CBSA program bonds
CBSA requires security for bonded operations. Its memorandum D1-7-1 sets the rules for posting it, and each program memo sets the level of security. The common ones:
| Program | CBSA memo | Who needs it |
|---|---|---|
| Customs sufferance warehouses | D4-1-4 | Operators holding goods before customs release |
| Customs bonded warehouses | D7-4-4 | Operators storing goods with duties deferred |
| Licensing of customs brokers | D1-8-1 | Licensed customs brokers |
| Temporary importation | D8-1-1, D8-1-4 | Importers bringing goods in for a limited time |
| International events and convention services | D8-1-2 | Event and exhibition organizers |
| Courier low value shipments | D17-4-0 | Couriers in the LVS program |
| Release prior to payment | D17-5-2 | Every commercial importer using RPP. See CARM RPP bonds. |
Security is posted electronically. The standard form is a written security agreement, shown as a "non-cash bond" in the CARM Client Portal. The surety submits it through CBSA's bond API or approves it after the client enters it. Paper agreements are accepted only in exceptional circumstances.
Excise Act licence bonds
CRA requires financial security from Excise Act licensees. A surety bond is accepted if the issuer is authorized by a Canadian regulator to write surety. The amount has to cover the duty the licensee is responsible for, within these limits:
| Licensee | Minimum | Maximum | What the amount covers |
|---|---|---|---|
| Spirits licensee | $5,000 | $2 million | Duty on bulk spirits the licensee is responsible for at any time |
| Tobacco licensee | $5,000 | $5 million | Duty on the reporting period return, or half the duty on unaffixed stamps if greater |
| Prescribed tobacco importer | $5,000 | $5 million | Half the duty on unaffixed excise stamps |
| Licensed brewer | $5,000 | $1 million | Gross duty payable for any calendar month |
| Wort, yeast or malt manufacturer | $5,000 flat | $5,000 flat | Fixed amount |
New applicants set the amount from business plan projections at current duty rates. CRA publishes sample bond forms for each licence type.
Non-resident GST/HST security
A non-resident without a permanent establishment in Canada that registers for GST/HST generally has to post security with CRA. The amount is 50% of estimated net tax for the first 12 months after registration, then 50% of net tax for the previous 12 months. The minimum is $5,000 and the maximum is $1 million.
Smaller registrants are exempt: taxable supplies in Canada of $100,000 a year or less, with annual net tax between $3,000 remittable and $3,000 refundable. CRA accepts a bond in its approved form (sample GST114) from an approved surety, reviews the security each year and can ask for an increase.
Provincial fuel and tobacco tax bonds
Provinces collect their own fuel and tobacco taxes and can require security from the businesses that collect or remit them. In Ontario, the Minister of Finance can require security, usually a letter of credit or a surety bond, from designated collectors and most other registrants under the Fuel Tax, Gasoline Tax and Tobacco Tax Acts. Ontario publishes its own surety bond forms for both (forms 013-9993 and 013-9994). A designated fuel collector posts the greater of $1 million or three months' average tax.
Other provinces run similar programs with their own forms. Send the ministry's letter or form and we will read the requirement.
Files we see most often
- The new warehouse operator. A logistics company adding a sufferance or bonded warehouse to its licence.
- The craft producer. A distillery or brewery applying for its first Excise Act licence, with the amount set from projections.
- The foreign seller. A non-resident registering for GST/HST to sell into Canada.
- The fuel distributor. A wholesaler designated as a provincial fuel tax collector.
- The customs broker. A licensed broker renewing or increasing its own program security.
