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DO YOU KNOW EVERYTHING ABOUT CARM?


What is CARM and when is it launching?


CARM (CBSA Assessment and Revenue Management) is an initiative by the Canada Border Services Agency (CBSA) to modernize and streamline the process of importing goods into Canada. It is designed to improve the way importers manage their interactions with CBSA by providing a new online portal and tools for managing their accounts and customs transactions.

The key features of CARM include:


  • CARM Client Portal: An online platform where importers, customs brokers, and trade consultants can manage their accounts and view transactions.

  • Self-service capabilities: Users can access their import records, review and pay duties and taxes, and track payments.

  • Simplified import processes: Automates several aspects of customs compliance, including calculating duties and taxes, reducing paperwork, and improving accuracy.

  • Security: CARM introduces security bonds for importers to cover their financial liabilities.


The CARM initiative is being rolled out in phases by the Canada Border Services Agency (CBSA). The expected timeline for the remaining releases is as follows:

1. CARM Release 1 (Already Launched - May 25, 2021)


  • CARM Client Portal: Importers, customs brokers, and trade consultants were able to create accounts and begin using the portal to manage their customs transactions.

  • Business Number (BN) Registration: Companies could register for access to their accounts.

  • Initial Self-Service Features: Users were able to view their transactions, apply for adjustments, and delegate authority to customs brokers or other service providers.


2. CARM Release 2 (Planned for October 2025)


  • Financial Security Requirement: This release will introduce the requirement for importers to post a financial security (e.g., a surety bond or cash deposit) to participate in the Release Prior to Payment (RPP) program, allowing goods to be released before duties and taxes are paid.

  • Full Import Declaration Processing: CARM will fully integrate the electronic submission and management of import declarations. This includes the ability to make corrections and manage adjustments more seamlessly through the portal.

  • Enhanced Features in the CARM Client Portal: Additional functionalities such as electronic payments, reporting, and better compliance tracking will be introduced.


While Release 1 is already operational, the full set of features that will significantly impact importers (including the financial security requirements) is expected to go live with Release 2 in October 2025.

 

CARM Requirements

To comply with and use the system effectively, companies that import goods into Canada need to meet certain requirements. These requirements include:

1. CARM Client Portal Registration


  • Business Number (BN): Companies must have a valid Business Number (BN) issued by the Canada Revenue Agency (CRA) with an import/export account (RM extension) (e.g., 123456789RM0001).

  • CARM Client Portal Account: Companies must create an account on the CARM Client Portal. This portal will be the primary interface for managing import transactions with the CBSA, including paying duties and taxes, tracking shipments, and managing compliance.


2. Appoint an Account Administrator


  • Each company must appoint an Account Administrator who will be responsible for managing the company’s CARM account, including assigning roles and permissions to employees, customs brokers, or other trade service providers.


3. Security Bond (Financial Security)


  • By CARM Release 2 (expected in 2025), companies must post financial security with CBSA if they want to participate in the Release Prior to Payment (RPP) program, which allows goods to be released before duties and taxes are paid. This can be done by either: Posting a surety bond (typically at 50% of their highest monthly duties and taxes payable). Making a cash deposit (100% of their highest monthly duties and taxes payable).


4. Electronic Declarations


  • Companies will need to submit import declarations electronically, ensuring all required information and documents are available in the CARM system. This involves: Harmonized System (HS) Codes: Correctly classifying goods for duty calculation. Invoices and Supporting Documentation: Uploading relevant documentation for customs clearance.


5. User Roles and Permissions Management


  • Companies must manage user roles and permissions on the CARM Client Portal to ensure that individuals within the organization or third-party service providers (e.g., customs brokers) have appropriate access to manage transactions and compliance.


6. Compliance and Training


  • Training: Ensure that staff involved in importing, customs, and trade compliance are familiar with CARM processes and understand how to use the portal.

  • Compliance Management: Review and strengthen internal procedures for customs compliance to align with CARM's digital processes, especially in terms of record-keeping and reporting.


