What The New CARM Release Date Means For Canadian Importers
On August 14th, 2023, the Canada Border Services Agency announced that the import-altering aspects of CARM (CBSA’s Assessment and Revenue Management) Release 2 are now expected in May of 2024. Release 2 remains on schedule, releasing in October of 2023, but as a test environment for industry and software partners. The mandatory accounting aspects, such as paying duty and tax through the portal and enjoying release prior to payment privileges on a company's own Custom bond, are set to become mandatory next spring.
So what does this mean for importers? For those already in the CARM Client Portal (CCP), this means you will need to continue to log into your portal regularly to ensure you don’t lose access. For those not yet in the portal, don’t take your foot off the gas. There is still much for you to prepare for.
We asked a few of our Trade Advisors what this new implementation date means for importers. Below are a few of the recurring themes in their answers, which serve as an excellent checklist for those importers who now have a bit more time to prepare.
Get in the Portal. Get in the Portal. Get in the Portal
If you only implement one suggestion in this blog post, we hope it's this one. The CARM Client Portal has its intricacies, it’s best to be familiar with them now and not a few weeks before it’s mandatory, especially given its financial ramifications.
For many companies, their customs broker has been assisting with their payment of duty and tax since they began importing (and it’s been our pleasure to do so ;) The broker essentially acts as a controller for the importing arm of the business, reviewing balances owing, reconciling them with imports, financially backing the import, and ensuring the accurate and timely payment of duty and tax to the CBSA. Under CARM, CBSA will shift much of this work onto the importer. The importer will be required to financially secure their own imports, reconcile their own account, and pay the duty and tax each month within the portal or by online banking.
The additional time spent doing this work in-house will impact businesses of all sizes. A company will need to determine who will be responsible for this work and determine if any additional training is required to complete these tasks accurately. The ramifications of not paying CBSA the full amount owed are repeated warnings and, if overlooked, the temporary loss of importing privileges (until the balance is paid).
Having done this work on behalf of our clients, we’ve observed that the balance CBSA shows you owe is sometimes not quite right, and corrections need to be requested directly from CBSA. This work is made more complicated with the use of multiple brokers. Getting a sense of the information available in the portal and how you may use that to ensure accurate payments is a beneficial practice best done sooner rather than later. Blindly paying the balance may also have repercussions, and careful reconciliation is advised.
Lastly, the CARM Client Portal is the primary tool CBSA will use to see your company's import activity and will grant import access based on portal registration. Should your company not have a CCP prior to the May 2024 release date, your import account will essentially be non-existent, and your imports will be delayed until you register your business and submit financial security.
Delegate Access to Your Broker
Just like Customs can't see you if you are not in the portal, your customs broker can't see you if you have not delegated them access.
Once you are in the CCP, it’s important to confirm your business relationship with your customs broker. Without this role assignment, your customs broker will not be able to submit accounting entries on your behalf, thus requiring you to create and file the final accounting within specified timeframes yourself in the CCP. If final accounting is not filed prior to the accounting deadline, late filing penalties are applied.
Also, by assigning a role to your broker within the portal, they are able to see your transactions and assist you in learning the intricacies of the CCP as well as sorting out any issues that arise.
Determine Financial Security
With the May 2024 CARM release comes the requirement for every commercial importer into Canada to post their own financial security in order to maintain their release prior to payment privileges. What this means is that your customs broker's release request for your shipments into Canada will not be approved by CBSA unless you have an approved financial security method registered in the CCP or have paid the duty and taxes owed for that specific shipment.
Financial security comes in various forms, including a Customs bond or posting cash in the CCP. With either option, CBSA will notify you if the amount posted is not sufficient to secure your release prior to payment privileges (meaning your ability to import now and pay later and not at the port of entry).
There are pros and cons to each option. Posting cash ties up that cash. The pro is that you can avoid the time and cost of obtaining a Custom bond.
Customs bonds free up your cash and allow for a high value of imports compared to a cash bond. However, they take some time to obtain. There are a limited number of surety companies in Canada that extend Customs bonds, all of which will be inundated with bond requests the closer we get to the May deadline. Although CBSA is allowing for a 180 transition period for financial security as of May 2024, if you are choosing this option, it is best to get in the queue now.
So there is your insider's look at the new CARM implementation date for the payment of duties and tax. As you can see, the pressure is technically off. However, we strongly suggest you don’t take your foot off the pedal and instead use this extra time to be as prepared for this massive role change as you can.