Accessing the right customs surety bonds as an importer/exporter business or brokerage can be challenging. After all, there are so many types available. But fear not, we have years of experience connecting importers like you to Canada’s leading surety bond issuers.

Consider this the only guide to customs bonds you’ll ever need.

 

What Are Customs Surety Bonds?

The Canada Border Services Agency (CBSA) requires customs importers, brokers, and businesses that are temporarily taking goods from Canada to post bonds, guaranteeing payment of duties and taxes.

Depending on the import/export industry segment you operate in, you may also need to post license bonds. These guarantee your business will perform the duties corresponding to the specific licenses.

 

 

CARM (CBSA Assessment and Revenue Management)

Recently, the Canada Border Services Agency created CARM (CBSA Assessment and Revenue Management). The goal of the program is to update the collection of duties and taxes for imported goods. They are looking to model the system currently in place within the United States of America.

At the moment, you (i.e., customs brokers) can post a bond with the CBSA to guarantee the payment of duties and taxes for all your importers. However, once the Agency finalizes the implementation of the new system, individual importers must have their own bond.

The Canada Border Services Agency is rolling out CARM in two phases:

• Phase One — In the first phase, importers can:
  • Create their profile on the CCP (CARM Client Portal) in readiness for Phase Two
  • Assign external designates (like the custom broker they work with or a trade consultant) to help with importing tasks
  • Submit electronic payments
  • Request updated customs rulings for origin, valuation, and tariff categorization
  • View account statements
• Phase Two — The second stage includes the requirement of individual importers needing to post their own customs security bond. Plus, it allows the external designates to do these activities on the CCP alongside the functions rolled out in Phase One:
  • Submit commercial account declarations
  • Submit corrections and amendments to accounts online
  • Receive notifications of payments daily

Participation in the CARM scheme is compulsory for any importer of goods into the country upon the initiation of Phase Two. If you fail to comply, you won’t be allowed to import items into Canada until you’ve completed the registration process and posted your bond.

Change can be scary — especially alterations as significant as this! So, if you’re looking for a way to help your business and importer clients get ahead of the new protocols, please feel free to reach out to ConstructionBond. We work with a wide range of leading surety providers well-versed in navigating this changing customs landscape.

 

The Types of Customs Bonds

There are nine types of customs bonds to be aware of, as you’ll discover below:

 

#1 Customs Broker License

A customs broker license is issued by the CBSA and is compulsory for a company or an individual to operate a customs brokerage in the country.

To get a customs broker license, you must submit your application to the chief officer of customs in your area. Once they receive your application, they post a public notice in the customs office displaying all your information for two weeks.

Before they can issue or renew your license, you must deposit security in the amount of $50,000 to protect the Canada Customs and Revenue Agency against loss during the effective license. The security can be in any of the following forms:

• Cash
• Certified cheque
• Transferable bond provided by the Government of Canda
• Customs broker license bond issued by a surety company

We work with leading Canadian customs broker license bond issuers, enabling you to get the license you need as quickly as possible.

Additionally, you must pay a renewal or license fee of $600 before the CBSA issues your customs broker license.

 

#2 Release of Goods Prior to Payment of Duties — Importers and Customs Brokers

Both importers and customs brokers submit security with the CBSA to acquire release of goods with accounting and payment privileges. It’s known as the RPP or release prior to payment privilege. It allows licensed customs brokerages and importers with financial security to:

• Defer payment of duties and taxes
• Get the release of goods from the Canada Border Services Agency before payment of duties and taxes
• Defer accounting for goods

If you don’t want to post financial security with the Agency, you can acquire one of the following bonds from one of our leading providers instead:

• One-time single-entry bond — The CBSA is releasing details on this type of bond closer to the implementation date of CARM Phase Two.
• Continual surety bond — The bond amount must be equal to at least 50% of your highest monthly accounts payable within the last 12 months. If you don’t have a one-year history, you must estimate the amount. It has a minimum of $25,000 and a maximum of $10 million.

Remember, once CARM is completely in place, individual importers must obtain their own RPP. We’ll help you get the bonds you need by analyzing your business based on the information you provide on our secure request form.

 

#3 Non-Resident GST/HST Bonds

You must register for non-resident GST/HST (Canadian Goods and Services Tax/Harmonized Sales Tax) if:

• you host a convention in Canada, and over ¼ of the delegates are residents of the country.
• you provide taxable goods in Canada while carrying on business in the country, and you aren’t a small supplier.
• you aren’t a small supplier and enable sales for books, magazines, and similar printed articles in Canada.
• you aren’t a small supplier and offer goods for sale in Canada through an agent, employee, or advertising.
• you make taxable supplies of admissions in Canada for a venue of amusement, an activity, an event, or a seminar inside the country.

Once registered for non-resident GST/HST, you must provide a security deposit unless you estimate that you’ll sell less than $100,000 of goods annually. You can submit the deposit as cash, money order, certified cheque or a GST/HST bond.

The first security deposit is half of your forecasted net tax throughout the coming 12 months. For every year after that, the security amount is half of your actual net tax for the past year. However, the minimum is $5,000, and the maximum is $1 million.

 

#4 Temporary Importation of Goods — Importer Direct and Customs Brokers

If you are an importer or customs broker taking goods to Canada on a temporary basis, you must acquire an E29B Temporary Import Bond.

