I think we're good to get started. Hello, everyone. My name is Sal. I work in sales operations at Expeditors, and I'd like to formally welcome you to today's Webinar on Bonds and the RPP program. Before we get into it, I just want to cover a few ground rules. Everyone is automatically on mute, and your cameras are off. This means if you have any questions, you can type them into the Q&A box at the bottom of your screen. Your questions will either be addressed during the webinar or at the end, depending on the question, and we encourage you to enter your questions at any point throughout the webinar. Later today, you will be emailed a link to a survey, and upon completion of it, the presentation and supplemental info will be provided and available for download.
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All right. Thank you so much, Sal, and good afternoon, everyone. Thank you for taking time today to join our ongoing webinar series. I really want to emphasize, thank you very much. With all of the, you know, what's going on between the U.S. and Canada, it's a challenge to keep ahead of the game and also find the time. I know everybody's strapped for time, but again, thank you so much. In today's session, we'll be addressing an important update that directly impacts commercial importers, the need to secure and post financial security in the current client portal. As of May 20, which was recently extended, all commercial importers to Canada will be required to secure and post financial security in the current client portal in order to maintain the release prior to payment RPP privileges.
This is a significant change that will affect both importers and customs brokers. For those of you who may still be unfamiliar with the CARM initiative, CBSA Assessment and Revenue Management Program is a multi-year modernization project by the CBSA designed to streamline and enhance the importation process to Canada. The RPP bond is a mandatory requirement under this new framework, and today we'll walk you through what this means for your business operations and the steps you need to take to comply with this update.
My name is Steve Bunda, and I am responsible for the business development here at Expeditors Canada for the customs product, and I'm pleased to be joined by my colleagues today, Phoebe Seifu, Regional Customs Support Manager, and David Mitchell, Customer Technology Solutions Manager, and of course, Sal Averty, who's our Sales Operations Coordinator, will be assisting with the presentation, and together we'll help guide you through this process. Next slide. All right, the agenda. During today's discussion, we'll cover the following key points: what the RPP program, what is the RPP program, and really how it actually works, options for posting financial security aside from the RPP bond, how else can an importer provide security, and C- types versus RPP participants, basically, I guess, from with bonds and without bonds.
Additionally, we'll highlight the benefits of the RPP bond, which allows importers to obtain the release of goods from CBSA before paying the duties and taxes and defer the payment of duties and taxes, including GST. Right now, we have a poll question. The question is, how prepared do you feel for the upcoming deadline? Just a single answer there, please. Sal, the numbers are coming in? Okay.
They're flowing through. I think we've received it from almost everyone, so go ahead and end the poll and share some results.
Okay. Very prepared, 32%, somewhat prepared, 46%, and not prepared, 22%. We've got some work to do. I'm a little concerned on somewhat prepared is, do you have the bond, or is there still some questions? Hopefully, those questions, we can answer those. For the ones that are not prepared, it's great that you're attending this session because we do have it pushed out for an additional 30 days till May 20th. We still have time, of course, but it's going to get pretty hectic, to say the least. I'm going to stop talking now. Without further ado, I'd like to turn it over to Phoebe to begin.
Thank you, Steve. Good afternoon, everyone. An overview of the release prior to payment or RPP program. The program allows importers to obtain release of their goods before paying duties and taxes. Essentially, it allows you to defer accounting and payment for goods. The requirements to participate in the program are you must enroll in the program, have no outstanding debt to CBSA, and you must post financial security. It is not mandatory for importers to enroll in the program. However, if you choose not to, you will have to submit your CAD Commercial Accounting Declaration and pay applicable duties and taxes in full before your goods are released. This is called filing a C-type or a cash entry. While enrolling in the program is not mandatory for importers, registering your business on the CARM client portal is, regardless if you are a small, seasonal, or infrequent importer.
Phoebe, I guess a C-t ype entry wouldn't be viable for a commercial importer because there's no way that a commercial importer could just attend customs and pay for each shipment, correct? That's where.
You're absolutely correct. C- type or a cash option is suited for a one-time or perhaps infrequent importers.
Okay. Okay.
