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

Issue 2024-04

In brief

On February 8, 2024, the Canadian House of Commons Standing Committee on International Trade (CIIT) announced that it will meet March 19 to 21, 2024 to study the CBSA Assessment and Revenue Management (CARM) initiative. Because the CARM has significant implications for the importation of goods into Canada, many Canadian and non-resident businesses that import goods have raised concerns about CARM. As a result, the CIIT will undertake a full review to understand:

the impact of an unsuccessful launch of CARM
the implementation plan to ensure that Canadian trade is not hindered by any faults within CARM

Stakeholders can prepare written submissions to the CIIT so that their views can be considered in the committee’s final report. This could be the importing community’s final opportunity to provide their feedback before the Canada Border Services Agency (CBSA):

shuts down the system that is currently being used by importers, scheduled for April 26, 2024
implements Release 2 of the CARM initiative, scheduled for May 13, 2024

This Tax Insights provides an update on Release 2 of the CARM initiative, including the CBSA’s implementation timelines, and CARM’s implications for non-resident importers and suppliers.

In detail

Background

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. The initiative targets the revenue and cash management systems that are currently in place for assessing and collecting duties and taxes and replaces them with a simplified process that includes electronic payment options. Participation in the CARM is mandatory for all Canadian-resident and non-resident businesses that import goods into Canada and their trade chain partners (TCPs)¹ that interact with the CBSA. Importers that do not participate will be prohibited from bringing goods into Canada.

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. The CCP can be accessed by importers, customs brokers and certain trade consultants. Under Release 1, organizations are required to:

register their business on the CCP, create a user profile/business account, and identify and designate a Business Account Manager
delegate authority to all their TCPs so that they can continue managing the organization’s commercial importation activities under the CARM

The CBSA website for the CCP² provides many tools³ to help businesses, including a worksheet for collecting the required information and completing the registration steps.

It is important to know that the new measures being implemented by the CARM will not impact the process for releasing imported goods. This function remains with the business’ customs broker (if those services are utilized).

Release 2 of the CARM initiative (scheduled for May 13, 2024)

Release 2 of the CARM initiative is currently scheduled for May 13, 2024 and will expand the functionality of the CCP, including the ability for an importer to post and monitor security to participate in the Release Prior to Payment (RPP) program, among other functions.

The RPP program allows goods to be released before duties and taxes are paid and facilitates the movement of goods across the border. To participate in the program, importers will need to post their own financial security (i.e. a surety bond or cash deposit). It is recommended that importers pay the Statement of Account directly to the CBSA (however, there may be circumstances when it can be paid through their customs broker).

In October 2023, CARM Release 2 was made available for selected industry partners who wanted to test their own internal systems, and for software service providers to continue to certify their software with CARM.

Recently, the CBSA outlined its proposed implementation plan for CARM Release 2:

April 26 to May 2, 2024 (systems shutdown) –
- the Customs Automated Data Exchange (CADEX)⁴ system and the legacy accounting system (Customs Commercial System), will be shut down
- importers are advised to submit all B3 entries for reconciliation before the shut down and any B2 adjustments or corrections as soon as possible for approval
April 26 to May 13, 2024 (blackout period) –
- no accounting privileges or visibility to accounts or registration onto the CCP will be available
- the CBSA will continue to use the Accelerated Commercial Release Operations Support System (ACROSS)⁵ and the Release Notification System (RNS)⁶ to release goods at the borders
May 13, 2024 –
- CARM Release 2 will be implemented (additional details are forthcoming)
- the expected date that the 180-day transition plan for the RPP program will begin
Fall 2024 – further enhancements to the CARM are expected to be available

Implications for non-resident importers (NRIs) and suppliers

NRIs are required to register for the CCP and have an active CCP account for seamless customs clearance processes. This ensures that their imports are handled efficiently, contributing to a problem-free experience.

Suppliers handling delivered duty paid shipments in Canada are also required to have a CCP account, which ensures that the customs clearance process is conducted without any disruptions, and thus contributing to the overall efficiency of cross-border trade.

It is important that NRIs and suppliers register their business on the CCP and adhere to the CARM mandate promptly; they should start the CCP registration process now. Failure to have a CCP account in place before May 2024 will result in potential delays and complications in customs clearances.

Other considerations

Importers should register with the CCP (under Release 1) before May 2024 to minimize border delays and benefit from the RPP transition period (i.e. importers will be assigned RPP qualifying status for a 180-day transition period allowing them to obtain the requisite financial security and adapt to this new model, while ensuring that border disruptions are mitigated).

As of May 13, 2024, businesses will only be able to register for an importer or exporter account using the CCP; the Canada Revenue Agency will no longer provide this service. In addition, businesses should pay attention to, and properly manage, the requirements of Release 2, because goods may be held at the border if they do not post the appropriate financial security or miss paying the Statement of Account.

The takeaway

If your business interacts with the CBSA, you should ensure that you meet the requirements under CARM before May 2024. You should start the process to meet these requirements by:

identifying a Business Account Manager, creating a user profile and registering your business on the CCP
delegating authority to all your TCPs and posting the appropriate financial security
paying your duties and taxes directly to the CBSA, which can be completed through the CCP or through your customs broker

Importers should also consider preparing a written submission to the CIIT, so that any concerns about the CARM can be considered in the report that the CIIT will present to the House of Commons.

^{1. A TCP includes (i) employees that are responsible for customs and trade compliance activities, and for the payment of the organization’s duties and taxes, and (ii) service providers that help with any customs and trade-related activities (i.e. trade consultants and customs brokers).

2. CBSA, CARM Client Portal at ccp-pcc.cbsa-asfc.cloud-nuage.canada.ca.

3. CBSA, CARM Client Portal, Onboarding documentation includes:

- Registering a Business on the CBSA Assessment and Revenue Management (CARM) Client Portal

- User Guide - Onboarding to the CARM Client Portal

- User Guide - Delegation of Authority in the CARM Client Portal

4. CADEX is a proprietary message-formatting standard that allows importers and customs brokers to file an electronic Form B3‑3, Canada Customs Coding Form.

5. ACROSS allows importers and brokers to electronically transmit release and invoice data and removes the requirement to present hard copy release packages.

6. RNS allows the CBSA to instantly notify RNS participants (i.e. brokers, importers, carriers and warehouse operators) electronically when a transaction is released and a Pre-arrival Review System transaction is approved.}