CARM is coming – Will you be ready on May 13, 2024?

Better known as CARM, Canada Border Services Agency’s (CBSA) Assessment and Revenue Management project is a multi-year digital initiative that will modernize how the government interacts with the trade community to assess and collect duties and taxes – over $30B in annual revenue – for commercial goods imported into Canada.

Trade partners include importers, customs brokers, freight forwarders, carriers, customs bonded and sufferance warehouse operators, duty-free shop operators, financial security providers and software service providers.

Designed to replace legacy systems that date back to 1987, CBSA says CARM will deliver a globally leading customs experience that reduces the burden for legitimate trade, makes CBSA more efficient, and generates more revenue for the organization while contributing to securing Canada’s borders.

It’s a massive, generational shift for both industry and the government and it’s coming into force as the official system of record on May 13, 2024. Additionally, CARM is set to launch on that date as a big bang: legacy systems and processes come offline and the new technology and regulatory framework comes online. For hundreds of thousands of importers and their partners, preparedness now is crucial to keep goods flowing compliantly in the very near future.

Where are we today?

The CARM implementation is structured as a series of releases, the first of which, called Release 0, involved the Accounts Receivable Ledger (ARL) in January 2021. CARM Release 1 was launched in May 2021, introducing the self-service CARM Client Portal (CCP), allowing importers, brokers and third parties who submit rulings on behalf of importers to view transactions and statements of account, request rulings, and pay invoices with new electronic payment options. CBSA is now set to kick off the last phase of the mandatory transition to CARM.

On October 16, 2023, the CARM Release 2 system will go live in a pre-production environment for select industry partners and software service providers who will be able to test their own internal systems and processes. Release 2 builds on lessons learned in the Deep Cycle Testing (DCT) and CARM Experience Simulation (CES) pilot, which brought together volunteers from the trade community this past year to perform a series of simulations in sprints, against which CBSA also gauged its own readiness.

As an example, the pilot highlighted opportunities for tighter alignment within the agency to support questions from industry with more timely responses. Similarly, Release 2 provides all stakeholders with another opportunity to engage outside of a regulatory context to make process improvements and increase operational readiness.

Where are we going?

Between October and December 2023, CBSA’s priority is to continue to certify approximately 150 companies which have a direct connection with CARM and collectively represent a significant portion of CBSA’s marketplace. Once certified, any organization can continue to use the system and perform simulation activities. Importers, brokers and other trade partners who haven’t already registered on the CPP must do so to review the new system prior to May 2024 to minimize potential supply chain disruptions.

During this time, they will be able to interact with and conduct simulations in CARM as a parallel system to the legacy system. For example, an importer or their customs broker could send the same accounting entry to both systems (CARM and legacy) and compare results. In this way, early participants gain valuable insight into what’s changing and into the nuances of CARM.

For added complexity, in order for CARM to be fully implemented, CBSA is also proposing a number of amendments to existing regulations to support the modernization initiative: nine under the Customs Act and three under the Customs Tariff. Administered and enforced by CBSA, the proposed amendments remain on schedule and are expected to be announced by the Canada Gazette in fall 2023 and come into force in May 2024 with the cutover to CARM.

In terms of the big bang itself, the May 2024 system will introduce the following features:

• Electronic commercial accounting declarations that can be corrected and adjusted;
• Changes to the Release Prior to Payment (RPP) program;
• Harmonized billing cycles;
• New offsetting options;
• Electronic management of appeals and compliance actions; and
• The ability to:
  • Register for a Business Number (BN9);
  • Enroll in various CBSA commercial programs.

How ready are we?

CBSA continues to track its own operational readiness, industry readiness and solution readiness. In terms of importers and trusted partners filing on behalf of importers, approximately 40,000 companies are currently registered with CPP accounts and this figure needs to grow. For the digital filing community, certification numbers also need to grow, as this is another key element of overall readiness.

To drive greater preparedness, CBSA has ramped up CARM Trade Chain Partner Working Groups and training to continue to help educate importers, brokers and vendors on how to adapt their systems and business processes to integrate successfully with CARM.

In the brokerage community, some are also evaluating where opportunities may lie to provide new value-added services to importer customers to further broaden their scope as a trusted advisor, such as offerings that complement CCP services. For companies that have software applications or provide filing services for CARM, early participation in working groups has been especially instrumental, such as with deep cycle testing.

While working groups sometimes have a policy focus, the policy side and technology side can’t be separated in a project of this magnitude. Having all sides in the same room at the same time so that policy criteria are understood and technology experts can make the corresponding connections has been valuable point of intersection between CBSA and service providers.

Parting thoughts

Without question, CARM is a monumental project, having already been through six cycles of testing with over 1,000 deficiencies resolved. And, as is the norm with major government projects, there are many checks and balances in the journey, which is appropriate even while it may extend project schedules.

Ultimately, CARM itself will continue to evolve. Government of Canada requirements will change and the need for CARM to be able to respond in lock step to a changing regulatory environment is already happening. While all parties have significant work left to ensure readiness for May 13, 2024, all parties also have their own vested interest in modernizing and streamlining the process of importing commercial goods into Canada and to help protect and grow over $750 billion in trade each year.