CARM stands for Canada Border Service Agency’s (CBSA) Assessment and Revenue Management. It is a digital initiative launched by CBSA to assess and collect duties and taxes that apply to goods imported into Canada.
CARM was launched with the purpose of simplifying the import process and providing a user-friendly Single Window system for importers, besides optimizing how CBSA assesses and collects duties and taxes. The immediate purpose of the CARM updates is to make the process easier for IORs (Importer on Record), enable access to account information and online payments, provide importers with easy access to their information, and improve importer’s compliance with trade rules.
The ruling on the latest CARM regulations stipulates that any company importing goods into Canada must register in the CCP and post financial security by October 2024 (extended from May 14, 2024). The regulation primarily impacts Canadian importers and customs brokers, as well as U.S. exporters to Canada.
What Changes in CARM With Phase 3
The government of Canada has previously launched two phases of the CARM. The first phase was the Importer Launch, which covered the calculation of import duties and taxes, online payment of applicable duties and taxes, classification of goods, and viewing transactions and online statements.
The second phase was the internal CBSA launch, under which the CARM portal was made available to all importers with a Business Number (BN) for registration. Importers could no longer use their Customs Brokers RPP security to clear shipments before paying duties and taxes.
Phase 3 was officially introduced on Oct. 21, 2024, after which CARM is now the system of record for duties and taxes. Business owners can create their accounts after their business is registered to access all portal functionalities.
Key changes include:
- Changes to the RPP program
- Electronic corrections and adjustments processing
- Harmonized billing cycles
- New offsetting options
- Electronic management of appeals and compliance actions
- Ability for resident chain partners to register a business number (BN9) and sign in to the CARM Client Portal
Benefits of CARM and National Customs Ruling Programs
The implementation of CARM is anticipated to generate the following benefits:
- Eliminate cumbersome and time-consuming paper-based processes.
- Provide better tools to improve fairness and consistency in the treatment of all importers. This will reduce missed opportunities to apply taxes and/or duties, thereby reducing revenue leakage. Understanding customs regulations in different countries is crucial to ensuring compliance and avoiding legal issues.
- Improve functionality for importers through the ability to enroll in commercial programs, submit accounting documents, and receive notifications through their CARM Client Portal account. When importing goods, be aware of restrictions on food items to prevent penalties or confiscation at customs.
Getting Started with CARM
To get started with the CBSA Assessment and Revenue Management (CARM) system, businesses need to register for a CARM Client Portal account. The CARM Client Portal is an online system that allows businesses to manage their trade chain and comply with customs regulations. To register, businesses need to provide their business information, including their name, address, and contact details. Once registered, businesses can access the CARM Client Portal and start using it to manage their trade chain.
CARM Portal and Resources
The CARM Client Portal is a key component of the CARM system, providing businesses with a single window to access all CARM-related services. The portal allows businesses to view their account information, submit declarations, and make payments. The CARM Client Portal also provides access to various resources, including the CARM API Catalogue, which is necessary for users with their own customs software to transmit information to the CBSA electronically. Additionally, the portal provides information on national customs ruling programs, advance rulings, and tariff classification.
Advance Rulings and Compliance
The CBSA offers advance rulings on tariff classification and origin through the Advance Ruling program. This program provides businesses with a binding ruling on the classification and origin of their goods, helping them to comply with customs regulations. To obtain an advance ruling, businesses need to submit an application to the CBSA, providing detailed information about their goods. The CBSA will then review the application and provide a ruling letter, which is published on the CBSA website with the applicant’s consent. The ruling letter provides guidance on the classification and origin of the goods, helping businesses to ensure compliance with customs regulations.
How Does It Impact Importers and Exporters?
Under CARM, all duties and taxes on imports to Canada must be paid through the CARM Client Portal, and the importer is responsible for paying customs fees.
It is crucial for importers and exporters to understand customs regulations in different countries. Each country has its own specific rules regarding prohibited items, export permits, and the potential legal consequences for violations.
This is a change from the previous process, where a customs broker could assume responsibility for payment of customs duties and taxes, provided they had a surety bond. Now, however, the importer has to register with the CARM portal and secure the surety bond. The importer also has the onus of following up on the payment of duties and taxes.
Implications for U.S. Exporters
CARM will impact American companies exporting to Canada, either to Canadian retailers or to fulfillment centers in Canada.
Understanding customs regulations in different countries is crucial, as each country has its own specific rules regarding prohibited items, export permits, and potential legal consequences for violations.
American shippers will no longer be able to rely on their customs broker to settle customs duties and taxes. Instead, they will need to register as Non-Resident Importers (NRI) on the CARM portal, obtain a surety bond, and manage their own duties and taxes.
This involves American shippers getting an NRI account and thereafter registering themselves on the CARM portal. For the RPP (Release Prior to Payment) privilege, U.S. shippers must purchase a D120 Customs Bond or pay a cash deposit.
Duties and taxes need to be paid on a regular basis.
If a customs broker’s services are utilized, the broker must be given authority to access the importer’s CARM data. After that, the broker can still submit the customs entry, but the payment must be made through the CARM portal.
NRIs need to verify that they can meet the requirements and pay their duties and taxes to CBSA, through the following means:
- Online banking, through
- Canadian financial institutions
- American institutions – Bank of America and JPMorgan Chase
- Physical cheque, drawn in Canadian Dollars, mailed to CBSA in Ottawa
- Pay in-person by Cash or Credit Card (latter option only if the amount is under CAD 5,000)
It is important to note that shipments released by October 11th, 2024, will be payable to CBSA in October, while shipments released on or after October 12th, 2024, will be payable to CBSA in November.
Best Practices for CARM Adoption
To ensure a smooth transition to the CARM system, businesses should follow best practices for CARM adoption. These include registering for a CARM Client Portal account, familiarizing themselves with the CARM API Catalogue, and obtaining advance rulings on tariff classification and origin.
Businesses should also ensure that they have the necessary systems and processes in place to manage their trade chain and comply with customs regulations. Additionally, businesses should regularly review and update their account information and ensure that they have the necessary support and resources to use the CARM system effectively. By following these best practices, businesses can ensure a successful transition to the CARM system and take advantage of its benefits.
Contact KlearNow To Assist With the CARM Client Portal
With its AI and ML-powered customs clearance platforms, KlearNow can help your business navigate the complex regulatory maze, ensure accurate and timely compliance, and expedite customs clearance of goods. KlearNow can help with registering for Canadian Business Numbers (BN) and CBSA programs and surety bond applications for Release Prior to Payment (RPP) Privilege.
Click here for a free demo of how KlearNow can help streamline your customs clearance activities in the post-CARM scenario.
