Tax Insights: Businesses importing goods into Canada must register for CARM – Action required! (October 2024 update)

Issue 2024-30

In brief

On October 21, 2024, the Canada Border Services Agency (CBSA) will launch Release 3 of the CBSA Assessment and Revenue Management (CARM) initiative. CARM Release 3 will be available for trade chain partners (TCPs) and become the official system for accounting and paying duties and taxes on commercially imported goods into Canada.

This Tax Insights provides an overview of certain key features in CARM Release 3 and what importers need to be aware of during the transition period.

In detail

Background¹

The CARM is an initiative by the CBSA to transform and modernize the collection of duties and taxes for commercial goods being imported into Canada. Participation in the CARM is mandatory for all Canadian‑resident and non‑resident businesses that import goods into Canada and their TCPs that interact with the CBSA. Importers that do not participate must formally declare their goods and pay the applicable duties and/or taxes due at the border before customs will release their goods.

In May 2021, as part of Release 1 of the CARM initiative, the CBSA launched the CARM Client Portal (CCP), a self‑service tool to facilitate accounting and revenue management processes with the CBSA. On May 13, 2024, the CBSA launched Release 2 of the CARM internally, which allowed the CBSA to continue working towards the expected benefit of having better compliance under CARM. The CBSA used CARM Release 2 to identify errors and discrepancies in duties and tax submissions and then worked with industry stakeholders to resolve the issues.

The CBSA will launch Release 3 of the CARM on October 21, 2024, and make it the official system of record for assessing and co llecting duties and taxes on goods imported into Canada.

CARM Release 3 and transition period considerations²

Interim process for import-export program (RM) accounts

An importer is required to have an RM account to submit import and export transactions with the CBSA. Until CARM Release 3 is fully operational, importers, exporters and customs brokers must complete and submit, by email, CBSA form:

• BSF947 to request and register for a new RM account (a business number [BN] is required before requesting an RM account)
• BSF948 to request changes to existing RM accounts

Once the forms are processed, the RM account will be activated for use in CBSA commercial systems (within a few hours) and will be available for registration in the CCP within seven days.

In the interim, new commercial importers that require a BN and RM account can work with the Canada Revenue Agency (CRA) and the CBSA until 12 pm ET on October 18, 2024. After CARM Release 3 is implemented (i.e. October 21, 2024 onwards), the CCP must be used to obtain the RM account for an associated BN obtained through the CRA.

Eliminating form B2, Canada Customs – Adjustment Request

The current form B2, which is used for adjustments to form B3‑3, Canada Customs Coding Form, will be replaced by submitting adjustments using a Commercial Accounting Declaration in CARM.

Single B2 and blanket B2 adjustments, or voluntary disclosure requests submitted after August 31, 2024, will be accepted by the CBSA and, if they are not processed before CARM Release 3 goes live, the B2s will be manually entered into CARM starting October 21, 2024.

TCPs may experience processing delays during the transition to CARM. To limit interest accrual, TCPs are encouraged to submit B2s with payments for amounts owing. TCPs are also advised to refrain from submitting B2 adjustments and voluntary disclosure requests between September 1 and October 20, 2024, to avoid delays from manual entry.

The CBSA’s 90‑day service standard for processing adjustments will remain unchanged after CARM is implemented.

Duties relief program (DRP)

Once CARM Release 3 is ready, TCPs can report DRP diversions using the pre‑CARM blanket process. The CBSA will use discretion when applying penalties for obligations expiring between September 1 and October 20, 2024.

Release prior to payment (RPP) changes

When CARM Release 3 is fully operational, importers will no longer be able to use a broker’s RPP security to obtain the release of imported goods before paying duties. Instead, they must post their own financial security through the CCP. However, a 180‑day transition period, from October 21, 2024 to April 19, 2025, will allow importers time to obtain the necessary financial security.

During this transition period:

• importers with a history of accounting for commercial goods will automatically benefit from RPP
• new importers without a history of importing commercial goods within the past four years will also benefit with financial security requirements initially set to zero

Importers must ensure they register in the CCP and post applicable financial security during the transition period to avoid disruptions in the release of their goods.

Cutover period

The cutover period for transitioning to the CARM system will occur from October 4, 2024 (4 pm ET) to October 21, 2024 (3 am ET). During this period:

• some CBSA legacy systems, such as the Customs Commercial System and the Customs Automated Data Exchange (CADEX), will be retired
• the CCP will not be available; TCPs will not be able to onboard to the CCP until it resumes on October 21, 2024
• the Customs Self‑Assessment (CSA) enrolment activities will be paused; they will resume on October 21, 2024, and all CSA applications must be submitted through the CCP thereafter
• the Partners in Protection enrolment will remain available in the Trusted Trader Management System
• the CARM testing environment will not be available; TCPs will be able to access the lab starting the week of October 28, 2024

The takeaway

Importers should register with the CCP before October 4, 2024, to minimize border delays and benefit from the RPP transition period. Importers will be assigned RPP qualifying status for the 180‑day transition period, which will allow them to obtain the requisite financial security and adapt to this new model, while ensuring that border disruptions are mitigated.

Once Release 3 goes live on October 21, 2024, TCPs will be able to register for an RM account using the CCP; the CRA will no longer provide this service. In addition, businesses should pay attention to, and responsibly manage their Statement of Account to meet the monthly compliance obligations. If not met, importers may not be able to obtain the RPP program's benefits. 

It is important that non‑resident importers and suppliers register their business on the CCP and adhere to the CARM mandate promptly. Failure to have a CCP account in place before October 4, 2024 may result in potential delays and complications in customs clearances. All businesses that have not registered before October 4, 2024 will be required to register once the CCP goes back online on October 21, 2024, and obtain a bond so they can benefit from the RPP program. If a bond is not obtained, the importer will be required, at the border, to pay all duties and taxes owing before the goods are released.

^{1. For more information, see our Tax Insights “Businesses importing goods into Canada must register for CARM – Action required! (April 2024 update).”} 

^{2. See CBSA Customs Notices at www.cbsa-asfc.gc.ca/publications/cn-ad/menu-eng.html:
    •   24‑18 – CARM: Changes to the Registration and Maintenance of Program Accounts for Importers and Exporters (RM) (May 13, 2024)
    •   24‑25 – Submission and Processing of Single B2 and Blanket B2 Adjustments, or Voluntary Disclosure Program Requests on or After September 1, 2024 (August 2, 2024)
    •   24‑27 – CARM October Implementation – Transition Measures (August 23, 2024)
    •   24‑29 – Preparing for the CARM October Implementation - Cutover Period (August 30, 2024)}