What Is CARM? 

CARM, short for the Canada Border Services Agency’s (CBSA) Assessment and Revenue Management Project, is a multi-year initiative aimed at transforming the collection of duties and taxes for goods imported into Canada.

Key Considerations for Importers:

1. Web Portal Access: Importers will have their own web portal directly connecting them to the CBSA. This portal offers increased control and visibility, empowering importers to manage their importations more effectively.
2. Surety Bond Requirement: Importers will be required to obtain an individual surety bond to import goods into Canada. This requirement ensures compliance with import regulations and responsibilities.
3. Changes to Payment Process: CARM introduces modifications to the handling of Goods and Services Tax (GST) and duty payments. Importers are advised to stay informed about these changes to facilitate seamless transactions.

CARM Mandate

Here is our hot take on CARM, highlighting both its positive and negative aspects. 

The CBSA aimed to develop an integrated “modern” system to enhance the accuracy of trade data, improve compliance, and enhance revenue collection. This involved upgrading and improving the infrastructure and technology used to manage the importation of commercial goods into Canada, enabling them to pinpoint issues with trade compliance such as incorrect HS codes and duty rates. 

For instance, in the past, if a customer imported a phone but the description was vague and it was imported as a computer, the duty rate for these two products would differ. This discrepancy could go unnoticed for years, leading to incorrect duty payments until an audit is conducted. With CARM, the CBSA will have the tools to trace back and make informed assessments regarding incorrect HS codes. 

Our best, most complaint customers are ones that have undergone audits previously. Typically, compliance takes a back seat until an audit occurs, but here at Jori, as a small to medium-sized boutique customs broker, we prioritize assisting our clients in maintaining compliance. Therefore, we view CARM as a positive development as we strive to ensure compliance.

CARM is also expected to streamline the overall importing process and potentially lower the cost of importing into Canada (although these benefits are yet to be fully determined).

When Is CARM Going To Be Implemented? 

The initial release of CARM, known as CARM Release 1, occurred on May 25th, 2021. This marked the introduction of the CARM Client Portal, a self-service tool designed to streamline accounting and revenue management processes with the CBSA. 

It became accessible to importers, brokers, and trade consultants who handle rulings on behalf of importers. Users who have been onboarded to the portal can now view their transactions and statements of accounts, request rulings, and utilize new electronic payment options to settle invoices.

Currently, we are in the phase of CARM Release 2, with a proposed release date set for October 2024. However, it’s worth noting that the release date has been subject to changes. In CARM Release 2, we anticipate the inclusion of several additional functionalities within the CARM Client Portal:

• Electronic commercial accounting declarations (CAD) with correction and adjustment capabilities.
• New requirements to the Release Prior to Payment (RPP) program.
• Implementation of harmonized billing cycles.
• Introduction of new offsetting options.
• Electronic management of appeals and compliance matters.

We recognize the challenges importers face with the influx of information surrounding CARM. As of April 10th, 2024, a parliamentary standing committee has been established, and they are recommending a potential suspension of CARM implementation. The outcome of this recommendation remains uncertain, underscoring the importance of staying informed and updated on developments related to CARM.

Consequences Of Not Registering For The CARM Client Portal 

• Release Prior to Payment (RPP) requirements will undergo changes in Release 2.
• You will not be able to register on the portal between April 26th and May 13th; registration must be completed before April 26th.
• Those registered on the portal by April 26, 2024, will automatically be enrolled in RPP, granting an additional 180 days as a transition period to establish an RPP bond.
• Failure to register will require you to post security or payment directly to CBSA upon import for all goods; otherwise, they will not be released into Canada.

How To Register For The CARM Client Portal 

Step 1: Create an individual user account – each individual user must have one of the following: GC Key, A Sign-In Partner, GC Key, or Sign-In Partner.

Step 2: Register your business or link your personal account to the CARM Portal.

If your business is not registered and you are serving as the account manager, you must register your business.

If your business is already registered, you will need to request access to the CARM portal from your employer to link your personal account to the business.

Registering A Business On CARM

When registering a business, the first individual to link their user account with the business account automatically becomes the Business Account Manager (BAM). The BAM is responsible for monitoring the portal for several tasks: delegating access to employees or representatives who require access to the business account for their daily activities or to conduct business with CBSA on your behalf. 

It’s also crucial to note that you must grant specific access to your broker. Failing to do so will prevent them from acting on your behalf to submit your shipments to CBSA for complete accounting, potentially resulting in penalties and interest charges for unpaid amounts.

Information Needed To Register Your Business On CARM

1. Legal entity name or operating name of the business.
2. Full physical or mailing address of the legal entity (BN9 address): This information is essential for registering your business on CARM.
3. CARM Affinity Questions: When registering your business in the CARM portal, you will need to answer two of the following affinity/security questions:

• Total duties and taxes payable on a specific transaction number.
• Transaction payment amount.
• Statement of account balance.

If you are unsure of the answers to the affinity questions, we recommend contacting your customs broker for guidance. If your customs broker cannot assist with these answers, there is a CBSA form for affinity questions that you can fill out online using your company information. 

Select the financial account activities options and complete the additional required fields, specifying that you require CARM portal help with financial account information and emphasizing that you need assistance with the affinity questions specifically. CBSA will acknowledge your request via email and assign you a case number, typically responding within a 10-day business window.

Requesting Access To Your Employer 

Requesting access to your employer is much simpler than registering a business. As an employee, if you are requesting access to your employer, you will need the business number and a reason for needing access.

