What is CBSA Assessment and Revenue Management?

The Canada Border Services Agency (CBSA) is changing things up by shifting how it collects duties and taxes on commercial imports.

Soon, the CBSA Assessment and Revenue Management (CARM) will become the primary platform for importers and trade chain partners to fulfill duty and tax obligations for commercial goods entering Canada.

Understanding and adapting to CARM is crucial for businesses involved in shipping goods into Canada. They must register and adjust their systems and processes before the October deadline.

An Introduction to CBSA Assessment and Revenue Management

The CBSA oversees the flow of people, goods, plants, and animals in and out of Canada to safeguard the nation's welfare and economic well-being. This organization, much like U.S. Customs, collects import duties and taxes, which until now has been a siloed and, at times, manual process.

The CARM project will streamline how import duties and taxes are paid. CARM has several goals:

• Reduce the burden for Canadian importers and other trade partners.
• Streamline trade and shift Canada’s global trade enablement ranking to improve Canadian competitiveness.
• Avoid missed opportunities to apply taxes or duties by treating all importers consistently for increased government revenues.
• Reduce the CBSA’s administrative burden to improve efficiency and increase service levels.

CARM will replace the Canada Revenue Agency in accepting import payments. Starting October 2024, any business exporting goods to Canada must have a portal account for payment and import management.

This initiative changes everything for importers. Upon complete CARM implementation, importers must use the CARM portal for all duty and tax payments. Though setting this up can be a heavy lift, importers will benefit from improved efficiency, reduced costs, and easier trade.

What are the Main Components of CARM?

Knowing the key components of CARM will help importers comply with the change.

• CARM Client Portal (CCP). This portal acts as the primary hub for managing accounting and revenue with CBSA. Users can establish their business account and get acquainted with the portal now. They can delegate access to employees and third-party service providers, view accounting information and make payments through the portal. They also can use it to classify goods, calculate duties and taxes, submit rulings and track the status of these requests.
• Import Accounting Declarations. CARM introduces a new method known as Commercial Accounting declarations (CAD) for accounting purposes. This new system creates an electronic process for versioning and making corrections.
• The CAD will function as the electronic record for imported goods into Canada, replacing the existing customs coding (B3) and request for adjustment (B2) forms. Any changes or modifications to the CAD will be documented as an updated version of the original declaration. The CARM system will use CAD data to calculate duties and taxes automatically.
• Financial Security Requirements. Importers must now provide their own financial security to qualify for Release Prior to Payment Privileges (RPP), which allows goods to enter Canada without upfront duty and tax payments to the CBSA.
• Appeals Process. Clients can make corrections to their initial CAD submission with no interest fees until the payment due date. Any modifications made by the client to the CAD after the payment due date need review.

CARM Considerations for Importers

Importers are encouraged to take necessary steps in anticipation of the impending change brought about by CARM.

Importers can start by identifying and reviewing all company Business Numbers (BN), canceling any BNs that are no longer used or are duplicate numbers. They also can identify any customs brokers and GAA's/POA’s and gather previous trade data from CBSA.

Next importers can register and set up a CARM account. All importers need a CARM account and must designate a customs broker to submit accounting files.

Companies must delegate who will manage their CARM portal. They must list their customs brokers as delegated authorities for each BN. They also must list all designated employees in the portal and assign permissions.

The portal allows several user roles and permissions which include a business account manager (BAM), Program Account Manager (PAM), Editor, Reader and Unassociated User. Each user role has a set of permissions that control what the user can do within the portal.  

Because CBSA now requires importers to obtain their own financial security, a customs brokers bond may not be used for RPP. However, an RPP must be in place for each BN by Nov. 1.

Importers must determine the necessary RPP levels for each BN and make sure the RPP is visible in the portal. A financial security provider can load this information into the portal directly. CBSA will review the information and verify calculated duties are accurate and match the financial security amount.

There are two ways for importers to qualify for RPP. They can:

1. Post a continual surety bond equal to 50% of their highest monthly amount owed to the CBSA in the past 12 months.
2. Make a cash security deposit equivalent to 100% of their highest monthly amount owed to the CBSA in the previous 12 months. At minimum, $5,000 is required per importer program account. However, an importer may post a higher security amount if they choose. The maximum amount of security will be capped at $10 million for each importer program account.

Companies also must assign an owner to the Statement of Account (SOA). This ensures the owner can access the portal to view and take necessary action. The owner has the ability to start the approval and payment process for the SOA or payment, choose the payment method, assign the payment owner and backup, and create a procedure to verify payment of the SOA.

Dispute Resolution

Importers also must pay duties and taxes electronically. CBSA wants electronic payments to come directly from the importer. Customs brokers can still pay duties on importers’ behalf, but not all will, and most will charge for this service.

Corrections and adjustments are tricky. Importers should determine when and who will make corrections and adjustments. Failure to make adjustments on time can impact the total owed. Importers, for example, can adjust their CAD submission without paying interest until payment is due. After that time, the CBSA will review all adjustments and could charge interest.

The CARM portal allows users to view their latest balance, transaction history, statement of accounts, and list of CBSA invoices. It is recommended that companies set up the portal to send out an SOA before payment is due. To maintain consistency, choose a fixed date, like the 25th of each month, for payments due on the first. If users want to ensure the payment matches the SOA, they can also set up an internal cut-off date.

Remember to establish protocols for making corrections and adjustments. If changes are only made in the portal, service providers won't be aware of them unless they have access to it. It's advisable to use EDI processes whenever possible to guarantee comprehensive and accurate data.

Requirements for Books and Records

Section 40 of the Customs Act requires all importers, whether they are residents or non-residents, to maintain their books and records at their Canadian place of business. These records include origin, value, use of goods, marking, purchase, importations, costs, payment, and disposal.

However, non-resident importers often do not maintain a place of business in Canada. Non-resident importers who want to keep records elsewhere must complete the Agreement to Maintain Records Elsewhere in Canada form (BSF900) before they can register for CARM. The CARM registration process asks importers to identify where they will maintain their books and records.

Non-compliance could lead CBSA to revoke authorization and issue administrative penalties.

Related Content: Custom's Compliance: An Overview of Partner Government Agencies (PGAs)

How Importers Can Prepare for CARM

Importers can take steps today to prepare for full CARM implementation.

1. Register for the CARM Client Portal. If keeping records outside of Canada, importers must file a BSF900 with CBSA before registering.
2. Understand the new payment and accounting procedures that CARM requires. CARM will automatically calculate correct duties and fees, but importers are required to make these payments. This includes setting up a surety bond, electronic payments, and internal processes, and designating authorized users.
3. Get trained. There are many resources available to get familiar with CARM requirements. Here are two:

RI User Guides

CARM Videos-2021

Conclusion

Alexander Graham Bell once said, “Before anything else, preparation is the key to success.” Compliance with CARM requirements demands preparation today. Failing to register in the CARM portal and follow its requirements can slow Customs clearance and even lead to delayed entries. It’s best to work on compliance now to avoid headaches later.

As the October 2024 deadline approaches, importers should make it a priority to register for CARM and become acquainted with its requirements to guarantee a seamless transition.

Though it may seem overwhelming at first, by utilizing AN Deringer's customs brokerage service resources and following industry best practices, importers can confidently navigate CARM regulations.