CARM Simplified: get to know your import account
As we approach the second release of CARM, some importers may feel some confusion and possibly overwhelm at the new changes coming down the pipeline. But these changes are not insurmountable, and if anything, CARM is designed to streamline processes with the CBSA. Understanding what you need to learn about CARM is the first step to take as we enter this new landscape.
Ideally, by now you have registered your business in the CARM Client Portal (CCP) and taken care of setting up the basics:
Now, as we head full-steam towards Release 2 (R2) in 2023, it's more important than ever to be aware of the changes coming and ensure you are fully prepared for these. It’s all too easy to procrastinate in the face of system and process changes, and we want to help keep you moving forward. This two-part series of posts is designed to break down the essentials and provide you with the knowledge you need to get started. We’ll start with the basics: your account, how it will change in CARM, and how you can make payments. Let's dive in.
Understanding your CBSA account
As an importer, the first thing to understand is that CARM will require changing how you manage your trade information. While you can delegate to your customs broker, the monitoring of customs declarations as well as other functions will need to be handled by your internal operations.
In a nutshell, when it comes to your CBSA account(s) and payment, with CARM:
- importers are responsible for their account status with the CBSA
- importer accounts follow a monthly accounting and billing cycle
- payments must be made by a broker and/or the importer according to the agreement in place
- payments to the CBSA must be made within specific timelines—and these may differ from your current payment timelines with your customs broker
- in CARM R2, importers will be responsible for the payment of all duties and taxes directly to the CBSA
What is the Statement of Account?
The Accounts Receivable Ledger (ARL) is the accounting and payment system used by the CBSA to post transactions and establish balances owing on an import account. The ARL follows a monthly billing cycle for account activities and timelines. The CARM Client Portal (CCP) offers a new form of visibility into these account transactions and access to the monthly statement.
A Daily Notice (DN) reflects transactions posted to your import account the previous day. As you might expect, this summary is delivered daily and is a useful tool in managing your import account. As the DN is not available in the CCP, importers need to register to receive this via an Electronic Data Interchange (EDI) connection – usually through their broker.
The Statement of Account (SOA) is a monthly statement generated on the 25th of each month. It provides a summary of the account’s DNs, including transactions from the 25th of the previous month to the 24th of the current month. The SOA also shows that period’s account activity and the total payable by you and/or your broker to the CBSA by the end of that month.
The SOA also shows other balances and activity in your account, including:
- payments made
- past due balances
- interest owing
- credits on account
- disbursements issued
There are two types of SOA:
- Broker SOA: This only shows transactions and balances associated with that broker
- Importer SOA: This shows all transactions and balances
Where can I see my SOA?
Your importer SOA can be accessed a few ways. As of most recently, you can download your SOA straight from the CCP via the financial information page. A notification will be sent to your CCP account informing you that a statement is available. You can find this in the notification section on the top right of the home page in your CCP account.
You can also register to receive your importer DNs and SOA via EDI; this is commonly done through your broker and delivered by email. However, you must be enrolled in a direct payment program to register, something you can discuss with your broker. Importers can also submit a request online and pick up an SOA in person at a CBSA port of entry.
If you are not yet reviewing your importer SOA, it is important you begin doing so as there may be credits available for use or outstanding balances. It can take time to resolve balances prior to CARM R2, and not having this done on time could interfere with securing your bond.
The CBSA is encouraging all importers to register onto the CCP as soon as possible in preparation for CARM R2 so you can access your SOAs and clear any outstanding balances. The good news is, your customs broker or Cole International can assist with this.
So... who pays what?
Ultimately, the biggest change anticipated with CARM is understanding that as an importer, you have extra responsibilities. Among these are paying your duties and taxes directly to the CBSA.
It is essential to understand that registration in the CCP does not change the payment processes you have in place with your broker; in other words, you will not immediately start paying duties and taxes directly to the CBSA just because you are registered in the CCP. Also, changes to broker payment agreements cannot be made in the CCP and must be arranged with your broker. The Importer Direct Security (IDS) or GST Direct payment programs can assist in CARM preparation, something you can also discuss with your broker.
Before we look at payments in CARM R2, are you clear on which category you fall into? Take a look and see where you land:
- Does your broker pay duties and taxes on your behalf? If so, you are broker-backed.
- Does your broker pay duties on your behalf, but you pay GST directly to the CBSA? If so, you are likely on the GST-direct payment program.
- Does your broker charge you a service fee, but you pay duties and taxes directly to the CBSA? If so, you would likely have obtained a customs bond and are on the IDS program.
Always be sure to review your SOA prior to making payments to the CBSA, as this will avoid making duplicate payments in your account. Your SOA will show your direct payment amount as “Importer Total.” Amounts being remitted by your broker will show as “Broker Total.” If you see discrepancies, you can discuss these with your broker.
One final note to keep in mind: in CARM R2, commercial importers will no longer be able to use a broker’s financial security. This means that all amounts become Importer Totals and, as we’ve mentioned already, as the importer, you will be responsible for the payment of duties and taxes to the CBSA.
How to pay?
In Release 1 (R1), there are several acceptable payment methods for those importers on a direct payment program. However, some of these methods will be phased out in R2, thus it is strongly recommended you adjust your payment systems accordingly. Payments must be received by the CBSA in Canadian funds according to specific timelines.
These are the most common payment methods:
- online banking via your financial institution
- online via the CCP (pre-authorized debit (PAD), Interac, credit card)
- Electronic Data Interchange (EDI)
- mail or cheque
- in person at a CBSA Port of Entry
Note: Cash and cheque payments will no longer be accepted in R2.
Visit the CBSA’s commercial payments and accounts page for more information.
Things to watch for in the new CARM-scape
The more you recognize CARM as a simple attempt to streamline systems at the CBSA the easier the process will become. Moving step by step through the process slowly but surely will always get you there.
As you continue your CARM journey, here is a quick summary of the key things to keep in mind where your account is concerned:
- The amount to be remitted by the importer will be reflected on the monthly SOA as Importer Total Payable;
- The amount to be remitted by a broker to the CBSA will show on the SOA as “Broker Total Payable;”
- Payments by the importer for broker-owed balances will be duplicate payments;
- Not all importers will have access to or be able to see their SOA. Registration is required to receive it from the CBSA and/or access it via the CCP (we recommend both formats);
- Review your import account balances and activity regularly;
- Engage your broker to assist with your CBSA account.
Keep calm and CARM on
As importers, if there's anything you are prepared to handle, it's change. Part of your day-to-day involves navigating change with flexibility and stamina. CARM is no different. While you do have a responsibility as an importer with CARM, you are also not cast adrift on your own. Your customs brokers are here to help. Ask us today how we can help you best prepare for CARM.
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