Canada Border Services Agency (CBSA) is changing several processes relating to the import of goods that will directly affect all importers of commercial goods in Canada, including universities.

The CBSA Assessment and Revenue Management (CARM) project is a multi-year initiative to transform the collection of duty and tax for imported goods.  More information can be found at https://www.cbsa-asfc.gc.ca/prog/carm-gcra/menu-eng.html.  This project is scheduled to be phased in over a 12 to 14-month period.  The implementation timeline has been delayed from fall 2020 and will be added once CBSA operations normalize following the Covid-19 pandemic.

Release 1: This phase includes the introduction of the CARM Client Portal with basic functionality, including management of payment processing with timelines, tariff classification tool, tariff data management, case management functionality for Customs rulings and revenue reporting.

Release 2: This phase includes registration and enrolment for all CBSA clients, including universities.  There will be additional functionality offered in the CARM Client Portal.

What does this mean for Canadian universities?

Typical Current Process

Anticipated Process under CARM

  • Use customs broker to release, file and account for all imports
  • Use customs broker to release, file and account for all imports
  • Broker posts security (bond) to cover all duties, taxes and penalties for university shipments so goods can be released prior to payment
  • University posts security (bond) to cover all duties, taxes and penalties for university shipments so goods can be released prior to payment
  • University authorizes the final Customs accounting prior to submission
  • University authorizes the final Customs accounting prior to submission
  • Broker accesses university Statement of Account through CBSA Client Portal and matches to the entries on file
  • University accesses their Statement of Account through CBSA Client Portal and matches entries on file
  • Broker pays CBSA monthly Statement of Account through CBSA Client Portal
  • University pays CBSA monthly Statement of Account through CBSA Client Portal
  • Broker provides accounting documents and import entry data
  • Broker provides accounting documents and import entry data
  • Broker invoices university for authorized transactions – duty, taxes, brokerage and other ancillary fees
  • Broker invoices university for brokerage and other ancillary fees only
  • University reviews the import documents/data and pays broker’s invoices
  • University reviews the import documents/data and pays broker’s invoices
  • University requests adjustments or corrections (amends or refunds) to entries, as required
  • University requests adjustments or corrections (amends or refunds) to entries, as required
  • University distributes the import costs internally
  • University distributes the import costs internally
NOTE: It is expected that this process will change depending on the final program requirements and functionality of the portal. Failure to meet these requirements will likely result in clearance delays, loss and possible penalties for the university.

Security Bond

Posting security is a mandatory CBSA requirement that allows for the release of shipments prior to payment (RPP) of duties and taxes. This is usually posted in the form of a bond through an approved surety company.

Under CARM, all commercial importers (universities) must post their own security. This will establish direct financial liability for debt to CBSA, on the importer. Mandatory security will be effective as of CARM Release 2 and once this is in place, universities will no longer be able to use the Broker’s security to obtain the release of shipments.

Universities will be responsible for managing the amount of RPP security (bond) posted.

CBSA has provided information regarding RPP financial security (bond) calculation:

  • The amount of RPP security will be based on the highest historic monthly accounts receivables (AR) over the previous 12-month period, including GST
  • The minimum AR amount required for a bond is $25,000
  • AR amounts over $25,000 will require security of 50% of the total AR
  • The estimated annual cost of a bond is $4 per $1,000 AR

Payment

Payment will be the direct responsibility of the university using edi or eft functionality available through the CBSA Client Portal. It is unclear at this time whether universities can assign account payment access to their customs broker.

Without security, your university will not be permitted to have shipments released prior to payment as of Release 2 go-live. This will make it necessary to pay all duties and taxes prior to the release of all goods.

It is extremely important to communicate with your Broker about these changes, as soon as possible. They should be able to assist with answering your questions and providing data regarding your RPP security requirements and use of the CBSA Client Portal.

Prepared by Ray Williamson, Manager Customs & Logistics, Procurement Services, Western University