7. Updated Customs Brokers Arrangements


  • If a company works with a customs broker, they will need to authorize their broker on the CARM Client Portal to act on their behalf for declarations, payments, and other transactions.


Overall, companies need to invest in training, IT system integration, and ensure their customs procedures align with the digital and financial security requirements set by CARM.

 

Benefits of CARM

CARM offers several benefits for companies that import goods into Canada, as well as for customs brokers and other stakeholders. The primary benefits include:

1. Streamlined Import Process


  • CARM simplifies the process of importing goods into Canada by digitizing customs transactions and providing a centralized platform for managing imports, paying duties and taxes, and tracking compliance.

  • It eliminates much of the paperwork, making processes more efficient and less prone to errors.


2. CARM Client Portal Access


  • Self-service Capabilities: The CARM Client Portal allows companies to self-manage their customs accounts. They can access their import data, view duties and taxes owed, make payments online, and submit correction requests, all from one place.

  • Real-time Data: Companies have immediate access to their transaction history, duty and tax calculations, and account status, improving transparency and control.


3. Improved Financial Control


  • Companies can better manage their cash flow by tracking duties and taxes due in real time and viewing the status of payments.

  • Release Prior to Payment (RPP): CARM allows importers to release goods before payment of duties and taxes, provided they have posted financial security (such as a surety bond), giving them flexibility in managing payments.


4. Enhanced Compliance and Risk Management


  • Automated Processes: CARM automates many customs compliance procedures, reducing the risk of human error and improving overall accuracy.

  • Trade Compliance Reporting: The portal provides detailed reports on import transactions, helping businesses maintain compliance and respond more quickly to any issues or audits by CBSA.


5. Centralized Management of Trade Service Providers


  • Importers can manage and authorize their customs brokers or other third-party trade consultants directly through the CARM Client Portal. This ensures clear delegation of responsibilities and simplifies collaboration with service providers.


6. Better Visibility and Transparency


  • Transaction History: Businesses can track all their import transactions in a detailed and transparent manner, improving record-keeping and allowing for better monitoring of customs-related activities.

  • Audit Trail: CARM provides a clear audit trail for all transactions, which is helpful for internal audits and government reviews.


7. Increased Efficiency in Customs Clearance


  • CARM integrates various steps in the customs clearance process, such as submitting declarations and supporting documentation electronically, allowing for faster processing times.

  • It supports the use of the Harmonized System (HS) codes for proper classification of goods, reducing the likelihood of delays due to misclassification.


8. Better Support for Small and Medium-sized Enterprises (SMEs)


  • For smaller businesses, CARM can reduce the administrative burden of managing customs-related tasks. The user-friendly portal gives these companies the tools they need to handle customs without requiring large compliance teams.


9. Support for Future Innovations


  • CARM is designed with scalability and future advancements in mind, meaning that as trade policies and technologies evolve, CARM will be able to incorporate these innovations, providing businesses with a future-proof solution for customs compliance.


10. Cost Savings


  • By automating and digitizing many aspects of the customs process, CARM can help companies reduce the costs associated with customs management, including paperwork, delays, and errors. It also minimizes the need for extensive manual intervention in tracking duties and payments.


In summary, CARM provides enhanced transparency, increased efficiency, improved compliance management, and cost savings, benefiting companies of all sizes involved in importing goods into Canada.

 

Setup Concerns for Companies

Setting up and adopting CARM presents several challenges for companies, especially importers, customs brokers, and other stakeholders involved in trade. Some of the common issues companies face include:

1. Complex Registration Process


  • Account Setup and Validation: Many companies have experienced difficulty registering on the CARM Client Portal, particularly when verifying their Business Number (BN) and ensuring that their import/export accounts are properly linked. Ensuring that the correct individual within the organization is assigned the role of Account Administrator can also be complicated.

  • Delegation of Authority: Authorizing third-party service providers (such as customs brokers) through the CARM portal requires careful management of permissions and roles, which can be confusing for companies unfamiliar with the process.


