The new CBSA Assessment and Revenue Management (“CARM”) is scheduled to launch on May 13, 2024. The implementation approach of the Canada Border Services Agency (“CBSA”) is being described as a “big bang,” this is because CBSA plans to introduce CARM across Canada at the same time (rather than in stages across different regions to resolve any setbacks).
When CARM goes live it will likely be adopted by approximately 52,000 registrants representing approximately 82% of the volume and 83% of the value of the top 3000 importers. CARM adoption rates for customs brokers and customs self assessment (“CSA”) program participants is good. However, the impact that non-registered importers will have on the flow of goods into Canada on launch day is completely unknown.[1]
Importers and their service providers should consider contingency plans for dealing with potential disruptions. For importers and service providers who have not already prepared for CARM, the time to do so is now. This outline provides a brief description of the status of CARM and recommended next steps.
The CARM Client Portal
CARM changes the manner in which duties and taxes on commercial goods will be managed, accounted for, collected, and remitted. The CARM Client Portal will be the primary hub. It will allow importers and their service providers to obtain self-service access to customs data.
As of May 13, 2024, CARM will be the system used by importers and their service providers for payment of duties and import taxes. The CBSA requested all commercial importers and their service providers to register and adapt their systems and business practices to CARM before it goes live. Importantly, between April 26 to May 13, 2024 there will be a blackout period where accounting privileges or visibility to accounts or registration onto the portal will not be available.[2] Importers are encouraged to register on the CARM Client Portal prior to April 26, 2024.
Release prior to payment
Amongst the changes brought by CARM, the new Release Prior to Payment (“RPP”) program is likely the most significant for many importers. Importers using the current RPP program typically obtain the release of goods prior to final accounting and the payment of customs duties and import taxes using their customs broker’s RRP security. Under CARM importers will not be able to use their customs brokers’ RPP security in order to obtain release of the goods before final accounting and payment of duties. Importers who want to participate in the RPP program will required to post their own financial security.
Importers wishing to participate in the new RPP program must post their own account security to guarantee payment of customs duties and import taxes. The current RPP program will remain in effect until May 2024, at which point the new requirements take effect. Once in effect, two options are available:
- Option 1: a financial security instrument for 50% of their highest monthly accounts receivable (inclusive of GST) with a minimum financial security of $25,000 per import program (RM); or
- Option 2: cash deposit for 100% of their highest monthly accounts receivable (inclusive of GST).
To support the transition from financial security being provided through the paper-based system to the CARM system, the regulations permit importers to obtain release of their goods prior to the payment of duties for up to 180 days following the coming into force of the regulations without posting security, as long as the importer has registered for an account on the CARM Client Portal.[3]
To benefit from the transition period, importers must register to the CARM Client Portal before May 13, 2024. Once CARM is implemented an importer will not benefit from the transition period if it registers on the CARM Client Portal after that date. As such, importers should onboard on the CARM Client Portal before April 26, 2024 given the blackout period until May 13, 2024.
The CBSA will automatically enroll importers that have already registered their business in the CARM Client Portal during the implementation of CARM. These importers will not be required to enroll at this time, they must only post the required financial security prior to the end of the 180 day transition period. A failure to post security within the 180 day transition period will result in removal from the RPP program.[4]
The CARM system automatically calculates the amount of financial security required. This amount will be based on the importer’s historical payments to the CBSA in the prior 12 months at the time of enrolment. The amount of financial security may be listed in the CARM Client Portal under the Security Requirement Field.
If an importer posts the required amount, it should be automatically registered. However, if a lower amount is posted, an officer’s review will be triggered. In such a case, CBSA guidance states that the importer must provide a justification (e.g., a lower account receivable is expected in the future). The reviewing officer will then decide whether to approve or deny the request to post a reduced amount.
Financial security agreements may be obtained by a surety company or a financial institution. The CBSA intends to provide guidance on all entities that will be approved to issue financial security agreement for the purpose of securing debt for the RPP program. The formula for calculating the amount of financial security agreement is as follows:
- equal to or greater than 50% of the importer’s highest monthly accounts receivable (inclusive of duties and taxes) within the last 12 months of historical payments to the CBSA at the time of enrolment;
- a minimum amount of $25,000 is required per RM importer program account;
- the importer may choose to post the minimum amount however they must keep their accounts within their security limits by making interim payments or increasing the amount of security posted;
- the maximum amount of security will be capped at $10 million for each RM importer program account number; and
- an importer may choose to post a higher security amount if their account receivable exceeds the cap, but it is not mandatory.[5]
Security deposits may be submitted by the importer through a payment directly into the CARM Client Portal. The formula for calculating the amount required for the security deposit is as follows:
- equal to or greater than 100% of the importer’s highest monthly accounts receivable (inclusive of duties and taxes) within the prescribed period.[6]
An importer can make a single deposit for multiple importer program accounts that are linked to a business. However, it is important to identify the security breakdown for each importer program.
Importers who use a financial security bond must consider whether to use a broker’s financial security bond provider or its own financial security bond surety provider. Not all customs brokers will offer financial security bond services. Other options include cash security, customs bonds, continuous bonds or a bond for a set duration.
Summary
CARM will launch across Canada at the same time. The CARM universe will spring into existence on May 13, 2024. For commercial importers the time to register is now. Miller Thomson LLP’s Global Trade and Customs group can be contacted to obtain more information on the CARM implementation process.
A version of this paper was published by the Canadian Tax Foundation at the its 75th annual conference in Montreal in November of 2023.
[1] IE Canada, CARM Implementation and Preparation Advisory (2024) at page 1.
[2] IE Canada, CARM Implementation and Preparation Advisory (2024) at page 1.
[3] Canada Gazette, Part I, Volume 156, No, 48: Regulations Amending Certain Regulations Administered and Enforced by the Canada Border Services Agency (November 26, 2022), see: https://www.gazette.gc.ca/rp-pr/p1/2022/2022-11-26/html/reg2-eng.html
[4] See CARM Changes to the Release Prior to Payment Program here: https://www.cbsa-asfc.gc.ca/services/carm-gcra/schedule-calendrier-eng.html#4
[5] Ibid.
[6] Ibid.
