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

In brief

On April 19, 2024, the Canada Border Services Agency (CBSA) announced that it will postpone the launch of Release 2 of the CBSA Assessment and Revenue Management (CARM) initiative for trade chain partners (TCPs)¹ until October 2024; however, it will still launch CARM Release 2 internally on May 13, 2024. The internal launch will allow the CBSA to continue working towards the expected benefit of better compliance under CARM. The CBSA will use CARM to identify errors and discrepancies in duties and tax submissions and begin working with industry to resolve these issues.

In addition, on April 18, 2024, the Canadian House of Commons Standing Committee on International Trade (CIIT) released its report² on CARM. This report might have influenced this recent CBSA announcement because the report:

• specifically identifies that the concerns raised by witnesses are a sufficient call for caution and that the resulting effects that may occur if the implementation of CARM fails could not be identified with sufficient precision and certainty, and
• recommends that the House of Commons asks the government to suspend the implementation of the CARM until the CIIT can complete its study and table a final report containing its observations and recommendations

This announcement satisfies the CBSA’s need to launch on May 13, 2024, and provides adequate time for the CIIT to complete its study and allow for CARM to be launched in an appropriate state of readiness.

This Tax Insights provides an update on Release 2 of the CARM initiative.

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 TCPs 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 CCP³provides many tools⁴ 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).

CBSA internal launch of CARM Release 2 (scheduled for May 13, 2024)

Release 2 will enhance the CBSA’s compliance and enforcement capabilities. However, due to the ongoing strike vote activity by the Public Service Alliance of Canada and its potential impact on the CBSA’s operations, the CBSA plans to postpone the launch for TCPs until October 2024. This delay will ensure that the CBSA can adequately support partners as they transition to using CARM. As a result, TCPs will maintain their current operations until the fall.

While CARM is ready to be deployed, its successful implementation depends on the backing of CBSA employees. By delaying its launch, the CBSA’s intent is to position industry partners for success. Considering the connections between CARM and other business mainframe systems in the CBSA and Canada Revenue Agency (CRA), the next available opportunity to implement significant information technology changes is in October 2024.

Trade chain partner launch of CARM Release 2 (postponed until October 2024)

Release 2 of the CARM initiative 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. Before the April 19, 2024 announcement, the CBSA had outlined its proposed implementation plan for CARM Release 2;⁵ the plan will now be updated to reflect the new timelines for TCPs.

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 October 2024 may result in potential delays and complications in customs clearances.

Other considerations

Importers should register with the CCP (under Release 1) before October 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).

Once Release 2 goes live in October 2024, TCPs will be able to register for an importer or exporter account using the CCP; the CRA will no longer provide this service. In addition, businesses should pay attention to, and responsibly manage, the requirements of Release 2, because importers may not be able to obtain the benefits of the RPP program if they 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 October 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 that have not yet submitted a written submission to the CIIT should consider preparing a submission, so that any concerns about the CARM can be considered in the CIIT’s final report, which will be presented to the House of Commons.  

<sup>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. CIIT, Report 15 - The CBSA Assessment and Revenue Management System (CARM) at www.ourcommons.ca/committees/en/CIIT.
3. CBSA, CARM Client Portal at ccp-pcc.cbsa-asfc.cloud-nuage.canada.ca.
4. 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
5. For details on the pre-April 19, 2024 CBSA proposed implementation plan for CARM, see our Tax Insights “Businesses importing goods into Canada must register for CARM – Action required! (February 2024 update).”</sup>