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6 things you need to know about Canada CARM

By Britney Wells

Cross Border, Duties and Taxes, Global Trade Compliance, Industry,

14 March 2022 / 0 min read

Canada Border Services Agency (CBSA) Assessment and Revenue Management (CARM) has been quite the hot topic in global trade as of late, but there is still a lot of confusion around it. With Canada being the 8th largest ecommerce market in the world, it is important to have a clear understanding of the following to ensure your imports into Canada are not hindered:

  • What is CARM?
  • Who is an importer?
  • Why CARM?
  • What phase of CARM is already in effect?
  • What is the future of CARM phases?
  • What do I need to do?

What is CARM?

CARM is a change to how the CBSA manages commercial goods being imported into Canada, including the collection of duties and taxes. Canada is moving from a manual system to a more automated one through the CARM Client Portal (CCP). With the portal, importers have access to CBSA 24/7. This access will provide visibility and control over the data associated with the import, as well as the processes occurring after the entry. In short, CARM is a system that streamlines the import process by allowing importers to upload and track information about an import rather than everything being done manually at the border.

Who is an importer?

Before throwing the term “importer” around in this blog, let’s define it. An importer is one who brings in goods from foreign countries and is responsible for the payment of duties and taxes. Canadian resident and non-resident businesses who import commercial goods into Canada as the importer of record are ultimately responsible for the payment. Here are the categories of importers defined by Canada:

  • A non-resident importer (NRI): A business located outside of Canada that ships goods to customers in Canada and is responsible for customs clearance and payment.
  • An NRI that pays the duties and taxes as the sender: A business located outside of Canada that ships goods to customers in Canada and delegates customs clearance responsibilities to their carrier.
    • This is likely you if you have an online business that sells goods into Canada!
  • A resident importer (RI) in Canada who chooses to use the services of a customs broker to support and/or account for their imported goods and transact business with the CBSA on their behalf.
  • Importers who self-clear without using a customs broker regardless of value.

Now that you have a basic understanding of what CARM is and who is considered an importer, let’s discuss the why behind CARM.

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Why CARM?

To remain relevant and competitive in global trade, the CBSA is modernizing the way it assesses imported goods and manages revenue. The CBSA is among the top collectors of revenue for the Canadian government. Duties and taxes generate billions of dollars annually, which is critical to Canada’s government and economy. CARM’s intended goal to simplify Canada’s import process, which has been in the works since 2016, gives importers more incentive to bring in goods, which likewise benefits the CBSA. The intended goals of CARM are as follows:

  • Make it easier for businesses to work with CBSA through online access to import information
  • Provide online tools to classify goods and calculate duties and taxes
  • Make payments online and view up-to-date account information
  • Improve consistency in applying trade rules and decisions
  • Reduce repetitive information requirements
  • Improve compliance with trade rules

All of these goals make up the overall purpose of streamlining the import process.

What’s already in place for Canada CARM

Phase one (May 2021) introduced the CARM Client Portal (CCP). Phase one is still current, as phase two has not yet been rolled out. Though optional, the CCP allows importers and customs brokers to do the following online:

  • Calculate duties and taxes
  • Classify goods
  • Generate e-manifests where applicable
    • An e-manifest is the electronic documentation of the goods/freight in a shipment forwarded to customs.
  • Pay the landed cost (duties, taxes, and fees)

Again, since the use of the CCP in phase one has been optional and somewhat of a trial phase, importers have time to prepare for the complete implementation of CARM.

What’s coming

The release in January 2023 (if not postponed again) will impact the majority of retailers who ship to Canada. In addition to what the CCP offers in phase one, phase two will no longer be optional, and will introduce the following:

  • Importers will be qualified to receive Release Prior to Payment (RPP) Privilege, which allows them to have their shipments released by customs prior to payment of duties and taxes.
  • Canada’s B3 and B2 customs coding forms will be replaced by a new online document called the Commercial Accounting Declaration (CAD). This means only one document is needed for all your submissions. The CAD allows you to make changes and create different submissions in one document without losing the document’s history.
  • New options for duty and tax billing cycles and payment options will be available.
  • CBSA program and business number registration will be available and required for imports through the CCP.

All aspects of phase two are intended to speed up the import process and involve the CCP, and importers must do their part to be compliant with CARM.

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What do I need to do?

Starting in the spring of 2023 (the specific date is unknown), you either delegate brokerage responsibility to your carrier, work with CARM and the CCP and give your customs broker access to your account, or work with CARM and the CCP yourself to manage and clear your shipments. It is recommended to have everything in place by fall 2022 to be ready for a possible January 2023 release date. Requirements for resident and non-resident importers are outlined below.

Resident (Canadian) importers

  • If you are an RI who brings high or low volumes into Canada monthly and do not use a customs broker, you need to work with CARM and manage the CCP yourself.
  • If you are an RI who imports into Canada monthly and you do use a customs broker, either directly or through your carrier, you are required to work with CARM and give your customs broker, business account manager (BAM), or carrier access to your CARM account to manage the import process through the CCP on your behalf.

Non-resident (outside of Canada) importers

  • If you sell more than $50,000 CAD to Canadian consumers or businesses monthly, then it is recommended that you work directly with CARM.
  • If you have a business that ships goods totaling less than $50,000 CAD to Canadian consumers or businesses monthly, it is recommended to allow your carrier to continue managing your commercial imports under CARM on your behalf. To choose this option, you need to delegate authority to your carrier.
    • This delegation is an additional requirement and does not replace the current requirement for a Power of Attorney (POA) for a Non-Resident importer or General Agency Agreement (GAA) to authorize a customs broker to act for you.

How do I delegate authority to my carrier?

As the importer, you should anticipate either using the CARM portal or the carrier’s website to indicate your desire to let the carrier continue to act on your behalf. Here are some resources for doing this:

How do I get started working with CARM on my own?

  1. First, obtain a Canadian business number if you do not already have one. The Canada BN is a tax ID number.
  2. Register on the CCP by creating a user account and setting up a business account.

Please note that if you decide to use the CARM CCP for your shipments, including payment of duties and taxes, you will not receive an invoice from the carrier for those amounts. This can be a lot of information to take in, but if you are a business shipping goods to Canada with a total value of less than $50,000 CAD monthly, let your carrier continue to handle the clearance process; but be sure to delegate authority to them. If your business ships more than $50,000 worth of goods into Canada monthly, then it is recommended that you get set up with CARM as soon as possible. A firm start date for phase two of CARM is not known at this time. Start preparing by ensuring that your business has a Canadian business number and looking over the CARM website for updates. Happy importing!

Resources:

Britney Wells
Britney Wells

A love of bringing words together to create clear, simple messages about complex topics has driven me to pursue a career in professional writing. As the Technical Writer at Zonos, I find excitement and purpose in decoding the complex details of cross-border ecommerce.