Payment of Duties and Taxes on Imported Commercial Goods
Memorandum D17-5-1

Ottawa, October 16, 2017

ISSN 2369-2391

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In Brief

This memorandum is being issued to explain to importers and licensed customs brokers the Canada Border Service Agency (CBSA)’s policies and procedures for the payment of duties and taxes on imported commercial goods. This memorandum replaces the payment policies and procedures outlined in Memorandum D 17-1-5, Registration, Accounting and Payment for Commercial Goods, Memorandum D17-1-8, Release Prior to Payment Privilege and Memorandum D23-3-1, Customs Self-Assessment Program for Importers.

Legislation

Customs Act, Sections 3.1, 3.2, 17(3), 32(5), 33(1), 33(2), 33.4(1), 33.4(3), 33.7(3), 80, 80.1, 97.26
Financial Administration Act, Sections 155(1), 155.1(1)
Customs Tariff
Excise Tax Act
Excise Act 2001
Special Imports Measures Act
Accounting for Imported Goods and Payment of Duties Regulations
Interest Rate for Customs Purposes Regulations

Definitions

The following definitions apply to this memorandum:

Account Security
Is the pre-authorized amount of money or a bond posted in accordance with Memorandum D1-7-1, Posting Security for Transacting Bonded Operations to secure the duties and taxes debt on imported goods.
Administrative Monetary Penalty System (AMPS)
Is a sanctions regime that authorizes CBSA to issue monetary penalties to commercial clients who violate CBSA’s trade and border legislation. AMPS penalties provide the Agency with a means to deter non-compliance with legislation by commercial clients, and create a level playing field for all Canadian businesses by ensuring that there is a cost for non-compliance.
Business Number (BN9)
Is a 9 digit numerical Canada Revenue Agency (CRA) business registration number used to uniquely identify legal entity information of businesses when dealing with the federal, provincial and municipal governments (e.g., 123456789).
Credit
Is an amount owing to an importer from the CBSA and recorded to the importer’s account.
Customs Account
Is an account established with the CBSA that records accounting transactions related to imported commercial goods, which include debts, credits and payments.
Customs Account Holder
Is an importer or licensed customs broker who is responsible for the payment of one or more Customs account(s).
Customs Self-Assessment (CSA) Importers
Are importers authorized under the CSA program to use the CSA accounting and payment processes for all commercial goods they import, regardless of the clearance process used to report the goods to the CBSA. The CSA Program is a CBSA program designed to streamline the import process for authorized low-risk importers who have the systems capability to self-assess the accounting for imported goods to the CBSA, including revenue reporting and the payment of duties and taxes.
Daily Notice (DN)
Is an electronic statement issued on a daily basis that displays accounting transactions that were recorded on a Customs account by the CBSA the previous business day, unless the previous day was a holiday (provincial civic holiday or statutory holiday) or there was no activity recorded on the account for the previous day.
Debt
Is an amount owing to the CBSA.
Disbursement
Is a payment made by the CBSA in the form of a cheque or direct deposit.
Duties
Are duties and taxes on imported goods. Under the Customs Act, these include duties and taxes on imported goods under the Customs Tariff, the Excise Act 2001, Excise Tax Act, the Special Imports Measures Act and any other Act of Parliament. However, for purposes of some sections and articles of the Customs Act, the term ‘duties’ does not include the taxes applied under Part IX of the Excise Tax Act (i.e., the GST). This means that in the case of a request for a refund of duty, GST is not refunded. Under the Customs Tariff, duties include duties and taxes levied on imported or exported goods, except for the duties and taxes provided for in Sections 53, 55, 60, 63, 68, or 78, or the temporary duties levied under any of Sections 69 to 76.
Electronic Data Interchange (EDI)
Is the electronic interchange of data between EDI-enabled commercial clients, their financial institutions and the CBSA. For example, EDI-enabled importers and licensed customs brokers can electronically remit their payments to the CBSA and can electronically receive their Daily Notices and Statements of Account from the CBSA.
Electronic Banking Services
Is the electronic service offered by financial institutions to their clients for making electronic payments.
Electronic Payments
Are payments sent electronically to the CBSA by the commercial client’s financial institution when the client is EDI-enabled or uses a third party service provider, or when the client uses the financial institution’s online (internet) banking services.
Importer Balance Overview Report
Is a report that lists all accounting transactions on an importer’s Customs account.
Licensed Customs Broker
Is an individual, partnership, or corporation that acts as an agent to transact business with the CBSA on behalf of the owner or importer of goods. While for most purposes, any agent may represent a client when transacting business with the CBSA, only a licensed customs broker may account for goods and pay duties under Section 32 of the Customs Act as the agent of the owner or importer of the goods.
Off-Setting
Is a practice whereby all credit amounts owing to an importer are applied to the importer’s account to reduce their balance owing. Off-setting is a financial management best practice, as a disbursement is not issued to a recipient who has outstanding debt.
Payment Deadline
Is 16:00 Eastern time on the payment due date.
Refund
Is an amount owing to an importer.
Release Prior to Payment (RPP) Privilege
Is a privilege that entitles importers with account security and importers without account security who are using a licensed customs broker to transact business with the CBSA on their behalf to:
  • (a) Obtain the release of goods from the CBSA before paying duties and taxes; and
  • (b) Defer accounting.
Refer to Memorandum D17-1-8, Release Prior to Payment Privilege for additional information.
Statement of Account (SOA)
Is an electronic statement for importers (excluding those under the Customs Self-Assessment Program) and licensed customs brokers that is issued on a monthly basis. The SOA displays account balances for a billing period, and includes a daily summary of accounting transactions made during the billing period that are due on the SOA payment due date, other accounting transactions that are due on their respective payment due dates and accounting transactions under review along with their respective payment due dates.