2. Understanding Financial Security Requirements


  • Surety Bonds and Cash Deposits: One of the major changes under CARM is the requirement to post financial security (such as a surety bond or cash deposit) for companies wishing to participate in the Release Prior to Payment (RPP) program. Many companies are struggling with understanding how to calculate the appropriate bond value (based on their highest monthly duties and taxes) and how to arrange the bond or deposit.

  • Bond Providers: Not all companies are familiar with how to obtain a surety bond, which can involve working with a financial institution or insurance provider. Smaller companies, in particular, may face difficulties securing the necessary financial backing.


3. Technical Integration and System Compatibility


  • Internal System Adjustments: Companies may need to upgrade or adjust their internal systems to be compatible with CARM’s electronic declaration and payment processes. This can involve new software integrations, adapting accounting systems, or making adjustments to Enterprise Resource Planning (ERP) systems.

  • Learning Curve: The shift from traditional customs processes to digital systems involves a learning curve. Staff need to be trained on how to use the CARM Client Portal effectively, manage transactions, and ensure compliance with new procedures.


4. User Role and Permission Management


  • Assigning Correct Roles: Companies may face challenges when assigning and managing user roles on the CARM Client Portal, especially in larger organizations with multiple employees involved in customs-related tasks. Incorrect role assignments could result in unauthorized access or insufficient permissions for critical users.

  • Third-party Authorization: If companies work with customs brokers, they need to properly authorize these service providers in the CARM portal, which can be a confusing process, especially for businesses unfamiliar with delegation procedures.


5. Training and Knowledge Gaps


  • Lack of Training: Many companies are not adequately trained on the new CARM processes, especially when it comes to self-service capabilities, calculating duties and taxes, and handling customs compliance digitally. Some businesses may also face difficulties with understanding the detailed compliance requirements.

  • Change Management: For organizations that have been relying on more traditional, paper-based customs processes, adapting to CARM’s digital system can be a major cultural shift. Companies may need to invest in training and change management to ensure smooth adoption.


6. Compliance with New Procedures


  • Adapting to New Compliance Rules: Companies need to ensure that they remain compliant with the new CARM rules, including accurate and timely submission of import declarations, proper classification of goods (e.g., Harmonized System codes), and ensuring that all supporting documents are provided electronically.

  • Risk of Errors: The shift to electronic submission increases the risk of errors in data entry, which could lead to delays in customs clearance, fines, or penalties if not managed carefully.


7. Financial and Cash Flow Impacts


  • Posting Security: The requirement to post financial security (surety bond or cash deposit) could pose a financial strain on companies, particularly small or medium-sized businesses with limited cash flow. Securing these funds or bonds may involve complex negotiations with banks or insurers.

  • Payment Adjustments: Companies need to adjust to the new payment systems introduced by CARM, and delays in adopting these processes could result in cash flow issues, such as delayed shipments due to unpaid duties or taxes.


8. Reliance on Customs Brokers


  • Dependency on Brokers for Setup: Many companies rely heavily on customs brokers to manage their customs-related transactions. If brokers experience difficulties with the CARM system or face delays in transitioning to the new portal, it can negatively impact importers who depend on them for compliance and customs clearance.


9. System Downtime or Bugs


  • Technical Issues with the Portal: As with any new system, there have been reports of system downtime, bugs, or unexpected behavior during the initial phases of CARM implementation, which has affected companies’ ability to register, complete transactions, or access real-time data.


10. Communication with CBSA


  • Clarity and Support: Some companies have expressed concerns over communication issues or the availability of timely support from CBSA when troubleshooting CARM-related issues. This includes delays in resolving registration problems, clarifying financial security requirements, or dealing with transaction disputes.


In summary, while CARM provides significant improvements in terms of efficiency and transparency, companies face challenges related to registration, financial security, technical integration, user training, and compliance management. Preparing in advance and seeking proper guidance, including legal or consulting support, can help businesses mitigate these issues.

Take the fear out of your setup, let our professionals manage your setup and account administration so you can feel confident running your business.  Connect with us today www.consultingredefined.ca. 

 
 
 

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