There are many industries in Canada that rely on the shipment of merchandise to or from other countries. The success of such companies is highly reliant on the import process. Importer security bonds are a great choice when it comes to facilitating this process. Just as the name suggests, they provide security, ensuring that everything runs smoothly with the Canada Revenue Agency when it comes to payment of taxes. Here is an overview of custom bonds, how they work in Canada, the types involved, and how you can obtain one.
Importer Security Bonds are used to ensure that all duties and taxes are paid for goods coming into Canada. A custom bond works similar to an insurance policy. It will cover your importation taxes falling within the value of the bond. This acts as a guarantee to CBSA that you are capable of fulfilling any financial responsibility associated with taxes, duties, or penalties, when asked to.
A customs bond is usually a binding contract among three parties regardless of the type of bond involved. These are:
As a Canada importer, you can post security with the CBSA in order to be eligible for the Release Prior to Payment Privilege (RRP). This will grant you the advantage of having your goods released before payment is done. With the financial security of a bond, an importer is entitled by the RRP to:
Initially, importers could comfortably use custom bonds from their custom brokers to obtain importer security. Since the creation of the CBSA’s Assessment and Revenue Management (CARM), importers are now being advised to get their own custom security bonds as the former will no longer hold in the future.
Whether or not to get a customs bond in Canada will depend on the type of goods, their total value, and importing reasons. However, securing one is not always necessary when importing goods into Canada. Nonetheless, it is something you should consider, especially if you are a frequent importer. You will be able to reap the following benefits:
It ensures a quick release which will facilitate a smooth movement of your goods.
You can secure a custom bond with any surety company in Canada. The process is more like that of obtaining insurance. However, there are a lot of complexities involved in this case. To make it easier, you can ask your customs broker to assist you through the process.
Before getting the bond, you will need to know the amount that it will cost to secure it. This usually depends on the value and type of merchandise you import and the frequency in which you do so.
Your customs broker will therefore need to go through your current and previous imports and the duties involved. The insurance company may request to see a company’s most recent financials before approving the bond. Once they approve the issuance of the bond, it will need to be sent to CBSA in Ottawa for them to update their system with the bond information against your importer/business number.
From giving you credibility at the border to offering payment protection and a quick release of your goods, there are several benefits that you can get from importer security bonds. Whether you are doing it by choice or as a requirement by the Canadian government, you can contact us to get a customs bond suitable for you and your business.