A Canadian Tax Lawyer’s Guide to Get Ready for Delayed Canadian Border Services Agency Assessment and Revenue Management (CARM 2)

Introduction

The Canadian Border Services Agency Assessment and Revenue Management (“CARM”) is a multi-phase project that aims to modernize the collection of duties and taxes for commercial goods imported into Canada. With CARM, the Canada Border Services Agency (“CBSA”) has updated and upgraded its longstanding systems which have been in place for the last 35 years. CARM has been designed to simplify the overall importing process by reducing costs and providing a modern interface for importing goods into Canada. The new system also reduces reliance on border service agents, enabling importers to access self-service to increase overall efficiency.

The Launch Of CARM

The launch of CARM was split into two phases, the initial phase of the project was launched in May 2021. The initial launch of CARM allowed importers, customs brokers, and trade consultants to view importer transactions and statements of account, request rulings, and pay invoices with the new electronic payment options.

The second phase, known as CARM 2, was set to launch on May 13^th, 2024, but has been delayed until October 2024. When CARM 2 is finally implemented, CARM will be the system of record for importers to interact with the CBSA for commercial import shipments into Canada. The second phase also introduced a variety of other features, such as: applying for and updating business numbers, paying duties and taxes online, and the ability to immediately access updates on imports.

CARM 2 introduced a variety of changes and features to the system, including:

• changes to the Release Prior to Payment (“RPP”) program
• electronic commercial accounting declarations that you can correct and adjust
• harmonized billing cycles
• new offsetting options
• electronic management of appeals and compliance actions
• the ability to register for a Business Number
• enrolment in various CBSA commercial programs

CARM Client Portal (CCP) Registration

In order to continue importing activities, importers will need to register for a CCP account. To successfully complete the CCP registration process, a business will need the following information:

• A GCKey or the ability to use a sign-on partner (financial institution linked to the CBSA systems)
• Business Number
• Import/Export Program account
• Statement of Account and/or Daily Notice

For individuals to access the CCP for the business, they will need their own personal CARM profile. The business can control the level of access and authorization that each individual will have over the business’ CCP account. The business account manager has the highest level of access and authorization, which is usually the individual who initially registers the business for CCP.

Customs Brokers

Within the CCP, importers can decide to delegate the authority to act on their behalf to a customs broker.

Changes To The Release Prior To Payment (RPP) Program

The RPP program allows importers to have their imported goods released by the CBSA before full payment of all taxes and duties if sufficient security is provided. Many importers currently utilize the RPP security of their customs broker for the expedited release of their imported goods. However, the RPP program process will change significantly after CARM becomes the official system of record in October 2024. Commercial importers will be required to post their own financial security to participate in the RPP program. If importers have registered a CCP account, they will have 180 days to post the required financial security to continue to reap the benefits of the RPP program.

Commercial importers will have the choice of two options for posting the required financial security.

• Option 1: a financial security instrument worth 50% of their highest monthly accounts receivable (GST included) with a minimum value of $5,000 per import program.
• Option 2: a cash deposit worth 100% of their highest monthly accounts receivable (GST included).

New Commercial Accounting Declaration

Later in October 2024, a new Commercial Accounting Declaration (“CAD”) will be introduced. The CAD is the digital document that will be used to account for imported goods into Canada. The CAD will replace the current customs coding (Form B3) and request for adjustment (Form B2). If adjustments or corrections are made to a CAD, the changes will be recorded as a new version of the original declaration.

When a client declares using the CAD, the CARM system will use the information on the CAD to automatically calculate the duties and taxes owing for that declaration. Trade chain partners to submit, adjust, or correct the CAD through various methods such as: the CCP, electronic data interchange (“EDI”), or an application programming interface (“API”). Corrections can be made to the original CAD submission before the date payment is due, without any interest. However, any adjustments to the CAD after the date payment is due, may be subject to review by the CBSA.

New Harmonized Billing Cycles

After the full implementation of CARM, there will also be a new harmonized billing cycle which will align payment due dates for importers. This will include: high value shipments (“HVS”), low value shipments (“LVS”), courier low value shipments (“CLVS”), continuous transmission commodities (“CTC”), and the customs self-assessment (“CSA”) program. The due date for payment will be 10 weekdays (inclusive of holidays) after the 17^th of the calendar month.

Pro Tax Tips – Register for CARM Ahead Of Time

The recent delay of the implementation of the CARM system provides opportunities for importers to familiarize themselves further with the new changes before full implementation. Registering for CARM Client Portal (CCP) ahead of time will ensure that there is as little friction as possible when CARM becomes the system of record. Failure to register in time can potentially cause delays in receiving shipments and potential penalties. To avoid any potential issues which may arise due to the transition, importers should familiarize themselves with these new changes and ensure registration is complete ahead of the delayed release in October 2024.

FAQ

Do Importers Need a Customs Broker For CARM?

Importers are not required to have a customs broker to utilize the new CARM system. The system is designed to create more “self-help” options for importers in dealing with importation of commercial goods. However, importers may delegate authority to a customs broker to act on their behalf within the CCP.

Do Importers Have to Enrol In RPP During The Transition Period?

When CARM officially becomes the system of record, the CBSA will automatically enrol all importers with a CCP account or a history of importing commercial goods into Canada within the last four years if their account is in good standing. Up until October 2024, it is not possible to enrol in the RPP program, after this time new importers who are not registered in the CPP will be required to enrol in the RPP program through the CARM portal.

Can Importers Use a One-Time Financial Security Agreement?

Financial security agreements can be for a set duration, or a continuous agreement. If using a specific duration, the agreement will only be considered active for the timeframe they are underwritten, after the end date of the agreement, it will be considered inactive. If using a continuous agreement, there is no expiry, but the agreement will be monitored to ensure that there is adequate security posted.

Disclaimer: This article just provides broad information. It is only up to date as of the posting date. It has not been updated and may be out of date. It does not give legal advice and should not be relied on. Every tax scenario is unique to its circumstances and will differ from the instances described in the article. If you have specific legal questions, you should seek the advice of an experienced tax lawyer.