Yeah. Yes. Next slide, please, Sal. RPP timeline. The 180-day transition period with an original end date of April 19, 2024, was afforded to importers by CBSA to get their financial security in place. You might have heard the transition period has recently been extended to May 20, 2024. CBSA has granted an extra month to get financial security in place. Next slide, please, Sal. Posting financial security. There are two methods: cash security and Written Security Agreement, previously known as a customs bond. Cash security is a deposit made by an importer in the CARM portal to guarantee against their duty and tax-related debt to CBSA. For this method, importers are required to post 100% of their highest monthly duty and tax accounts receivable. This method does not have a required minimum amount to be posted.
The second option is WSA or a Written Security Agreement, again, previously known as a customs bond. For this, importers are required to post 50% of their highest monthly duty and tax accounts receivable. This option comes with a required minimum amount of CAD 5,000 and a maximum of CAD 10 million per RM import account. There are two ways to link a Written Security Agreement or bond to the RPP program. One is by API, which is an electronic message from your financial security provider directly to your account on the CARM client portal. Two, bond details can be manually inputted into the CARM portal by the importer with approval and instructions from their financial security provider. Next one, please, Sal.
Phoebe, I want to go back on that one, if you could. When you talk about cash security, this can also be a credit card deposit, correct?
Yes, of course. Cash security, you're typically paying with a—you can pay for it with a credit card in the portal.
Okay. Good. Okay.
Yes. The CBSA's new harmonized billing cycle runs from the 18th of one month to the 17th of the following. A monthly statement of account will contain information for goods that were released and accounted for between the 18th of one month and the 17th of the following. SOAs are still issued by CBSA on the 25th of each month, but they are now posted in the CARM portal. Payment is due to CBSA 10 weekdays after the 17th of the month, and this generally works out to be the last business day of the month. The next one, please, Sal. The billing cycle for RPP and for C type clients. C type clients clear their shipments in person at the port of entry into Canada.
All transactions completed will appear on their SOA, and if no other transactions, penalties, assessments, or adjustments have occurred, their SOA will typically show a zero amount owing. For RPP participants, all CADs submitted and accepted between the 18th of month one and the 17th of month two will appear on their statement of account. Payment is due to CBSA 10 weekdays after the 17th of the month. The next one, please, Sal. Payments to CBSA for RPP and for C type clients.
For C type clients or cash clients, payments can be made using debit, credit card, or cash. For RPP participants, payments can be made via online banking through a bank's portal, debit or credit card on the CARM portal, electronic data interchange, or by PAD, Pre-Authorized Debit in the CARM portal. I believe we also have a second poll for our audience. Yes. Do you have your RPP in place today? A single choice answer is needed.
Some answers still coming in. Give it another 15 seconds. Okay. I think that's everyone. We'll get those results on the screen.
That's a lot better than the first question. If 84% of the people have their RPP in place, that is a good sign. I'd actually go back and ask the first question again, maybe in a later webinar, because if you've got it in place, you are pretty much ready.
Yeah, that's great to see that number, 84%. Still, we got some work with the 16% also.
About 45 days from now.
Yes. Okay. All right, Dave.
Yeah. Go ahead, Sal.
Just quickly, just wanted to give you guys an overview. This is a snapshot of the CARM client portal. Again, within the portal itself, you have the ability to take a look at all of your transaction history. In the middle, you've got your statement of account. This is when you log in and go to the financial information tab. Go ahead, Sal. On that, it will give you your total net open balance once you get into the transactions. Basically, you are able to see that, or any company that you've delegated authority to can see it as well. A customs broker or anyone else that you've delegated authority to shows your account balance, so what's open and what's closed, and then what's payable within that particular accounting or payment period.
With that said, customs is still working through a couple of bugs. We have been working very closely with the importers that are filing entries through us to make sure that these things are matching, and then working back with customs to highlight any kind of differences through their ticketing systems. Just really from your current open balance, you can see there if you have cash payment requirements, you have to keep that up to date. Also, with any kind of bond requirements, you are going to want to keep an eye on that and make sure that you have sufficient coverage.
While you're looking through that and any kind of issues that you might run into as far as your balances are concerned, our teams are always happy to help figure out getting into the portal, working through RPP, and really ensuring that the CARM program is working for and with you. These are our experts in the different cities across Canada that we operate in. These are our customs managers, and they'd be happy for you to reach out. Okay. Questions. Phoebe or Steve, I think one of the most frequent questions that I see is, if I don't have my RPP in place and I'm not set up for cash, what's going to happen on May 21st to my shipments that are crossing the border? Either one of you want to take that?
