CBSA Credit Offsets: What Importers Need to Know
The Canada Border Services Agency (CBSA) recently changed its business process as part of phase one of the Assessment and Revenue Management Project (CARM), under Accounts Receivable Ledger (ARL). Prior to August 2, 2016 and the introduction of credit offsets, importers received refunds in the form of a check. Refunds will now be processed as a credit that offsets any debt owed to the government.
How are credit offsets applied?
If an importer has a credit balance less than $1,000, CBSA now rolls it to the following month to be applied against amounts owed to the Receiver General. If the importer has no activity within two months, CBSA disburses the residual credit to the importer. Credit balance more than $1,000 will roll to the following month and be applied against any outstanding debt even if not due. This new process could present a potential challenge for importers that have come to rely on CBSA refund checks as part of their monthly cash flow. They will now need to review their present process and alter their projections to accommodate this change.
Below are the two most important things for importers to remember about credit offsets.
Gain better visibility and oversight. Very few importers currently post their own import-secure bond and therefore do not have access to debt posted against their business number. In order to have visibility, importers should seriously consider the benefits of posting their own bond. CFOs will have direct oversight into what debt has been posted against their business number and what is owed to the Receiver General, payable on the last business day of the month.
Make the most of credit offsets. Working with a customs broker can make the accounting process more fluid. Brokers can assist importers in understanding the benefits of moving to an import-secured program and certifying for ARL, as well as the challenges associated with having zero visibility into their account. Credit offsets reduce the liability to the Receiver General for an importer, thereby providing a mechanism where an importer’s balance due is reflective of the net amount.
Companies should review their options and determine the best solution to meet their business needs. Understanding the challenges associated with ARL and moving to an offset environment is critical to ensuring companies are well positioned for CBSA’s new client-based accounting solution.
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