Wednesday, June 30, 2010

Proposed CBSA Initiatives Relating to Account Security, Electronic Funds Transfer and Requests for Adjustments (B2s)

(IE Canada)

On June 30, 2010 the Canada Border Services Agency (CBSA) called a meeting via conference call of the Broker Licensing and Account Security Working Group to announce two CBSA initiatives arising from the strategic review of the agency that took place last year: (i) the proposed elimination of account security, which is linked to the provision of an electronic funds transfer option; and (ii) the partial automation of requests for adjustments (B2s).

Strategic reviews involve the ongoing assessment of all direct program spending by government departments and agencies and represent a key pillar of a new expenditure management system introduced by the Government of Canada to better manage government spending. Each government department and agency must conduct a strategic review every four years to determine whether their direct program spending and operating costs are effective and efficient; meet the priorities of Canadians; and are aligned with federal responsibilities. Strategic reviews do not necessarily result in cuts to spending but can lead to the reallocation of spending from lower to higher priority areas. More information on strategic reviews is available here.

Elimination of Account Security:
Currently account security, usually in the form of a surety bond, must be posted either by the customs broker or directly by the importer in order for the importer to take advantage of the release prior to payment privilege. The cost to CBSA of administering account security, however, exceeds the funds recouped by CBSA through account security when there is a failure to pay duties and taxes. Release prior to payment privilege, which expedites the release of goods by deferring the payment of duties and taxes, will still be available, but it will no longer be a requirement to post a bond or other form of account security. If there is a failure to pay, CBSA will look to the importer rather than the broker for payment. The importer could also lose its release prior to payment privilege meaning that duties and taxes would have to be paid in order to obtain release of goods. CBSA is aiming to make this change by 2012/13.

Electronic Funds Transfer:
Linked to the elimination of account security is the provision by CBSA of an electronic funds transfer option for paying duties and taxes. CBSA is currently in the process of upgrading its accounts receivable systems. Part of the scope of this project is electronic bank remittances of duties and taxes. This project will not be completed for another two years. I.E.Canada and other trade associations have been advocating for some time for electronic funds transfer and have insisted that it has to be a condition of the elimination of account security. Assuming this initiative goes through, it would be a significant win for the importing community.

Partial Automation of B2s:
Requests for adjustments or B2s currently involve a manual process. CBSA had hoped to fully automate the B2 process but given the age of the Customs Commercial System, which was introduced in the 1980’s, this presents some significant challenges. As an interim step CBSA is proposing to automate the filing of revenue neutral adjustments using the Canada Customs Coding Form B3, type-20. CBSA is proposing to implement this change by 2011.