Once you have requested access to the business account and it has been approved by the Business Account Manager (BAM), or once you have registered the business and completed the registration, you will gain access to the CARM Client Portal. Here, you will encounter three main areas to be aware of:

1. Delegation of Authority
2. Accounting overview and payment processing
3. Rulings

‘Access Request’ in the bottom right corner is where you can grant access to:

• Your broker
• Any third-party representative
• Any employee to link their personal account with your business account

Delegation Of Authority 

In the delegation of authority within the CARM Portal, you can:

1. Provide access to employees within your company by assigning user roles.
2. Allow importers to provide access to service providers by establishing business relationships.

Internal delegation applies to you and your employees and external delegation applies to service providers with whom you have established business relationships. 

Internal BAMs managing an account will have access to all client portal functionalities for a business account and all its associated program accounts. Examples of program accounts include import/export accounts and RM0001 Accounts.

Every business account importer, customs broker, and trade consultant will require at least one BAM.

A Program Account Manager (PAM) provides full access to CARM client portal functionalities for specific program accounts. This role is beneficial when there are multiple program accounts, and the BAM wishes to grant access to certain program accounts only. The purpose of this role is to assist in managing the program alongside the BAM.

If the importer grants their service provider business management-level access, the service provider’s BAM automatically receives the Proxy BAM role for the importer’s account. 

The Proxy BAM role grants almost full access to all CARM client portal functionalities for an imported business account and all its program accounts with some exceptions. They do not have access to the client’s sensitive information, such as bank account details, and cannot view or manage the details or access of the importer’s employees or other business relationships held by the client. 

The Proxy BAM role can perform operational activities in the CARM client portal for all of the importer’s program accounts; for example, they can request rulings, make payments, view statements of account, invoices, and payments made, and manage the access of the service provider’s employees.

If the importer grants their service provider program management-level access, the service provider’s Business Account Manager is automatically granted the BAM role for the importer’s account. This role provides almost full access to all CARM client portal functionalities for the importer’s program accounts. The purpose of this role is to manage the client’s specific programs without providing access to the business profile.

Important Changes To Be Aware Of

1. Importers will require a Canada Customs Bond to import into Canada (180 days after May 13th).
   • Importers not registered on the CCP by April 26th will not receive the 180-day grace period.
2. Billing cycles are changing; importers must pay their CARM portal balance to the CBSA monthly.
   • Any unpaid balances will accrue daily interest from the CBSA.
   • Previously, interest was assessed on a case-by-case basis only.
3. Granting access to your broker is the only way they can continue to account for your goods to CBSA.
4. The CBSA will have more tools and resources to find and penalize importers for non-compliance.

Import CARM Requirments 

Make sure to register on the CARM portal by April 26, 2024, to:

1. Complete customs clearance into Canada after May 13th.
2. Benefit from the free 180-day RPP transition bond.

Ensure that your broker is given the appropriate access level and visibility on the CARM.

What Is The Release Prior To Payment (RPP) Program? 

The RPP Program entitles importers to:

• Obtain the release of goods from the CBSA before paying duties and taxes.
• Defer accounting for goods.
• Defer payment of duties and taxes.

All importers wishing to participate in the RPP Program will be required to enroll in RPP and post financial security. Importers will no longer be allowed to use their broker’s financial security to participate in RPP. Importers who are not RPP participants would continue to have the option to pay full duties and taxes at the time of release, at a port of entry (CASH Entry).

Cash Bond:

A cash deposit would be 100% of your highest monthly amount paid to the CBSA in a 12-month period. This total amount is paid to the CBSA to hold as security in the event that you do not pay your duties and taxes. 

This type of bond does not have a minimum; it is simply 100% of the highest amount. This cash payment must also be made physically at the border where your goods are.

Security Bond:

These are issued through insurance companies and have a different calculation method. They have a minimum bond amount of $25k and a maximum bond amount of $10M. The total for the bond needed in this case is not the cost to the importer. 

These types of bonds are issued annually, and the cost is much like your car insurance; you will be charged an annual premium to be insured for coverage up to the amount of your calculation. Then, that insurance would be utilized in case you failed to pay your duties and taxes.

CBSA Billing Cycle Changes

There are going to be changes to billing cycles and payment due dates for CBSA with Release 2 for CARM.

The current Harmonized Billing Cycle:

The Statement of Account (SOA) shows all transactions that occur on an account. These include declarations, penalties, reassessments, and adjustments. The SOA is issued on the 25th of each month, covering all goods released and accounted for between the 18th of month 1 to the 17th of month 2.

With Release 2:

The Statement of Account will still be issued on the 25th of each month. However, the dates it covers will change to range from the 18th of the previous month to the 17th of the current month. The due dates will also change to 10 weekdays after the 17th of the current month, and it will include declarations, penalties, reassessments, and adjustments.

Changes Between The Import and The Broker 

1. RPP Bonds: As the importer, you need to decide if you will purchase your own RPP bond through a surety company or if you will have your broker facilitate that bond on your behalf.
2. Payment of Duties and Taxes: Do you wish to pay any duties and taxes directly to the CBSA, or do you want your broker to handle the payment of duties and taxes to the CBSA on your behalf?
3. Reconciling Your Importer CARM Portal: Do you want to manage the reconciliation of your CARM statement balance, or do you prefer to have your broker assist with the reconciliation of your CARM statement balance?

When making these decisions, it is important to consider two things:

1. Unpaid CARM Balances: After the payment due date, interest will be automatically assessed on a daily basis. Therefore, if your broker is not handling this, you as the importer need to keep a close eye to avoid missing payments. Unpaid or consistent balances will lead to more scrutiny by the CBSA.
2. Duplicate Payments: Duplicate payments can occur if the importer does not communicate to the broker which option they intend to choose.