With upcoming changes in the CARM initiative, businesses will need to post their own financial security. Gallagher Select provides tailored RPP bonds, offering a cost-effective and flexible solution to help businesses stay compliant and efficient.
If you import goods into Canada for your small business, it's important to know about the Release Prior to Payment (RPP) Program. This program, managed by the Canada Border Services Agency (CBSA), lets you have your goods released before paying duties and taxes. It's part of the CBSA Assessment and Revenue Management (CARM) project.
Here's a simple guide to help you understand the RPP program and its benefits.
What is the RPP program?
The RPP program helps make importing easier by allowing you to delay paying duties and taxes. So you can get your goods from the CBSA without paying upfront. Instead, by posting a surety bond, you can pay later, which can help improve your cash flow and make your operations more efficient.
Key features of the RPP program
- Financial security requirement: To join the RPP program, you need to provide financial security, like a surety bond, to the CBSA. This security guarantees that you'll pay the duties and taxes. The amount of security required is usually based on your highest monthly accounts receivable, with a minimum of $5,000.
- Deferral of duties and taxes: One of the main benefits is that you can delay paying duties and taxes. This deferral gives you more financial flexibility and helps you manage your cash flow.
- Simplified import process: By joining the RPP program, you can speed up the import process. Your goods can be released faster, reducing delays and improving efficiency.
Changes with the CARM Initiative
The CARM project will bring changes to the RPP program. Starting in October 2024, you can't use your customs broker's RPP security to clear shipments before paying duties and taxes. Instead, you'll need to post your own financial security such as cash, certified funds or a surety bond. This change aims to modernize and streamline the import process.
Gallagher Select: Your trusted supplier of RPP bonds
Navigating the RPP program can be challenging, but having a reliable partner can help. Gallagher Select is a trusted supplier of RPP bonds, providing the financial security you need to comply with CBSA requirements. With extensive experience in insurance and risk management, we offer tailored solutions to meet your business needs.
Why use a bond?
Posting a surety bond has several advantages over other forms of security:
- Lower financial burden: Surety bonds usually cost less upfront than cash deposits. For example, the bond amount 50% of the highest amount payable to CBSA in a 12-month period, while cash deposits require 100%.
- Improved cash flow: Using a surety bond means you can keep more of your capital for other business operations, instead of tying it up in a cash deposit.
- Flexibility: Surety bonds are more flexible and can be adjusted based on your needs and financial situation. This flexibility is helpful for businesses with changing import volumes.
- Ease of management: Managing a surety bond is simpler than maintaining a large cash deposit. The bond provider handles the administrative tasks, allowing you to focus on your business.
- Access to expertise: Working with Gallagher Select as your bond provider gives you access to expertise and support in navigating the RPP program and ensuring compliance with CBSA requirements.
The RPP program offers many benefits for importers, including better cash flow, fewer delays and a simpler import process. As the CARM initiative brings changes, it's important to stay informed and prepared. We're here to help you navigate these changes and ensure your import activities run smoothly.
For more information on the RPP program and how it can benefit your business, feel free to contact us. We're here to support you every step of the way.
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