Regulations Amending the Regulations Amending Certain Regulations Administered and Enforced by the Canada Border Services Agency: SOR/2025-116

Canada Gazette, Part II, Volume 159, Number 8

Registration
SOR/2025-116 March 23, 2025

CUSTOMS ACT

P.C. 2025-460 March 23, 2025

Her Excellency the Governor General in Council, on the recommendation of the Minister of Public Safety and Emergency Preparedness, makes the annexed Regulations Amending the Regulations Amending Certain Regulations Administered and Enforced by the Canada Border Services Agency under subsection 35(1)footnote a and paragraphs 164(1)(i)footnote b and (j) of the Customs Act footnote c.

Regulations Amending the Regulations Amending Certain Regulations Administered and Enforced by the Canada Border Services Agency

Amendment

1 Subsection 69(2) of the Regulations Amending Certain Regulations Administered and Enforced by the Canada Border Services Agency footnote 1 is replaced by the following:

(2) Subsection 30(2) comes into force at 3:00:01 a.m. Eastern Daylight time on May 20, 2025.

Coming into Force

2 These Regulations come into force on the day on which they are registered.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Issues

Regulatory changes that were previously made to support the implementation of the Canada Border Services Agency’s (CBSA) Assessment and Revenue Management (CARM) system launch on October 21, 2024, included an exception whereby importers or owners of commercial goods did not have to give financial security if they were registered in the CARM portal (hereafter “Release Prior to Payment (RPP) transition period”). This exception was intended as a transition period to be repealed 180 days after coming into force. It began when the Regulations made in support of CARM implementation came into force on October 21, 2024.

As of March 19, 86% of importers have not yet posted security and would be required to follow a paper-based process to obtain release of their goods at the border once the transition period ends.

The RPP transition period needs to be extended to avoid operational challenges and at-border delays, and to allow time for importers who wish to continue obtaining the release of their goods prior to the payment of duties to obtain security before the transition period ends.

Background

The CARM project is a multi-year initiative designed to modernize processes for the importation of goods into Canada. CARM was designed to be the central portal for commercial import accounting and revenue reporting and management and, as of October 21, 2024, CARM is the main system used by importers when accounting and making payment of duties and taxes for commercial importations into Canada.

A key component of CARM is the CARM Client Portal — a self-service tool that offers importers online access to their accounting transactions and provides them with electronic options to provide financial security for participation in CBSA programs, including the RPP Program which allows importers to obtain the release of their goods at the border before paying duties.

To support the transition of the importers who previously participated in the RPP Program in meeting the new requirements to give financial security electronically under CARM, a 180-day transition period was provided. The transition period was established through a regulatory provision that did not require importers or owners of goods to give security. The regulations stipulated that the provision would be repealed 180 days after it came into force, which meant the RPP transition period would end on April 19, 2025.

The majority of importers who had a history of importations with the CBSA in the previous year were enrolled in the RPP Program at the beginning of the transition period without needing to post financial security. As of March 19, 2025, 27 745 of the CBSA’s 197 414 active importers, or 14%, have posted security.

While importers are not required to participate in the RPP Program, they are encouraged by the CBSA to do so as participation in the program allows them to benefit from a more efficient release process. Prior to the implementation of CARM, most importers participated in the RPP Program using their customs broker’s bond or a paper-based customs bond. The transitional provision was introduced to allow time for importers to obtain their own security to continue meeting the program requirements and continue to obtain release without needing to pay and use a paper-based process each time they import goods. If the transition period expired on April 19, 2025, importers who were enrolled in the RPP Program by the CBSA, but did not post security before the end of the transition period, would no longer be able to benefit from the release of their goods prior to payment.

Objective

Extending the transition period gives importers more time to meet their financial security requirements for continued participation in the RPP Program and allows the CBSA to continue implementing an outreach strategy that encourages importers to participate in the RPP Program.

Description

The coming into force of the Regulations Amending Certain Regulations Administered and Enforced by the Canada Border Services Agency is amended to replace the repeal of the regulatory provision that allows importers or owners of commercial goods registered in CARM to participate in the RPP Program without giving financial security 180 days after the Regulations came into force with a repeal date of May 20, 2025, at 3:00:01 a.m. Eastern Daylight time.

Regulatory development

Consultation

The CBSA began consultations with stakeholders on CARM-related issues in 2013, and stakeholder input informed the design and development of the vision for CARM and its associated regulatory initiative.

