- Workplace Type: On-site
CBSA Assessment and Revenue Management
A major change
That's right! The CBSA's financial security rules are changing. As a result, the importer will be required to post their own financial security with the CBSA in order to maintain the same Release Prior to Payment (RPP) privilege it had through their broker’s bond.
The RPP program entitles importers who have posted financial security with the CBSA to:
- obtain the release of goods from the CBSA before paying duties and taxes;
- defer accounting for goods;
- defer payment of duties and taxes.
Therefore, importers without financial security and not enrolled in RPP cannot defer payments and will be required to pay duties and taxes to the CBSA, at time of import for the release of their goods.
How do I post security for CARM?
You’ve got two (2) options: an annual surety bond or a cash deposit.
Surety Bond: Calculated on 50% of your highest monthly payable to the CBSA, by you or your broker within the prescribed 12-month period. The proposed minimum bond amount for CARM R2 is $25,000 per import program (RM). A customs bond is currently available.
Cash Deposit: This refers to 100% of your highest monthly payable to the CBSA by you or your broker within the prescribed 12-month period. (Cash deposits will be available as of R2.)
ProTip: To determine your highest monthly accounts payable, look at the 12-month period between July 25th of last year to July 24th of the current year. Importers who don’t have a 12-month history of accounts receivable can make an estimate.
Although you are required to renew your bond annually, the CBSA reserves the right to request an increase to your bond at any time, and will be monitoring bond utilization in real-time in the CCP.
Frequently Asked Questions:
What if importers do not have their own security in CARM full deployment?
When CARM requirements are fully deployed, importers who are not enrolled in the RPP program with security will be required to provide payment to the CBSA for the release of their goods. In addition to delays, impacts could include added service, warehouse, or transportation costs.
Surety bond amount
The minimum bond level required to be allocated to each BN15 will be $25,000 and the maximum bond will be $10 million. Note: This does not mean you’ll pay $25,000 to obtain a bond.
A bond fee is much lower—a fraction of the bond amount. Bond fees may change based on competition and demand. Make sure to ask your surety company what the bond fee is.
The bond amount is generated based on your BN9 (your overall nine-digit business number). In CARM, a minimum bond amount must be allocated to each BN15 (RM Import Program). The security is easier to allocate to each RM once you have your bond in place.
For any importers exceeding the minimum bond threshold, the CBSA has proposed a bond equal to 50% of the highest monthly duties, taxes, and fees (including GST) for a single month, from their past 12-month history.
For example: if the highest monthly payable to the CBSA is $200,000, the bond amount will be $100,000. If the highest monthly payable is $80,000 then the importer will need a $40,000 bond.
Customs release will still be done by customs brokers and customs-authorized couriers in the same manner as it is done today, however, importers must have their own financial security in place to participate in the RPP in CARM.
How to secure a surety bond (customs bond)?
Within the CARM project, you can no longer rely on your customs broker’s financial security for RPP privileges. However, you can get your bond through your customs broker or an approved surety-bond provider.
If you deal directly with a surety company, be sure they are well experienced in Canada Customs bonds and are up-to-date with current and future CARM requirements.
Cole can help you get your bond! Request a bond and one of our CARM representatives will contact you directly.
What happens once I get my bond?
For importers accustomed to paying with terms, this step potentially represents a big change. After you are bonded and have made the arrangements with your broker, you’ll be responsible for paying your month-end balance directly to the CBSA, according to the CBSA’s billing cycle. It is important to determine your payment method to the CBSA prior to establishing your bond with a broker.
- Review your internal accounts payable processes and adjust them accordingly.
- Set up electronic accounts payable with the CBSA. Online banking is the most efficient and commonly used, but there are other electronic options through the new portal.
There will be approximately 200,000 importers and trade chain partners involved in the customs bond process in preparation for CARM R2.
To avoid backlogs, delays, increased cost, or the inability to get a bond before the go-live date for CARM, obtain and register your bond with the CBSA now.
Frequently Asked Questions:
Why should we get a surety bond now?
Over 200,000 commercial Importers in Canada will be trying to obtain a bond over the next few months. This will impact how quickly surety companies and the CBSA are able to process bond applications as their resources are not unlimited.
I use several customs brokers to clear my goods. Do I need a separate bond for each one of them?
No. Security is based on how much you owe the CBSA every month regardless of who handled the transaction for you.
Can I use my U.S. customs bond for Canadian RPP?
No. A Canadian customs bond is required.
Is this bond premium a one-time cost?
The bond can be renewed every year and the premium needs to be paid annually for the coverage required.
Keep calm and CARM on!
Now that we have completed Step 4: Financial Security, it's time to look closer at your CBSA import account, so you can review your payment processes.
NOTE: All details pertaining to R2 processes are based on the current information available at the time of writing. As this is subject to change, it’s recommended you periodically check in with the CBSA or your broker.