The Canada Border Services Agency (CBSA) has established The Canada Border Services Agency Assessment and Revenue Management (CARM) project as a multi-year initiative to transform the collection of duties and taxes for goods imported into Canada. The goal is to modernize and streamline the process of importing commercial goods. The outcome of the CARM project will affect all importers into Canada.
CARM Release 1 has already occurred with the launch of the online Client Portal in 2021. Importers are encouraged to onboard with the portal so that they will be able to:
- Create and manage their accounts;
- View transactions posted to their accounts;
- Make secure payments through the portal;
- Delegate portal access to employees and third parties to manage commercial import activities;
- Request and track the progress of rulings electronically; and
- Classify goods and estimate duties and taxes.
CBSA has been holding regular Onboarding Webinars and has produced an Onboarding Guide for Importers that is available on-line at: https://tinyurl.com/2p88ww87
CARM Release 2 is currently scheduled for release in Spring 2022 although no formal date has been announced. Additional features to be included in this release are:
- Electronic Commercial Accounting Declarations with the ability for corrections and adjustments;
- Harmonized billing cycles;
- New offsetting options; and
- Electronic management of appeals and compliance actions
CARM Release 2 will also introduce changes to the release prior to payment (RPP) security. If RPP security is posted with CBSA, importers and licensed customs brokers have the following privileges:
- Obtain the release of goods from CBSA prior to paying duties and taxes;
- Defer accounting for goods; and
- Defer the payment of duties and taxes.
Having RPP security filed with CBSA allows an importer to move through the Canadian customs process with little to no interruptions at the border. RPP security guarantees the payment of duties, taxes, GST, penalties, interest, redeterminations, anti-dumping duties and countervailing duties. At the time of writing of this article, there has been no notice from CBSA about making any changes to the privileges or guarantees provided by RPP security.
The current state of RPP security is that it may be provided by the importer or by the importer’s licensed customs broker. If the importer’s customs broker takes responsibility for the security needed by an importer, the customs broker assumes the risk of non-payment by the importer under its RPP surety bond. CBSA has defined acceptable financial security as cash, certified cheque, money order, transferrable bond issued by the Government of Canada and an RPP surety bond.
When CARM Release 2 is launched, there will be many changes to the RPP Security Requirements. Licensed customs brokers will no longer be allowed to post RPP security on behalf of their importer clients. All importers will be responsible for posting their own RPP security with the CBSA. The type of security acceptable to CBSA will change as well. Certified cheques, money orders and transferrable Government of Canada bonds will no longer be acceptable as RPP security. That leaves only the option of cash or an RPP surety bond. CARM Release 2 will provide a new method for determining the amount of RPP security to be posted with CBSA. The final change is the way in which RPP security will be delivered to the CBSA.
CARM Release 2 will define the amount of RPP security to be provided based on the type of security to be provided. For resident and non-resident importers filing an RPP surety bond, the amount of the bond will be 50% of the highest month of duties and taxes (including GST) over the prior twelve months. The amount of the bond will range from a minimum of $25,000 CAD to a maximum amount of $10 million CAD. If the importer wishes to post cash RPP security, the amount to be posted is 100% of the highest month of duties and taxes (including GST) over the prior twelve months. There is no minimum cash amount and the maximum amount is $10 million CAD. See: https://www.cbsa-asfc.gc.ca/services/carm-gcra/prep-eng.html#s1-1. Posting cash for small volumes of importing may be a viable option, however, as the value of the highest month of duties and taxes (including GST) rises, it is more advantageous to secure a bond than to use your cash resources.
The security evaluation period is July 25 of the previous year to July 24 of the current year. Security adjustments must be filed by October 15. If an importer does not have twelve months of history, they are allowed to estimate their RPP security amount.
CBSA has not yet announced a new method for filing an RPP surety bond as security. It is anticipated that bonds will move from the traditional, paper, wet ink and raised seal format to some sort of electronic format. There has been no announcement of the details of how this will be accomplished. The Surety Association of Canada has established three threshold criteria for e-bonds (see: https://suretycanada.com/SAC/Surety-Bonds/E-Bonding/SAC/Surety-Bonds/E-Bonding.aspx?hkey=01cd2088-9918-454e-bb0e-a309fa495bef):
- Integrity of Content – The assurances that the document received is the true document executed and the content has not been changed or altered;
- Secure Access – Restricting the access to the document to those authorized to view and/or download it; and
- Verifiability / Enforceability – Assurances that the document was duly executed by the parties identified and that it is enforceable in law.
CBSA should consider these criteria as they move closer to the CARM Release 2 date.
As an importer, what should you be doing before CARM Release 2?
- Complete the onboarding process for the CARM client portal;
- Assess the amount of RPP security that will be needed as of the release of CARM 2;
- Consider your options for RPP security – cash or RPP bond;
- If you opt for a bond, reach out to Rosenberg & Parker of Canada, Inc. to discuss your options (firstname.lastname@example.org / 416 218 1280);
- Consider filing a paper bond ahead of the CARM 2 Release
There are positive and negative aspects to filing your paper bond now. From a positive point of view, your importer RPP bond will be in place well ahead of the CARM 2 Release deadline and there should be no interruptions to your importing activities. On the other hand, filing a bond now may put more security into the hands of CBSA than you are legally required to post under the current regulations.