Guidelines and General Information

Types of Commercial Clients

1. For purposes of payment of Customs accounts, there are five types of commercial clients:

Customs Accounts

2. To facilitate the payment of duties and taxes, all importers and licensed customs brokers are required to maintain a Customs account with the Canada Border Services Agency.

3. To be eligible for a Customs account, applicants must have a registered business number with the Canada Revenue Agency (CRA). For instructions on how to apply for a Customs account, refer to Appendix A – Procedures to Set Up a Customs Account.

4. Accounting transactions related to the importation of commercial goods will be reflected on a Customs account.

5. Importers may authorize CBSA to provide an agent with Customs account information. For additional information, refer to Appendix B – Procedures to Receive Daily Notices and Statements of Account by EDI.

6. Customs account holders may provide security to the CBSA in accordance with Memorandum D17-1-8, Release Prior to Payment Privilege to secure debt on their Customs account. This can be provided directly by an importer or through a licensed customs broker. The security secures the debt on the Customs account and the security holder is liable for the payment of this debt.

Debts, Credits, Off-Sets and Disbursements on Customs Accounts

7. All debts related to the importation of commercial goods will be recorded on a Customs account.

8. All refunds will be issued as credits on a Customs account.

9. Credits will be used to off-set debts on a Customs account. The off-set will occur prior to the end of the payment period and before a Statement of Account is issued.

10. If the original refund request was submitted by an agent, the credit will be issued on the Customs account and will also be associated to that agent. When that credit is used to off-set debt, priority is given to debt that is also associated to that agent. Any residual credit may be used to off-set debt that is associated to another agent.

11. A disbursement will not be issued to an importer who has any debt on their Customs account. In exceptional circumstances, a Customs account holder can request a disbursement by following the Procedures to Request a Disbursement in Exceptional Circumstances in Appendix C.

12. If after off-setting has occurred, a Customs account shows a credit balance and there is no debt associated with the account, a disbursement may be issued to the importer. A disbursement may only be issued if the credit balance exceeds the Agency threshold; or, if the credit balance is less than the Agency threshold, when the account has been showing a credit balance for two consecutive months or longer.

