The Canada Border Services Agency (CBSA) is in the process of instituting a new program to streamline how duties and taxes are collected for cross border shipments. This new program is called the Canada Assessment and Revenue Management (CARM) project and its aim is to modernize how merchants’ imports goods into Canada.
CARM will be the official method for managing and assessing duty and custom fees, starting October, 21 2024. Brands shipping into Canada will be required to follow all new protocols before then. Ultimately with this new program, merchants will take on more responsibility for their importation process, products, and customs fees associated.
The TL;DR on CARM
- CARM will be the official method of customs tax management by October 21, 2024.
- CARM is changing the way B2B and commercial shipments clear customs in Canada.
- Customs brokers will no longer be able to release B2B shipments on their own surety bond, known as Release Prior to Payment (RPP)
- The importer will be responsible for paying duties and taxes and must provide “financial security” through a surety bond or a cash deposit.
- The importer can be a Canadian retailer, a US brand, or a third party.
What’s Changing with CARM?
By October 2024, all commercial shipments to Canada will require the shipper to pay duties and taxes through the CARM client portal. This is a digital initiative to help modernize and streamline this process.
The two main changes to note are:
- The importer is now responsible for paying customs fees.
- The CARM portal will be the only route for these transactions.
Through the current Canada import system merchants can use a Canadian customs broker to import their goods—the broker can take on responsibility for customs fees if they have a surety bond (this acts as an assurance that the duties and taxes will be paid no matter what). Most often the broker will submit filings monthly to reconcile any unpaid duties and taxes.
CARM will change this system so that the broker no longer has this same power; the US shipper or Canadian importer must register with the CARM portal, secure the surety bond themself, and be the one to follow up with the payments of their duties and taxes.
These changes with CARM are putting the burden of paying duties and taxes on the importer of the goods. If that’s a US ecommerce brand, they’ll need to register to be the non-resident importer (NRI) to get a surety bond and process their taxes properly.
New Responsibilities for Merchants Importing to Canada
Under CARM there are some new responsibilities for merchants. Prior to the October 2024 deadline, every commercial shipper will need to:
- Register to have a Canadian import-export program account business number (also known as an NRI account)
- Create an account within the CARM portal.
- Purchase a D120 Customs Bond if you want RPP privileges, or put up a cash deposit
- Pay duties and taxes on a periodic basis (monthly is the recommendation)
- Delegate authorization for your customs broker to access your CARM data. Brokers will still submit the customs entries, but payment of the account must be done through the CARM portal.
- Reconcile shipments and pay duties and taxes through your CCP account.
One of the most impactful changes with CARM is that customs brokers will no longer be able to secure RPP for shippers. While there’s no explicit requirement for shippers to register for CARM, it’s the only way to get your commercial shipments released without paying duties and taxes on the spot.
CBSA will no longer release shipments prior to receiving a duty and tax payment. If the importer still wants to take advantage of Release Prior to Payment (RPP) privileges, they will need to obtain a surety bond that guarantees payment to CBSA of duties and taxes. Importers can also post a cash deposit in lieu of a surety bond.
FAQs Related to CARM Changes
Will my documentation change with CARM?
CARM will change how customs entries are filed.
Customs brokers will no longer use the “B3” form for customs entries. Existing B2 and B3 entry documents will be replaced by an online document called a Commercial Accounting Declaration (CAD), submitted by the customs broker or the importer through the CARM portal or through API/EDI.
Each entry cleared by CBSA will be given a Release Prior to Payment (RPP), which allows entry before duties are paid.
What types of shippers are affected by CARM?
CARM will impact multiple entities:
- US brands shipping to Canadian retailers
- US brands shipping to Canadian fulfillment centers or holding inventory in Canada
- Small Canadian retailers who don’t understand import processes
- Marketplaces and platforms that facilitate B2B sales
Can I still work with a Canadian broker to import my goods?
Importers can delegate an authority to manage entries to their existing customs broker. However, the importer must register for and sign into the CARM portal to accomplish this. Otherwise, importers can manage their duty payments and entry transactions themselves on the CARM portal.
Will I Need a Canada Tax ID with CARM?
You need a Business Number (BN), but there are several types of BNs. The specific BN for CARM is called the importer/exporter program account, also known as a non-resident importer (NRI) BN. Note that this is not a full Canada GST number. There are no requirements to report Canada taxes if you just have the NRI number and not a GST number.
Do I need to establish a Canadian business number or NRI?
Importers must create a Business Number (BN) with Canada Revenue Agency if they do not have one. American companies can create a NRI Business Number to manage their imports. Access to the CARM portal is tied to the importer’s Business Number.
When do CARM changes take effect?
CARM has been rolling the program out over several years, and it is in it’s final launch now in 2024.
- Soft Launch, October 2023. Selected industry partners allowed to test their own internal systems and allow time for software service providers to continue to certify their software with CARM. opened the portal to importers, customs brokers, and trade consultants so that they could become familiar with the process and get their clients registered for CARM and ready to go.
- Internal Compliance, May 13, 2024. With this successful internal launch, enhanced compliance and validation activities are now underway using a new trade compliance tool.
- External launch, October 21, 2024, CARM will become the official system of record for imposing or levying duties and taxes.
What’s the cost of a surety bond?
As of June 2023, they are approximately $350-$500 USD. The average price can change. Estimate that it takes about three weeks of lead time to get the bond approved.
How much “financial security” does a participant need?
The minimum surety bond is $25,000 CAD, but importers will need a bond for 50% of the highest monthly accounts receivable. For cash deposits, it is 100% of the highest monthly accounts receivable.
What are Canadian taxes like?
For more resources on Canadian taxes, duties, and import fees, here are a few resources.
Understanding the difference between HST, GST, and PST
Bottom Line
There are many changes to consider if you are a business importing goods into Canada. The best thing you can do is to find a shipping partner that is up to date on CARM changes.
The regulatory landscape can shift daily, and importers can face significant delays, or sometimes fines, if their Canadian imports aren’t documented properly.
At DCL Logistics we offer customized fulfillment solutions for high-growth brands. We’ve helped many brands scale into international markets. If you’re looking for a modern 3PL to help your navigate the changes to importing into Canada, take a look at the services we offer. Reach out and send us a note. We’d love to hear from you.
Tags: International