While stakeholders largely supported the move to electronic transmission of information regarding financial security, many raised concerns about making significant information technology system investments and changes to meet the new financial security requirements; they indicated that they would need a lead time of up to one year to make the necessary changes to meet the new financial security requirements.

Prepublication in the Canada Gazette, Part I

The regulatory amendments and Financial Security (Electronic Means) Regulations made to support the CARM system implementation, including the proposed 180-day transition period, were prepublished in the Canada Gazette, Part I, on November 26, 2022, followed by a 45-day public comment period until January 10, 2023. The CBSA shared the publication with the Trade Chain Partner Working Group, other CBSA working groups and the Border Commercial Consultative Committee. The publication was also shared on the CBSA website and social media.

The CBSA received five comments voicing concern that 180 days was not enough time to allow importers to transition to the new financial security requirements for the RPP Program, and one comment expressing support for the implementation of a transition period.

Through subsequent consultations with financial security providers, the CBSA learned that, in most cases, the process for an importer to obtain security is expected to take less than a week. While the length of time it takes for the importer and security provider to finalize a security agreement varies based on a number of factors (e.g. level of risk of the importer), the CBSA believed that the 180-day transition period would give importers an adequate amount of time to meet their security requirements in order to continue to participate in the RPP Program, while managing the level of financial risk associated with the release of unsecured goods for the CBSA and the Government of Canada.

Modern treaty obligations and Indigenous engagement and consultation

As required by the Cabinet Directive on the Federal Approach to Modern Treaty Implementation, an assessment of modern treaty implications was conducted. The assessment examined the geographical scope and subject matter of the initiative in relation to modern treaties in effect, and did not identify any potential modern treaty impacts or obligations. The CBSA will continue to assess potential impacts as new modern treaties are implemented.

Instrument choice

As the coming into force is set in regulation, a regulatory amendment was required to change the date that the transition period ends.

Regulatory analysis

Benefits and costs

The extension of the RPP transition period does not introduce any new requirements or costs for stakeholders as participation in the RPP Program is not mandatory for importers. The extension only grants importers who wish to enroll in the RPP Program more time to do so, which will delay some of the anticipated benefits of the CARM regulations.

Costs

The extension of the transition period subjects the CBSA and the Government of Canada to a longer period of financial risk by continuing to allow the release of unsecured goods for a longer period. This may result in an increased number of unpaid accounts and a higher amount of taxes owed to the CBSA during the transition period. If an importer does not pay the duties owed on their monthly statement, the goods would have already been released into Canada without the CBSA collecting duties on the goods, thereby negatively impacting Government of Canada revenue.

The CBSA will continue to monitor this risk and engage the Canada Revenue Agency for the collections process to recover the amounts owed to the Government of Canada, as needed.

Importers who have already posted security in order to ensure continued participation in the RPP Program when the transition period ends may express frustration that they are already paying monthly premiums charged by financial security providers for their security agreement, or that they posted a deposit on the CARM Client Portal and incurred an unnecessary cost. As a result, there is a chance that these importers may cancel their security or stop paying the premiums being charged by financial security providers. Financial security arrangements between an importer and a security provider are not administered by the CBSA; rather they are business-to-business relationships. Therefore, the CBSA does not have any control over the agreements or premiums charged by security providers.

Some benefits identified in the CARM regulations will be delayed due to the one-month extension of the original RPP transition period. The benefits of reduced administrative costs for stakeholders associated with electronic processes and posting financial security electronically that were outlined in the original Regulatory Impact Analysis Statement (RIAS) for the CARM regulatory changes published in the Canada Gazette, Part II, on March 13, 2024, will be delayed by a maximum of one month.

The benefit of the improved collection of bad debt for the Government of Canada that was included in the original RIAS may also be impacted by the extension of the transition period. Part of the reason that the Government of Canada was expected to be able to improve its collection of bad debt was through the CBSA’s implementation of an electronic financial security model through which the CARM system would monitor the amount of financial security posted by importers in the RPP Program and notify them to post additional security if they are approaching their security limit to ensure that no importations are unsecured. This benefit cannot be realized until importers post security for participation in the RPP Program; therefore, it will also be delayed by a maximum of one month.

Benefits

Small business lens

Analysis under the small business lens determined that the regulatory amendment does not impose compliance costs on Canadian small businesses. While the CBSA is encouraging importers to post financial security and enroll in the RPP Program before the end of the transition period, participation in the RPP program is not mandatory.

Importers who are small businesses and wish to enroll in the RPP Program, either during the transition period or when the transition period ends, will experience reduced administrative costs as a result of the electronic financial security process, which allows for time savings compared to the previous paper-based process. These benefits may be delayed by a maximum of one month due to the extension of the transition period. Importers who are unable to comply with electronic requirements due to factors outside of their control (e.g. limited Internet access or system outages) are permitted to provide security by another means as per the exception outlined in subsection 5(3) of the new Financial Security (Electronic Means) Regulations.

One-for-one rule

The one-for-one rule does not apply, as there is no incremental change in administrative burden on businesses, though the reduced administrative burden associated with the initial CARM regulations will be delayed by a maximum of one month. The original CARM initiative estimated significant administrative cost savings for importers resulting from more efficient administrative processes under the new system. The estimates have not been revised, as they assumed that importers could choose to use CARM immediately and would benefit from the associated reduction in administrative burden. The extension of the transition period does not change this assumption; thus there is no incremental change in the administrative burden imposed on businesses.

Regulatory cooperation and alignment

The regulatory amendment is not related to an international agreement or obligation, nor does it have any impacts related to a work plan or commitment under a formal regulatory cooperation forum.

Effects on the environment

In accordance with the Cabinet Directive on Strategic Environmental and Economic Assessment, a preliminary scan concluded that a strategic environmental assessment is not required.

Gender-based analysis plus

The gender-based analysis plus (GBA+) and other distributional issues were considered in the context of extending the RPP transition period and no additional considerations were identified.

The impacts of an importer’s geographic location on factors such as Internet access and other individual challenges, such as age, that might have on an importer’s ability to meet the electronic financial security requirements under CARM were considered as part of the regulatory amendments and new Financial Security (Electronic Means) Regulations that came into force on October 21, 2024. To mitigate these challenges, exceptions were built into the regulations allowing for importers to provide security to the CBSA by non-electronic means if the Minister determines that they are unable, because of factors outside of their control, to comply with electronic requirements.

Rationale

If more importers do not post security by the end of the transition period, the CBSA does not have enough resources to manually process an increased volume of paper-based accounting declarations, which will cause significant delays at the border.

While extending the transition period by one month is expected to help the CBSA to mitigate the risk of significant border disruptions, the CBSA will continue to highlight the benefits of participation in the RPP Program and encourage as many importers as possible to participate in the RPP Program to reduce the potential for operational challenges and delays at the border when the transition period ends.

Implementation, compliance and enforcement, and service standards

The Regulations will come into force on the day on which they are registered.

In addition to planned outreach activities during the transition period and given the lower-than-expected number of importers who have posted security, the CBSA has significantly increased its outreach in an effort to increase the number of importers posting security. To address possible reasons for the delay in importers obtaining security, the CBSA has published step-by-step user guides, including guides on how to Post financial security for Release Prior to Payment privileges (PDF) and Enrol in a CBSA sub-program (PDF), which includes instructions for RPP Program enrollment. The CBSA is also implementing an outreach strategy for RPP Program enrollment which includes increased communications and stakeholder outreach to highlight the significant benefits of enrolling in the program through news releases, direct outreach to stakeholders, webinars, communications on the CARM Client Portal, social media posts, newsletters and CBSA web content. The implications of not posting security by the end of the transition period are being clearly communicated to importers as part of the CBSA’s outreach efforts.

To communicate the extended transition period to stakeholders, the CBSA will publish a national news release to inform importers and the trade community that the transition period now ends on May 20, 2025, and share this news release on the CBSA website and social media channels.

Once the transition period ends, importers will only be able to participate in the RPP Program if they have posted security in accordance with the Financial Security (Electronic Means) Regulations and completed the RPP Program enrollment process with the CBSA. Importers will no longer be automatically enrolled in the program, nor will they be able to use their customs broker’s security to participate in the program as it was the case before CARM implementation.

The CBSA is closely monitoring the number of importers who have obtained financial security and enrolled in the RPP Program during the extended transition period.

Contact

Kaveh Afshar-Zanjani
Executive Director
Commercial and Trade Policy Division
Strategic Policy Branch
Canada Border Services Agency
Email: CBSA.OCT/CECO.ASFC@cbsa-asfc.gc.ca