Monitoring Customs Accounts

13. It is the responsibility of all Customs account holders either directly or through an agent to:

14. To facilitate the monitoring of Customs account balances, Daily Notices (DNs) and Statements of Account (SOAs) are sent to Customs account holders by EDI. If a licensed customs broker or other agent has been identified to receive DNs and/or SOAs on behalf of an importer, this information will be provided to the licensed customs broker or other agent. To set up receipt of DNs and SOAs, refer to Appendix B – Procedures to Receive Daily Notices and Statements of Account by EDI. Customs account holders who are not EDI-enabled can either:

Customs Account Corrections

15. Customs account holders may request corrections to their Customs account information.

16. If the correction relates to payment information, interest or penalties, a request for a correction can be submitted by following the Procedures to Request a Correction to Payment Information, Interest or Penalties in Appendix E.

17. When corrections are requested and not processed before the SOA issuance date, Customs account holders are still required to pay the full balance owing on their Statement of Account by the payment due date. Once the correction is processed, if an overpayment has occurred, a credit will be applied to the Customs account that will be subject to off-set or disbursement in accordance with the above section.

18. Customs account holders cannot request changes to trade related information (i.e., any changes to the accounting information provided on form B3, Canada Customs Coding Form) through their Customs account. For these types of changes, Customs account holders should refer to Memorandum D 17-1-5, Registration, Accounting and Payment for Commercial Goods or Memorandum D17-2-1, The Coding, Submission and Processing of Form B2 Canada Customs Adjustment Request.

Payment of Customs Accounts

19. It is expected that all Customs account holders pay their account balance in full with one payment:

20. Payments are permitted at any time, provided that the full balance of the SOA is received by the payment due date. Refer to the Procedures for Payments in Appendix F

21. All payments from Customs account holders are applied first to CBSA charges and then to the oldest transaction in sequence unless a transaction is under appeal.

Acceptable Forms of Payment

22. Customs account holders with monthly account balances of more than $50,000 must submit their payments electronically.

23. Acceptable forms of electronic payment include online banking and Electronic Data Interchange (EDI). When making electronic payments, refer to the Procedures for Online Banking and EDI Payments in Appendix G.

24. Customs account holders making payments of less than $50,000 are also encouraged to submit their payments electronically.

25. When electronic payments are not possible, payments can be made:

26. The CBSA does not accept cash, travellers’ cheques or wire transfers as forms of payment.

27. The CBSA will accept bank remittances as a method of payment from CSA importers and other commercial clients in exceptional pre-approved circumstances only if the Customs account holder is paying the account balance for a single Customs account in full. To request approval to make a bank remittance, refer to the Procedures to Request Approval to Make a Bank Remittance in Appendix I.

28. The CBSA accepts payments in Canadian currency only.

Payment Due Date and Late Payment

29. Payment due dates are communicated to Customs account holders at the beginning of the calendar year.

30. All payments of monthly Customs account balances must be received by the CBSA by 16:00 Eastern time on the payment due date.

31. If full payment has not been received by the payment deadline, a late payment penalty may be applied to a Customs account. For more information on penalties, refer to Memorandum D22-1-1, Administrative Monetary Penalty System.

32. In these circumstances, late payment interest may also be applied on the outstanding balance of the Customs account at the specified interest rate. Refer to Memorandum D11-6-5, Interest and Penalty Provisions: Determinations/Re-determinations, Appraisals/Re-appraisals, and Duty Relief for additional information.

33. Customs account holders who do not pay the full account balance may be subject to an administrative fee. This fee will cover the additional costs related to the manual allocation of payments to each Customs account. This fee may be waived if the payment is received electronically.

34. Late payment penalties, late payment interest and administrative fees will appear on a Customs account holder’s Daily Notice and monthly Statement of Account. These charges will be reflected in the monthly account balance.

Collections

35. Customs accounts with outstanding unpaid debt will not be considered in good standing.

36. After the payment due date, the CBSA may issue a Notice of Arrears to the importer that displays the amount overdue and includes late payment penalties and interest owing at the specified interest rate (from the calendar day immediately following the payment due date to the date of the Notice of Arrears), and collection actions may be initiated.

