Small Business Importing 101: Paying Duties And Taxes

If you are new to importing, you may be wondering how duties and taxes are paid to CBSA. In this blog we will walk you through the process as well as a few must-knows.

All importers and licensed customs brokers must have a customs account with the Canada Border Services Agency (CBSA). To obtain a customs account, an importer or customs broker must get a registered business number from the Canada Revenue Agency (CRA). Once an importer account is acquired, all customs accounting transactions related to the importation of goods into Canada will be reflected on the customs account.

BN and RM Numbers | What Do They Have To Do With Importing Into Canada?

Release Prior To Payment

Customs account holders may also provide security to the CBSA for Release Prior to Payment Privileges (RPP) to secure the debt on their customs account. This allows the goods to be released at the border and payment of the duties and taxes are done later within a prescribed time frame. Importers can post financial security on their own for RPP or they can secure this through a licensed customs broker (prior to CARM Release 2).

Customs account holders who do not want to avail themselves of Release Prior to Payment Privileges either on their own or through a customs broker can transact business directly with CBSA and pay their duties and taxes at the time of release at the border. 

It is expected that all customs account holders pay their account balance in full with one payment. Where security exists, the account holder must pay by the due date. Where no security exists, payment is made at the time the goods are released.

CARM

Enter the CBSA Assessment and Revenue Management project, CARM for short. Through CARM, the CBSA intends to modernize and transform the collection of duty and tax for all imported goods into Canada. CARM is a multi-year project and has two main releases. 

The first release of CARM was May 25, 2021 which introduced the CARM Client Portal (CCP). The portal allows users (importers, brokers and consultants) to create, view and manage their account. Importers can make payments and delegate access to the customs broker and become familiar with the CARM self service options. 

CARM | Your Guide To The Client Portal

CBSA intends to implement the next release of CARM, CARM Release 2 sometime in 2023. With this release, the payment of duties and taxes will significantly change for the importer. 

• Enrollment on the CARM Client Portal will be mandatory right upon launch of CARM Release 2. Registration is mandatory and must be completed before Release 2 in order to avoid shipment delays.
• Changes to the Release Prior to Payment Program (RPP) will be introduced whereby importers interested in participating in this program will be asked to post financial security directly. The option to secure RPP through a licensed customs broker will no longer be an option. Importers without their own RPP financial security will have to pay duties and taxes on imported goods at the time the goods are released at the border. Security for RPP must be completed by the importer prior to Release 2 to ensure that their goods will not be held up at the border. 
• Importers will be required to make payment for duties and taxes directly to the CBSA through the CARM Client Portal or online banking. Importers will no longer be able to use the services of a customs broker to pay their customs account on their behalf. 

CARM | What Are Importer Security Bonds And Why Do I Need One?

Forms Of Payment

For account holders with Release Prior to Payment (RPP), the following options are available:

• Online via the CARM Client Portal (CCP)
• Pre-authorized Debit (PAD)
• Credit card (up to $4,999.99 Canadian dollars)
• Interac online (subject to the limit imposed by the card’s financial institution)
• Online banking via the financial institution website
• Electronic Data Interchange (EDI820)

For account holders without Release Prior to Payment (RPP), payment must be made at the time of release at the port of entry by:

• Credit card (up to $4,999.99 Canadian dollars)
• Interac online (subject to the limit imposed by the card’s financial institution) 

CBSA will accept cheques for account holders with monthly balances. The cheque must be sent to Ottawa and be received prior to the due date. Refer to Customs Memorandum D17-5-1 Appendix H for instructions on this form of payment. 

The CBSA does not accept cash, traveller’s cheques or wire transfers as forms of payment, and all payments must be in Canadian currency. 

With CARM Release 2 billing cycles will all be harmonized for ease of accounting and payment. 

CARM: Everything You Need To Know In One Place

Visit our CARM webpage to keep up to date with all the requirements today and tomorrow under CARM and be prepared for CARM Release 2 as it is just around the corner. Let us walk you through all the steps so that when CARM Release 2 arrives you are ready and none of your imports will be held up at the border.