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CARM external launch postponed until October 2024
May 2024
In brief
What happened?
The Canadian Border Services Agency (CBSA) on April 19 announced that it will launch the CBSA Assessment and Revenue Management digital initiative (CARM) internally on May 13, with the external launch for trade-chain partners (TCPs) postponed to October 2024. This stage of the CARM rollout is known as CARM Release 2. The CARM is intended to transform and modernize the collection of duties and taxes for commercial goods imported into Canada, while postponement of full implementation seeks to allow time for adequate transition.
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, the Canadian House of Commons Standing Committee on International Trade (CIIT) released its report on CARM. This report might have influenced this recent CBSA announcement because the report (1) 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 (2) 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.
Why is it relevant?
This announcement satisfies the CBSA’s original intent to launch on May 13 while also providing adequate time for the CIIT to complete its study in preparation for an external launch of CARM at an appropriate state of readiness. The internal launch will allow the CBSA to continue to advance work towards the expected benefit of better compliance. The CBSA will use CARM to identify errors and discrepancies in duties and tax submissions and begin to work with industry in these areas.
Action to consider
Businesses that interact with the CBSA should take all steps to meet the requirements under CARM before October 2024. They should start the process to meet these requirements by identifying a Business Account Manager, creating a user profile, and registering their business on the CARM Client Portal (CCP); delegating authority to all TCPs and posting the appropriate financial security; and paying duties and taxes directly to the CBSA, which can be completed through the CCP or through the business’s customs broker.
Importers also should consider preparing a written submission to the CIIT, so that any concerns about the CARM can be considered in the report that the CIIT will present to the House of Commons.
In detail
Background
The CARM is intended to transform and modernize the collection of duties and taxes for commercial goods imported into Canada. The initiative targets the revenue and cash management systems 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.
Note: A TCP includes (1) employees that are responsible for customs and trade compliance activities, and for the payment of the organization’s duties and taxes, and (2) service providers that help with any customs and trade-related activities (i.e., trade consultants and customs brokers).
In May 2021, as part of Release 1 of the CARM initiative, the CBSA launched the 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’s CCP website provides many tools to help businesses, including a worksheet for collecting the required information and completing the registration steps.
Observation: It is important to know that the new measures being implemented as part of the CARM will not impact the process for releasing imported goods. This function remains with the business’s customs broker (if those services are utilized).
CBSA internal launch of CARM Release 2
Release 2 will enhance the Agency’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 Agency’s operations, the CBSA plans to postpone the launch for TCPs until October 2024. This delay will ensure that the Agency 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 prepared for deployment, the backing of CBSA employees is crucial for its successful implementation. By delaying its launch, the Agency is positioning industry partners for success. Considering the connections between CARM and other business mainframe systems in the CBSA and Canada Revenue Agency, the next available opportunity to implement significant information technology changes is in October 2024.
TCP CARM Release 2 (postponed until October 2024)
Release 2 of the CARM initiative will expand the functionality of the CCP, including the ability for importers 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 a financial security (i.e., a surety bond or cash deposit).
Observation: We recommended that importers pay the Statement of Account directly to the CBSA. Note, however, that there may be circumstances in when it can be paid through the customs broker.
CARM Release 2 was made available in October 2023 to selected industry partners that wanted to test their own internal systems, and for software service providers to continue to certify their software with CARM.
The CBRA’s proposed implementation plan for CARM Release 2 will be updated to reflect the new timelines including the delay 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 and to enable their imports to be handled efficiently.
Suppliers handling delivered duty paid (DDP) shipments in Canada also are required to have a CCP account, which helps reduce disruptions in the customs clearance process, thus contributing to the overall efficiency of cross-border trade.
Observation: NRIs and DDP suppliers should promptly register their businesses on the CCP and adhere to the CARM mandate; they should start the CCP registration process now if it is not already completed. Failure to have a CCP account in place before May 2024 will 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 mitigating border disruptions).
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