Whether you’re opening a retail store, launching a service-based company, or expanding your operations, securing the right commercial surety bonds helps protect your business and build trust with regulatory bodies, clients, and partners. 

CARM brings significant changes to how duties, taxes, and compliance requirements are managed. If you’re an importer, this initiative will streamline your operations, enhance compliance, and offer new efficiencies. The CARM Client Portal is already live and ready for businesses to register. The Client Portal is a key feature of the CBSA’s initiative. Once phase 1 of the rollout is launched, it will serve as the primary tool for Canadian importers, customs brokers, and other trade chain partners to manage their import transactions. 

What is Commercial Surety?

Commercial surety bonds are financial guarantees that ensure a business or individual will meet their legal and regulatory obligations. These bonds are typically required by government agencies and help protect the public by ensuring the bonded entity fulfills the duties laid out in their licenses, permits, or contracts. Click to request a surety bond.

At Ferrari & Associates, we offer a variety of commercial surety bonds to meet the needs of businesses in different industries. Our experienced team understands the requirements and processes involved in securing these bonds and works with you to ensure you have the coverage needed.

Why Surety Bonds Are Important

Commercial surety bonds serve as a financial safety net for both businesses and the public. By securing these bonds, you ensure that your business will meet its obligations. This can include paying taxes, following regulations, completing contracts, and more. In addition, bonds can help build trust with clients, partners, and government agencies by showing that you are committed to operating with integrity.

Many government agencies will not issue licenses or permits without the appropriate surety bond in place. This means that having the right bonds is not just a good practice; it’s a legal requirement for many businesses.

Types of Commercial Surety Bonds

Customs Bonds

If your business involves importing goods into Canada, you will likely need a customs bond. Customs bonds ensure that importers pay the necessary duties and taxes on the goods they bring into the country. The Canada Border Services Agency is introducing new requirements as of October 21, 2024. CARM and all Canadian importers must comply with these new regulations to avoid penalties, delays, or legal issues.  We have prepared a series of blog articles on CARM, so please click here to learn more about CARM.  

Excise Tax Bonds

Excise tax bonds are often required for businesses dealing with goods subject to excise taxes, such as alcohol, tobacco, and fuel. They are inland taxes imposed on the sale or production of specific goods within a country, rather than at the border like customs duties. For example, a distillery in Guelph, Ontario producing whiskey or a company selling vapes and e-cigarettes, is required to pay excise taxes on their products. Excise tax bonds ensure that companies pay the appropriate taxes to the government on time and in full. For businesses in industries regulated by excise taxes, having this bond is essential to avoid financial penalties and interruptions in operations. Click to request a surety bond.

License Bonds

License bonds, also known as business license bonds, are required by government agencies for many businesses to operate legally. These bonds guarantee that the business will follow all relevant laws and regulations, ensuring the business operates ethically and responsibly. Failing to have a required license bond can result in fines or even the suspension of your business activities.

Permit Bonds

Permit bonds are often required for specific projects or activities. For example, if you’re a contractor applying for a building permit, a permit bond may be necessary to ensure that you complete the project according to local building codes and regulations. Permit bonds protect municipalities and clients by ensuring the work is done properly and legally.

Understanding the CARM Initiative and Its Impacts on Canadian Importers

The Canada Border Services Agency’s (CBSA) Assessment and Revenue Management (CARM) is a comprehensive digital platform and is set to transform the importation process in Canada. 

Scheduled to launch October 21, 2024, CARM will become the official system of record that Canadian importers and other trade chain partners will use to pay duties and taxes.

At Ferrari & Associates, we specialize in surety bonds, and we’re here to help Canadian businesses and importers navigate the complexities of CARM. Our surety experts understand the phased approach of CARM rollout and will walk you through what CARM is, how it will impact your business, and how you can prepare—particularly concerning surety bonds and financial security requirements.

What is CARM?

But CARM is more than just an administrative change—in fact, it will digitize the entire process; from accounting to payment, and introduce new requirements, especially for surety bonds, like tax and excise bonds, licence and permit bonds, and customs bonds.

For importers, the CARM Client Portal will provide a streamlined way to:

• Manage accounts
• Estimate and pay duties and taxes, and
• Post financial security (i.e., surety bonds or cash deposits).

Registering for the CARM Client Portal starts October 21, 2024

Canadian Importers may register via the CARM Client Portal starting October 21, 2024. After registering, you will notice a more efficient and transparent process. You will also have real-time access to your accounts and transactions, thus reducing paperwork, and minimizing errors. Learn more about the Client Portal by reading our blog article by clicking here.

Why Importers Need to Prepare for CARM

By October 21, 2024, all importers must be registered in the CARM Client Portal to continue importing goods into Canada. After this date, you will no longer be able to rely on their customs broker’s financial security (e.g., a bond). Instead, you’ll need to obtain your own customs bond. But not all customs bonds are the same.

For example, if you are an established importer, and if highest monthly duties and taxes over the past year amounted to $50,000, you would need a surety bond for $25,000, which is 50% of your highest monthly payable amount. Alternatively, you can post a cash deposit equal to 100% of the same amount.

If you are a new importer with no past history of duties, you would need to register in the CARM Client Portal, and will only be required to post security after your first month of imports, once a payment history is established.

How CARM Changes the Import Process

CARM introduces several fundamental changes, which importers need to be aware of, including:

New Surety Bond Requirements

Under CARM, importers must post their financial security. This security can be in the form of a surety bond (covering 50% of the highest monthly accounts receivable over the past 12 months) or a cash deposit (100%). As stated above, importers can no longer rely on a customs broker’s bond.

Enhanced Real-Time Information

With the CARM Client Portal, importers gain real-time visibility into their duties, taxes, and transactions. You’ll be able to monitor accounts, review payments, and ensure compliance at any time, 24/7. The system will also notify you when your bond or security limit is nearing its capacity, helping you avoid disruptions.

Before CARM, an importer might not realize they’re approaching their security limit until they face a delay in releasing goods. Now the portal will automatically notify importers when they need to increase their security to avoid interruptions.

Automated Calculations

The Commercial Accounting Declaration (CAD) will replace the current paper-based customs coding forms (e.g., B3 forms). This automation will reduce manual errors and speed up processing times. To learn more about e-Bonds click here.

Real-World Benefits for Canadian Importers

The digital-first platform creates efficiencies and eliminates cumbersome paperwork, ensuring that your import process is faster and more reliable. The portal automates calculations and compliance checks, making it easier to adhere to CBSA’s updated regulations. Finally, you’ll be able to track everything from duties, taxes, and payment statuses, 24/7 and in real-time.

Real-World Examples of CARM

A mid-sized business importing electronics into Canada used to rely on manual processes to estimate duties. They often faced delays due to human errors in calculations. The business now receives automated duty estimates and real-time notifications, significantly speeding up their import timeline.

Ferrari & Associates is Your Partner in CARM Compliance

Navigating the new surety bond requirements under CARM doesn’t have to be overwhelming. At Ferrari & Associates, we specialize in securing customs bonds that meet CBSA’s new guidelines. We work closely with importers to ensure they have the right financial security in place, tailored to their business needs.

How to Obtain a Customs Bond with Ferrari & Associates:

There are three steps to obtain a Customs Bond from Ferrari & Associates.

1. Assessment: We help you calculate the bond amount based on your highest monthly duties and taxes.
2. Bond Issuance: As surety brokers, our team works with leading surety providers to secure your bond at competitive rates.
3. Ongoing Support: We assist you in managing and updating your bond to ensure it remains compliant with CBSA’s evolving requirements.

Preparation is crucial to avoid disruptions to your business. The October 2024 deadline is fast approaching, and unprepared businesses may face delays in customs clearance. Click the link below to read our blog article on how to prepare for CARM.

By preparing now, your business can take full advantage of the new efficiencies and safeguards that CARM offers. Let Ferrari & Associates guide you through the transition.

Still looking for more information? Explore our entire blog article library here.

Ferrari & Associates: Your Commercial Surety Partner

Since 2009, Ferrari & Associates has helped businesses across Canada secure the commercial surety bonds they need to succeed. Whether you need a customs bond, excise tax bond, license bond, or permit bond, our team will guide you through the process. 

We take pride in providing personalized service tailored to your business needs. With offices conveniently located in Vaughan and Oakville, just outside Toronto, our brokers are ready to assist you with all your commercial surety needs. We understand that every business is unique, and we’re here to ensure you have the right bonds in place to operate smoothly and meet all regulatory requirements.

Connect with us today to discuss your commercial surety needs and learn how we can help your business thrive. Click to request a surety bond.

*The information provided on this page is for information purposes only and should not be taken as insurance advice. For actual insurance advice, please contact Ferrari & Associates at 1-888-467-8989