Canadian Customs Bond (D120)

Introduction to the Canadian Customs Bond (D120)

A Canadian Customs Bond (D120) is a document that provides security. It is provided by an importer, freight forwarder, or other relevant party to ensure that the Canada Border Services Agency (CBSA)’s customs duties, taxes, and regulatory requirements are met. An insurance company or financial institution usually provides the bond and then submitted to the CBSA.

Different types of customs bonds in Canada

Canadian customs bonds can be divided into the following main types according to their purpose and scope of application:

Import and export customs bond (D120 – Customs Bond)

• Used to guarantee that the importer or broker will pay customs duties, excise taxes, and other government fees.
• Applicable to companies that need to defer payment of customs duties.

Temporary importation bond (TIB)

• Used for temporarily importing goods, guaranteeing that the goods will be exported within a specified time or meet relevant requirements; otherwise, customs duties will be payable.
• Applicable to exhibitions, repairs, rental equipment, etc.

Customs Broker Bond

• Provided by a licensed customs broker to ensure compliance with regulations and fulfillment of payment obligations.

Carrier Bond/Transit Bond

• For goods in transit through Canada, ensure that the carrier complies with customs requirements and delivers the goods on time.

Warehouse Bond

• For bonded warehouses under customs supervision, ensure the warehouse operator complies with customs regulations and pays any potential duties or taxes.

The content of the customs bond

Importer information: name, address, contact details, etc.

Guaranteed amount: the specific amount guaranteed, usually based on the value of the goods, customs duties, and taxes.

Description of goods: a detailed description of the goods, including quantity, value, etc.

Guarantee period: the validity period of the guarantee.

Guarantee conditions: the specific conditions to be fulfilled by the importer, such as re-export, payment of taxes, etc.

Guarantor information: information about the bank or insurance company providing the guarantee.

Legal terms: the legal terms and conditions of the guarantee.

Signature and stamp: The importer and guarantor’s signature and stamp.

Related FAQ

What is a customs bond in Canada?

Customs Bonds allow imported goods to be released immediately before the final decision is made on the tariffs, duties, and taxes that must be paid. Federal and provincial governments require excise bonds. They guarantee that excise taxes will be paid and that the federal and provincial governments’ tax acts and regulations will be followed.

Who is required to have a customs bond?

Anyone importing merchandise to conduct commerce into this country valued at or above $2,500 must purchase a bond by law. In addition to commercial usage, buying a bond would also be necessary if the merchandise falls into the categories of firearms or food.

Who can provide a guarantee?

Companies or governments can issue bonds and generally pay a fixed interest rate. The market value of a bond will vary according to its attractiveness to potential buyers. Higher-quality bonds (more likely to be paid on time) usually offer lower interest rates.