The bond stays in place while the goods are on Canadian soil, so it’s important to cancel the bond once you’ve exported the items. Anything that enters the country under the temporary import bond must be exported within the given timeframe; otherwise, the bonded items are payable.

 

#5 Air Carrier Bonds

As a bonded air carrier, you can transport goods beyond the FPOA in Canada (i.e., the first point of arrival). You must post financial security to cover these scenarios:

• Moving goods to a CBSA office or inland sufferance warehouse to release the shipment
• Accessing the CSA (Customs Self Assessment) program
• Moving goods through the country to release outside of the country

 

#6 Customs Bonded Warehouse

The Custom Bonded Warehousing program lets you ship goods to Canada and arrive in bond, enabling you to defer or exclude duties and taxes.

Deferrals may last up to four years and allow you to seamlessly enter the Canadian market without worrying about the high costs of staging merchandise. Plus, it lets you more efficiently regulate cash flow to ensure your business thrives.

If you participate in the program, you can offer a bond as security. The bond must equal 60% of your total amount of duties and taxes owed at the time. Such protection ensures the Receiver General for Canada still receives payment should an issue or dispute arise.

 

#7 Freight Forwarders

As a bonded freight forwarder, you can transfer in-bond goods from points inside the country, including between warehouses. However, you can’t move or transport goods internationally under your bonded freight forwarder code.

 

#8 Carnet Bonds

Carnet bonds, otherwise called merchandise passports, are customs documents that allow the temporary importation of a range of goods (i.e., taking goods from Canada to a foreign country and then back to Canada). Generally speaking, they’re used by manufacturers and salespeople to show clients in other markets samples of their work at trade shows, fairs, and exhibitions.

You can get carnet bonds a variety of items, including:

• Exhibition, presentation, and tradeshow goods
• Commercial goods
• Professional equipment like sound systems and cameras

Depending on your business type, you can purchase carnet bonds for one trip or a blanket bond for all trips within the next 12 months.

 

#9 Customs Sufferance Warehouses

Sufferance warehouses are privately-owned establishments licensed by the CBSA for managing, storing, delivering, and transferring in-bond goods until they’re either exported from the country or released by the Agency.

You can purchase a customs sufferance warehouse bond to act as your security deposit. The amount of coverage needed equals $1,000 per 1000 shipments.

 

Who Requires Customs Bonds?

All kinds of businesses can need a customs bond at one point or another — not just customs brokers. Importers in a plethora of industries bringing goods into Canada require a customs surety bond, and so does a band temporarily taking instruments out of the country to gig overseas. The requirements of customs bonds are ubiquitous.

Put simply, if your business moves goods into or out of Canada, you need a customs surety bond.

 

How Much Does a Customs Surety Bond Cost?

The cost of customs bonds varies massively based on the type of bond you need. For example, for small license bonds, you may only need to spend $375. But for large release of goods bonds, you may have to pay between 0.5% and 1.5% of the total bond value.

If you require a small customs surety bond, you benefit from a straightforward application process with no deep dive into your company’s economic environment. However, as bonds reach the dizzying heights of $50,000 to $100,000, surety companies need to start looking at your financial statements during the underwriting process.

 

Why Choose ConstructionBond?

Surety might as well be our middle name. We have exceptional relationships with the best customs bond providers in the country. With us, accessing the correct bonding solutions couldn’t be any easier.

Begin the straightforward process by completing our request form. Then, we’ll start analyzing your bond needs and connect you with the perfect customs surety solution for your business! It’s as simple as that.

We do the hard work for you. So, why not let us take the pressure off?

 

Frequently Asked Questions

 

How Can You Prepare for Phase Two of CARM?

To avoid negative consequences, prepare for Phase Two by following the steps below:

1. Get a business number from the CRA — If you don’t have an importer/exporter business number, you need to acquire one from the Canada Revenue Agency. Obtaining them can be difficult, especially if you’re a non-resident, as the CRA tends to scrutinize every aspect of your business for security reasons.
2. Register on the CCP — You’ll need your Sign-In Partner details or a GOvernment of Canada Key (GCKey) to register on the portal.
3. Delegate external designates — Individual importers need to assign specific individuals, trade consultants, or customs brokers who can help conduct business for you on the CCP.
4. Get an importer security bond — As you already know, this is a crucial aspect of complying with the new CARM protocols for individual importers. But, with ConstructionBond, you don’t have to do it alone. We’ll connect you with providers specializing in supplying bonds to importer/exporter businesses.

 

How Much Coverage Do You Need to Acquire?

The amount of security required for Canadian resident importers is based on your monthly average of duties and taxes, minus GST, over the past 12 months.

For non-resident importers (NRIs), the amount of security needed depends on your monthly average of duties and taxes, including GST, over the past 12 months.

 

 

 

 

 

 

Other Types of Commercial Surety Bonds we provide:

• Auto Dealer Bond – Used in the automobile industry for dealerships.
• Fidelity Bond – Businesses purchase this bond to cover themselves from fraudulent employees.
• Janitorial Bond – Janitorial companies use this bond to protect the client’s interest.
• Utility Bond – Protects Utility companies from defaults from clients.
• Medical and Medicaid Bond – Protects patients from fraudulent behavior.
• Lottery Bond – Required to be purchased by business that engage in lottery.
• Union Bond – Obtained by union workers.