37. When Customs accounts are not in good standing:

38. For more information, within Canada call the Border Information Service at 1-800-461-9999. From outside Canada call 204-983-3500 or 506-636-5064. Long distance charges will apply. Agents are available Monday to Friday (08:00 – 16:00 local time / except holidays). TTY is also available within Canada: 1-866-335-3237.

Appendix A

Procedures to Set Up a Customs Account

Importers

1. Register with the Canada Revenue Agency (CRA) to obtain a 9 digit business number and open one or more import-export RM accounts. Business number import-export RM accounts assigned by the CRA are 15 digits (ex. 123456789RM0001).

2. To obtain the release prior to payment privilege in accordance with Memorandum D17-1-8, Release Prior To Payment Prvilege, contact the Commercial Registration Unit (CRU) by email at mailto:CBSA-ASFC_Commercial_Registration_Agrement_commercial@cbsa-asfc.gc.ca. CRU will issue a 5 digit account security number (ASEC) to the importer.

Customs Brokers

1. Register with the Canada Revenue Agency (CRA) to obtain a 9 digit business number.

2. Contact the Commercial Registration Unit (CRU) by email at brokers_licensing-agrement_des_courtiers@cbsa-asfc.gc.ca to post security with the CBSA in accordance with Memorandum D17-1-8, Release Prior To Payment Privilege as part of the customs brokerage application (refer to Memorandum D1-8-1, Licensing of Customs Brokers). CRU will issue a 5 digit account security number to the licensed customs broker.

Consultants

1. Register with the Canada Revenue Agency (CRA) to obtain a 9 digit business number.

2. Contact the Commercial Registration Unit (CRU) by email at CBSA-ASFC_Commercial_Registration_Agrement_commercial@cbsa-asfc.gc.ca to obtain a 5 digit number that will be used as a substitute for an account security number in CBSA’s financial system.

The following definitions apply to these procedures:

Appendix B

Procedures to Receive Daily Notices and Statements of Account by EDI

1. Complete the Electronic Data Interchange (EDI) Application For Daily Notice (DN) and Statement of Account (SOA) form or send an email to the Technical Commercial Client Unit (TCCU) at tccu-ustcc@cbsa-asfc.gc.ca to request the form. This form includes the importer’s authorization to provide a third party service provider with all importer information.

2. Print, sign, scan and email the completed form to tccu-ustcc@cbsa-asfc.gc.ca or fax it to 343-291-5482.

3. TCCU will review your application for completeness and validity, and will process your application within 10 business days. When accepted, TCCU will send an acknowledgement letter to the applicant. The first DN will be sent electronically to the applicant within 24 hours of acceptance of the application and the first SOA at the end of the billing period.

Note:

Appendix C

Procedures to Request a Disbursement in Exceptional Circumstances

1. Send an email request to the CBSA at cbsa-asfc_carm.gcra@cbsa-asfc.gc.ca that explains the circumstances and provides justification for a disbursement.

2. The CBSA will analyze requests for disbursement on a case-by-case basis, and consider factors such as the amount of the credit, the length of time that the credit has been on the account, the likelihood of the credit being used to off-set debts in the upcoming months based on historical importation activities etc.

3. If the request is accepted, the CBSA will issue a disbursement to the importer.

Notes:

Appendix D

Procedures to Request Monitoring Reports

1. Send an email request to the CBSA at cbsa-asfc_carm.gcra@cbsa-asfc.gc.ca:

2. Reports will be encrypted when sent by email.

3. A CBSA representative will contact the requestor and provide the required password to decrypt the file.

Note:

Appendix E

Procedures to Request a Correction to Payment Information, Interest or Penalties

1. Send an email request to the CBSA at cbsa-asfc_carm.gcra@cbsa-asfc.gc.ca:

2. CBSA will review and analyze the request, and if accepted, will process the required adjustments in CBSA’s financial system.