Yeah. On May 21st, CBSA will turn off that flag. This is what they've told us, right? Those without financial security in place, their shipments will be stopped, and we'll have to go the route of that cash entry type that I mentioned earlier. It is not a good thing to let happen if you were a frequent importer of goods. CBSA does plan to take off that to end the transition period.
That's May 20th, right, for the final, Phoebe, I think?
Yep. On May 21st, apparently that flag is coming off.
Okay. All right. We've got a few more questions here in the chat. I'll just read them out here. I'm new to my company, and nobody has access to our CARM account, but one has been created. Do you have any ideas on how we might be able to get in? I would say, and Dave or Phoebe, correct me if I'm wrong, but we have to go to the help desk for that and advise them what's happened, and hopefully they can support.
Yeah. With your business number and company name, we'll send out a link to this, but there's a ticketing system with the CBSA and also a CARM support mailbox where you can go directly to CARM. A customs officer would call you back and walk through resetting who the business account manager is for your particular company. They've streamlined that a little bit more over the past couple of months, although it's still a lengthy process to go through.
Okay. Next question here is some good ones. Is anyone concerned with the current way the nudging process works? Due to systems limitation, CBSA cannot change, and the way it is structured, it should be nudging end of month. Okay.
After the payment of its SOA.
Right.
Yeah. Can I take that, Steve?
Yes, yes.
Okay. CBSA wants importers to follow their guidelines and instructions from the CARM portal, whether that is through a nudge or an actual instruction. They will nudge you when your bond amount reaches 75% usage, and they will just alert you, but they will not at that point, at 75% usage, your bond will not be non-compliant. It's just a nudge. It's just an information they're giving you, an alert, really. When your bond exceeds 100% of the value, they will send you a message and ask you to either do one of two things: to make an interim payment or increase your bond amount, and they will give you the amount of time, they'll give you enough time to do so.
Again, following the nudges or their instruction, and what I mean by instructions, instructions are different than nudges. The CBSA will review all bond amounts in the fall of each year, and they will send you a notice again through the CARM portal if you need to increase your bond amount. Following those nudges, it's important, and they will give you a number of nudges and instructions before they take any actions.
Yeah. I mean, Phoebe, I totally agree with that systematically. I think as far as how often the nudges are happening on a daily basis versus letting the bond realize and the payments happen within their payment process, it's not ideal today. We're seeing a lot of emails from the CBSA and the CARM portal, but I think that is something that they'll look to fine-tune as they go.
I think so. It's going to be—it's new, and it is. I feel like they will give you a number of months. Let's say your bond exceeds your limit throughout the month, and on the 31st, your payment is due, and you make that payment, that's a good thing. CBSA is going to not revoke your bond at that point or your privilege to import. They're going to—as long as you make your payment in full at month end, and if the same thing happens on the next month, they are going to send you a message saying, "Okay, this happened previously. Can you look now at increasing your bond amount?" As long as you make those payments at month end in full, you will be given proper time to go to increase your bond. They will look at your historical pattern and then ask you to do that.
That's kind of the importance of having these things set up early and kind of have that historical pattern set up with the CBSA. There's another question in the Q&A, Phoebe, that I think you've been working on this quite a bit with the CBSA, but we have some old 2022, 2023 penalty charges still showing as outstanding. We've asked the CBSA about it and are not getting feedback. We've already registered for RPP. Should we be concerned about it not being implemented? What would you say on the old penalties that haven't been addressed or showing up on the portal?
Yeah. First of all, you need to file a ticket, absolutely. If you haven't heard back from the ticket within two weeks, you need to respond to the ticket and ask for an explanation. That's important for the old penalties that are showing up. Dave, what was the other part?
Should we be concerned about it? I think you answered kind of what needs to happen is put a ticket in. As far as the penalties, hopefully they're not exceeding your bond amount. That would be significant, I believe. I don't think that I would be super concerned about those not being rectified prior to May 20th, but I would put in a ticket and work through that with the CBSA. Again, reach out to our teams if you require any kind of further help with those things. One more. If we have a financial surety bond posted in our CARM portal, does that mean we're automatically enrolled in RPP?
Yes.
Easy.
You can check that in the portal.
Okay. This is kind of a common question with the retaliatory tariffs. How will CBSA handle surety situations with retaliatory tariffs? It will be hard for large companies to continuously increase surety and not practical for everyone to hold a $10 million max bond.
That is true. That is true. However, again, following the nudges and the instructions in the portal is the best way to address that. Again, paying your monthly payments in full is going to be a good—absolutely, it is going to help in that manner. CBSA, again, will look at your historical pattern of paying, and they will give you the proper time to increase your bond. Again, bond amounts are based on historical data. CBSA will do a formal review of your bond amount in the fall of each year. Again, following the nudges, it does not mean that you are going to have to increase your bond like two, three times per month. It does not. They will watch your patterns, and you will get at least a few months to make sure that happens.
I think the CBSA addressed this as well through the increased surtax, and the comment that I heard when I was on one of their calls was that importers may need to make payment throughout the course of the month if they do not have the proper bond amount and if they are exceeding those amounts. I think back to just the way that you manage it and the way that these surtaxes have come into place, the CBSA does expect the bond amount to cover all duties and taxes, including the surtax. That is not excluded from the calculation. Right, right. Okay. Another question here. Can we set up—can we still set up RPP after May 21st? I guess the answer is yes, but the key answer should really be, "Do not leave it till that time." It would be best to get it done well in advance of May 20th.
I've got a question here, Steve or Phoebe. Someone prepared, "We have a Canada bond. We need to increase the value and security according to CARM. In progress of doing that with our customs broker. Meanwhile, we've received a request from DHL or, sorry, a courier, I assume, to submit a revised power of attorney and enroll the RPP." RPP is not dependent on which provider you're using, whether that be as a broker or a forwarder. RPP is based on your business number. Your bond goes across your business number and then is allocated to the RM extensions should you have multiple imported records into the country.
From the example given within that question, I would just say that perhaps that provider—and you might want to check this out with them—is looking for you to delegate authority so that they can submit a customs accounting document on your behalf. However, the RPP would not be directed towards a carrier, courier, or forwarder. We're kind of bouncing back and forth between the Q&A and the chat, Steve. I'm not sure.
Yeah.
Do you have a handle on which one's next in the chat?
Yeah. In the chat, there was a question in regards to a maximum exposure, and we're being advised one could exceed $500,000. So I'm not 100% sure on that question. Your outlays are $500,000, and your question, how much is the bond required to cover that or maximum exposure? Bond requirements, I believe, is 10 million. Correct, Phoebe?
Yes, that's correct.
I'm not 100% sure on that comment. If you can possibly rephrase that.
Phoebe, maybe you could just quickly review what the calculation is again for the bond.
Yes. For a $500,000 monthly payment, you would require 50% of that as your bond amount. You would require a $250,000 bond, which would give you coverage for $500,000 worth of payments in a month.
Okay. Okay. Thanks for that, Phoebe. Another question. Will CBSA be sending out written policy on how they will manage that process for importers because it isn't in writing today? I would assume that is for the bond's amount, but I'm thinking we do have that in writing. Do we not?
There's already a D-M emo out with regard to that. Yes.
Okay. All right. I think we have the questions in the chat box up to date.
I think someone asked, "How will CBSA send instructions?" It is absolutely through the CARM client portal. You need to monitor that account. Each of your RM accounts needs to be monitored, and your instructions will come through that account in the portal.
All right. I just want to make a point that there's so much going on right now, and it's a challenge to keep ahead of the game, as I mentioned. At the end of the day, failing to provide the security by the deadline will result in ineligibility for the RPP. Duties and taxes must be paid at the time of importation before CBSA releases the goods. It is crucial for all companies importing into Canada to have the financial security in place before the transition period ends to avoid any sort of additional costs and processing delays.
I would just like to reiterate one thing. To help manage the nudges and the instructions, if importers pay their SOA in full at the end of each month, I guarantee you that is going to create a good pattern and give you enough time to increase your bond when it's necessary.
Okay. All right. I think we're up to date now. Sal? Do you want to take it from there?
Yeah. Just going to close it out quickly. Here we have some supplemental info. Again, all these links will be provided in that presentation once the survey is complete, which you will get access to. Just an opportunity for everyone to scan that QR code to stay connected. It'll bring you to the landing page where you can enter your information and subscribe to communications. Lastly, everyone will receive a follow-up email with the survey to fill out. Please keep your eyes out for that and complete the survey to receive the slide deck, which will also include details on how to log this webinar as continuing education for your certifications. That is all we have for today. Thank you all very much for joining, and have a great rest of your day.
Thanks very much, everyone.
Thank you.
Thank you.
Thank you.