Canada Border Services Agency (CBSA) Assessment and Revenue Management (CARM) project
Date of publication: August 8th, 2023
Background on CARM
The Canada Border Services Agency (CBSA) Assessment and Revenue Management (CARM) project is an ongoing project that aims to modernize the import process in Canada. This project has been ongoing for numerous years, and projected to continue through 2023. In the below article, we will explore some of the details to expect for companies importing into Canada. More information can be found on the CBSA website.
The CARM project has been split into multiple “releases”, with more details in the below grid:
Release | Related Changes |
|---|---|
CARM Release 0: January 18, 2021 | In preparation for future changes, the Accounts Receivable Ledger (ARL) system was moved to SAP S4HANA. External users were not impacted by this change. |
CARM Release 1: May 25, 2021 |
|
CARM Release 2: October 2023 |
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What you need to know about CARM release 2
What is a CAD?
In the most simplistic definition, the CAD serves as the digital document to account for imported goods into Canada, replacing the current B3/B2 forms. When CARM Release 2 goes into effect, the Commercial Accounting Declaration (CAD) will replace the existing B3 form required for importing into Canada. Whereas in the past separate forms (B2) were required for filing changes, the CAD will allow for changes/adjustments, using versioning while maintaining the same original document number and thus an audit trail/history of the document filing information.
These changes will be allowed either via EDI, Webservice (API), or via the CARM Client Portal and will be interest-free through the payment due date. Changes after payment date (known as adjustments) may be subject to CBSA review.
What are the major differences between B3/B2 and CAD from the business perspective?
The “release process” itself will not be impacted (except for B3 Type C entries where the CAD will be presented as part of the release package vs the B3 form).
One of the major differences between the B3 and CAD is that when the CAD goes into effect, the Duties, Taxes, and Fees will be automatically calculated by CBSA via the CARM system based on the information that is provided on the CAD. Following the electronic filing, the value of the duties and taxes will be posted to the importer’s accounts receivable sub-ledger.
With respect to the number of lines allowed on the CAD, there will be a file size limit of 50MB, which represents approximately 10,000 lines on the commercial accounting declaration.
The ability to submit, correct or adjust a CAD will also be different:
- Changes to a CAD can be done manually via the CARM Client Portal, via EDI, or via technology provider (e.g., the Broker).
- Electronic versioning will replace the legacy B2 process.
- A correction period will be introduced that allows changes between the CAD submission and the payment.
- Mass adjustments can be submitted without prior CBSA approval in certain situations, and will replace the current blanket adjustment process. The minimum number of transactions for a mass adjustment will be two.
- Details on filing Drawback are limited at this time. It is understood that drawback may be considered a mass adjustment. More details will hopefully be provided in the future.Changes to the Release Prior to Payment (RPP).
CARM involves a fundamental shift for Importers. The liability and financial risk for duty and tax payments will become the responsibility of the Importer. Previously, Brokers were able to extend their bond to Importers – this will no longer be the case. Importers will be required to obtain a bond. This bond must be in place prior to Release 2. Any Importer without a bond in place will be required to pay duties and taxes prior to release of the shipment.
Once CARM Release 2 goes into effect, Importers will no longer be able to leverage their Customs Broker’s RPP security clearance to receive release prior to payment. Instead, importers will now need to post security for either:
- a surety bond for 50% of their highest monthly accounts receivable with a minimum bond of $25,000
- a cash security for 100% of their highest monthly accounts receivableAdditionally, it will be mandatory for Importers to register with CBSA and secure a Business Number (BN) if they do not already have one.
They will also need to set up an account in the CARM Client Portal. Once the profile is established, they can delegate authority as needed (e.g., to their Broker), and manage other CARM related processes.
Importers that do not register and have a CARM Client Portal profile set up will not be able to import goods after Release 2.
Importers that are not RPP participants would continue to have the option to pay full duties at the time of release at a port of entry (CASH Entry).
Other considerations
One of the changes that CAD brings to users is now all CAD types can be transmitted to CBSA via EDI. The following are the CAD Types:
CAD Types Codes | Definition |
|---|---|
AB | With Release |
F | Courier Low Value Shipment |
TT | Customs Self Assessment |
10 | Warehouse In |
13 | Re-Warehouse |
20 | Ex-Warehouse for Consumption |
21 | Ex-Warehouse for Export |
30 | Transfer of Goods |
Another change is the tracking of imported goods into and out of the CBW which will require the submission of a CAD with one of the five (5) CBW-specific CAD type codes.
Changes to the billing cycles
An additional change being made for CARM Release 2 is related to Billing Cycles. The introduction of new billing cycles is being done to address current complexities involving debt management for businesses and to lessen the administrative burden.
The billing cycles shown below will be affected by CARM. For the below billing cycles, the payment due date will be 10 weekdays (Monday through Friday, inclusive of Holidays) after the 17th of the month:
- High value shipments (HVS) / Low value shipments (LVS)
- LVS goods released in the regular commercial stream will follow standard HVS billing cycle
- Courier low value shipments (CLVS)
- Continuous transmission commodities (CTC)
- Customs self-assessment (CSA) Program
Importers will have an online view of both their Transaction History and their Statement of Accounts (SOAs). The Transaction History will provide a live history of transactions where they can review the account balance and make payments. It will include all open debits and credits.
The SOA is a static document that is generated monthly containing all business activity. It combines multiple transaction types and payment due dates into one monthly summary. The SOA contains: Payments made, Interest owing, Credits on accounts, Disbursements issued, CAD, Adjustments, and Corrections (before SOA generation date).
How to prepare for CARM release 2
- Importers should ensure they are registered with CBSA and secure the necessary Business Number(s).
- Designate a Business Account Manager (BAM) for your company. The BAM will have full managerial and administrative rights over your company’s CARM Client Portal (CCP) account and assigning delegation of authority.
- Setup your CARM Client Portal user account. Also create a business portal account and delegate authority to the relevant parties. For more information, please visit the CBSA website.
- A CAD will not be accepted from a Broker without the proper Delegation of Authority, so it is important that you get that in place with your relevant Brokers.
- Importers will need to obtain the necessary direct security bond. If you currently use your Broker’s RPP privileges, ensure you take action to post security outside of that, as it will no longer be valid to use. A list of acceptable bonding companies can be found on the Treasury Board of Canada’s Contracting Policy webpage – Appendix L – Acceptable Bonding Companies.
- Due to the new billing cycles, Importers should review their current accounting practices to ensure they coincide with the new cycles.
- If you have your own customs software that you use to transmit to CBSA electronically, system changes will be needed. You will need to refer to the Electronic Commercial Client Requirements (ECCR) document for details.
- In addition to information provided here, CBSA will be conducting webinars to help educate the trade on CARM Release 2. These webinars are targeted primarily to the following stakeholders:
- Brokers
- Importers
- Consultants
- Financial security providers
Please note that these webinars will be available on CARM Client Portal. For further information about the webinars, send an email to: cbsa.carm_engagement-engagement_de_la_gcra.asfc@cbsa-asfc.gc.ca
You can also request to be added to CBSA’s distribution list for CARM related communication via this email address, which is recommended to stay up-to-date on any changes.
The CARM project has been a controversial and lengthy process involving numerous changes and delays, and in some cases, a lack of transparency and engagement with the Trade. There are many questions and concerns that are still unanswered. Despite the outstanding issues, it will be important for companies importing into Canada to do what they can to prepare with the information available now – understanding that there is the possibility of additional changes to the scope and timelines. Keeping lines of communication open with CBSA, as well as your service providers will be important for a smooth transition.