes Bulletin: Complying with Canada’s Forced and Child Labour in Supply Chains Act: Are You Ready?, December 2023 Blakes Bulletin: Part I: Canada Unveils Long-Awaited Guidance on Act Fighting Forced Labour and Child Labour in Supply Chains, and January 2024 Blakes Bulletin: Part II: Significant Implications Arising From Guidance on Modern Slavery Act.

For further information about any aspect of this bulletin, please contact:

or any member of our International Trade group.