3. CBSA will send an email reply to the Customs account holder.

Note:

The following definitions apply to these procedures:

Appendix F

Procedures for Payments

These procedures for payments address advance payments and interim payments only.

Advance Payments - Importers Under the GST Direct Payment Option or Importer Direct Security Option

1. Request the Importer Advance Payment form to the cbsa-asfc_carm.gcra@cbsa-asfc.gc.ca and complete it.

2. Make the advance payment to the Receiver General For Canada using any acceptable form of payment.

Advance Payments - Licensed Customs Brokers

1. Request the Licenced Customs Broker Advance Payment form to the cbsa-asfc_carm.gcra@cbsa-asfc.gc.ca and complete it.

2. Make the advance payment by EDI, cheque, credit card or debit card.

Interim Payments - Licensed Customs Brokers

Interim Payments – Importers

Appendix G

Procedures for Online Banking and EDI Payments

Online Banking (Internet)

1. Contact your financial institution to ensure that your account is set up to access online banking.

2. Add “Canada Border Services Agency” or “CBSA Customs Duties Taxes” (or a similar name, depending on your financial institution) as a payee in your online banking portal.

3. For each payment, select the payee “Canada Border Services Agency” or “CBSA Customs Duties Taxes” and enter the amount of the payment.

4. Use your 15 digit business number RM account (ex. 123456789RM0001) as the account number for the payee.

5. Once submitted, the financial institution will send you a confirmation number. This message will serve as proof that the payment request was received by the financial institution, and must not be interpreted that funds were received by the CBSA.

6. Consult your financial institution to determine their daily cut-off times to ensure that payments are received by the CBSA on time. Once the payment has been received by the CBSA, the payment will be recorded in the importer’s account.

Note:

EDI Payments

1. Contact your financial institution to ensure that your account is set up for EDI payments.

2. Create an EDI 820 payment message as per the record layout definitions in the CBSA EDI Payment Implementation Guide and send it to your participating financial institution. In the EDI 820 payment message, enter the amount of the payment, the importer’s 15 digit business number RM account, the licensed customs broker’s 9 digit business number (if applicable) and the Customs account holder’s 5 digit account security number. Examples of the proper EDI 820 file layout are included as an Appendix to the EDI Payment Implementation Guide.

3. The financial institution will forward the EDI 820 message to the CBSA and transfer the payment to the CBSA EPAY account in the financial institution.

4. After the EDI payment message has been sent electronically, you will receive an EDI 824 message or similar notification from your financial institution or service provider to confirm that the payment was transferred by the financial institution or service provider, followed by an EDI 997 acknowledgement message or similar notification.

5. The EDI 997 acknowledgement message or similar notification will indicate:

6. Consult your financial institution to determine their daily cut-off times to ensure that payments are received by the CBSA on time. Once the payment has been received by the CBSA, the payment will be recorded in the importer’s account.

Notes on EDI Payments

The following definition applies to these procedures:

Appendix H

Procedures for Payments by Cheque

1. Make all cheques payable to the “Receiver General For Canada” and send cheques to:

2. Include a copy of the first page of the Statement of Account or a copy of the transaction being paid by the cheque. Ensure that the copy shows legibly the account number against which the payment is to be applied.

Notes:

3. Email any questions on the procedures for payments by cheque to the CBSA at cbsa-asfc_carm.gcra@cbsa-asfc.gc.ca.

The following definitions apply to these procedures:

Appendix I

Procedures to Request Approval to Make a Bank Remittance

Customs Self-Assessment Importers

1. Contact your assigned Senior Program Officer.

Other Commercial Clients

1. Send an email request to the CBSA at cbsa-asfc_carm.gcra@cbsa-asfc.gc.ca that explains the exceptional circumstances and provides justification to make a bank remittance.

2. The CBSA will analyze the request on a case-by-case basis, respond by email and if approved, will forward instructions on how to make the bank remittance.

References

Issuing office:
Agency Comptroller, Comptrollership Branch
Headquarters file:
 
Legislative references:
Other references:
Superseded memorandum D:
 
Date modified: