The Management of Temporary International Assignments
HR CONSIDERATIONS FOR INCOME TAX AND IMMIGRATION COMPLIANCE
The mobility of the typical Canadian workforce is on the rise. Whether it be a result of corporate expansion, acquisitions, or movement into other favourable economies, conducting business in the global arena is inevitable for many companies. With this growth, we are now experiencing an increase in the temporary utilization of specialized skills of existing employees across borders and around the globe.
Unfortunate, however, with this global opportunity for the corporation comes a serious increase in the volume of employees who circumvent corporate expatriate or assignment programs to work in foreign countries without the involvement of qualified consultation. The consequences associated with the ineffective tracking, documentation, and management of a global workforce is potentially serious to the individual employee and the corporation.
Ideally, management would look to the Human Resources professional for support on these assignment policies. Historically, expense management and compensation were the primary focus of programs derived from a need to assign employees to other domestic locations on a short-term basis. Now, on the global level, new considerations for immigration and income tax compliance arise along with specialized processes, which are forcing such terminology as work permits, Visas, cross-cultural training, shadow payrolls, tax equalization, cost of living adjustments, and gross-up into the vocabulary of the average HR professional.
Larger multi-nationals frequently have the support of an International HR specialist or have outsourced the services to an Assignment and Relocation Management firm to develop and oversee these programs on their behalf. For the average firm, where ownership of processes lies within HR, managing the requirement of a workforce to cross borders, whether for meetings or for employment purposes, has become more complicated due to recent world events, tightening borders and new immigration procedures. In addition, penalties for non-compliance are potentially significant and detrimental to the reputation and ability for the firm to conduct business in that country. Therefore, a corporate policy taking a proactive and strict approach to assignment management, in particular immigration and income tax compliance is highly recommended.
More and more often we are seeing the inability of an employee to gain entrance to another country due to insufficient immigration and support documentation. In addition to the standard visa requirements, a letter from HR or management identifying the employee and specifics of the travel is suggested for the employee to present to the immigration authority. The process obviously becomes more complicated in instances where the employee is entering another country or into Canada to work. It should be understood that whether the work period is one day or extends over years, the work permit/visa application process and requirements are essentially the same.
The definition of “work” has been clouded over with a false assumption that if “tools are not being touched” or carried across borders, then “work” is not being performed. This is absolutely incorrect. If an employee is asked to perform their normal job duties on behalf of the company in another country, this can most certainly be construed as “working”. In this instance a work visa/permit is required and factors such as citizenship, job specifics, education, determination of specialized skills or executive capacity, and an understanding of the application process itself is a requisite in order to determine the category under which the application will be filed.
Along with misunderstandings concerning immigration processes, it is commonly assumed that if the assignment is on a short-term basis there are not income tax complications to be concerned with. The frequency of travel outside of the home country, in particular when it is to the same destination, may present issues surrounding residency, and therefore, country of income tax obligations. A good indicator is the “183-day rule” whereby if more than half the tax year is spent in the foreign host country, residency for income tax purposes needs to be determined. For example, a Canadian working abroad for more than 183 days could be deemed a non-resident of Canada for income tax purposes dependent upon residential ties and conditions, or the existence of a tax treaty or double taxation treaty with that country.
In addition, accurate accounting detail for expense allowances, accommodations, compensation and any cost of living adjustments (COLA) are recommended since tax treatment of all costs associated with the assignment may vary from country to country and according to the local interpretation of the provisions contained within the tax treaty.
To the HR professional, it is suggested that the company’s policy pertaining to foreign assignments, in particular immigration and income tax treatment be formally documented and concise. This includes an overview of the requirements for foreign workers to enter Canada and requirements for Canadian citizens or other foreign nationals to travel and work abroad on behalf of the company. It should address the controls and processes for the financial administration of an international assignment, and finally, educate and communicate the process to management along with what the ramifications of non-compliance to the individual and the company could potentially be.
Due to the complexities of income tax, immigration compliance, expense management and policy development, retaining the services of an outsourced Assignment Management or Relocation firm, or other qualified representation to implement best practices is highly recommended.
Terri Lynn Oliver is Client Service Director with Weichert Relocation Resources Inc. (WRRI)
More Space? More Time? More Life?
WHAT BETTER TIME TO TURN OVER A NEW LEAF?
Do you work stress-free? Are you well-organized? Do you think you could improve in any of these areas?
Your workplace - a calm and organized place?
You should be greeted with serenity, calm and organization at your place of work. You should be able to put your hands on a necessary item within 10 seconds of entering your office. Your day needs to be well planned and interruptions promptly taken care of. Or perhaps you want to keep on walking right out that door rather than being confronted with chaos, clutter and confusion. If you can find the door, that is!
Why not set a goal for better organization?
Many of us set goals, so why not set a goal to be better organized! Begin with your space, then you can plan your time and a balanced lifestyle is not far behind.
We often blame disorganization on everyone and everything else. Do you ever hear yourself making comments like this?
“There are so many papers coming in to my office that I don’t know what to do with them.”
“Everyone is always asking me to do everything and help everywhere. They are taking up all my time.”
Sound all too familiar?
We often blame others for the lack of control in our lives when we really should be pointing the finger at ourselves. YOU and only YOU are in control of your time, your space and your life. Make a conscious decision now to take back control and responsibility and you have taken the first step to becoming organized.
What about your other life goals?
Have you really determined what you want in life? Do you have goals, dreams, aspirations? If not, there is a void waiting to be filled by other’s expectations of you. Goals help you gain perspective so that you can focus on the things that are important to YOU. Goals will prevent you from allowing others to control your time. Without goals unnecessary clutter will easily make its way into your workspace. Take the time to daydream and reflect on what you really want in life.
What is your organizational personality?
Increase your awareness of why you are disorganized and what your organizational personality is. So you grew up in a really messy house and hated it so much you vowed to remain a neat freak the rest of your life. You are a
Right Angler. You wrap everything in saran wrap and spend so much time cleaning and straightening up that you have bypassed all the important elements of life.
You may be a Nothing Out. Your space looks pristine, neat and tidy, but don’t open those drawers! A Pack Rat may be inside.
Or maybe your house was the kind where the sofa was wrapped in plastic and you had to remove every vestige of outside sediment before you even entered the vestibule. You vowed never to live in such an atmosphere so now you are an Everything Out or a Total Slob. The world is a giant surface waiting to be covered and I’m here!
Take charge; change your behavior and form new habits. It will take you about 30 days to notice a change. It won’t be easy but it can be fun and rewarding and it can change your life!
Be the filmmaker of your life
Pretend you are making a documentary of your life. Starting on a Monday visualize and document what your day is like. From getting up (late?) in the morning, to not having enough towels or soap in the bathroom, to the empty fridge, the gasless car and the keys you can’t find. Follow yourself to work and the office that bears the sign “Enter at your own risk … Helmet required”. Go through the day identifying lost items, interruptions, confusing priorities. Picture yourself driving home, making dinner without changing clothes first, spending little quality time with the family or yourself. Identify areas where improvement is necessary.
Some tips on “decluttering” your space
Make an appointment with yourself on your calendar (having one of these is the key to organizing). Time it to coincide with your high energy level. Start with 15 minutes. Use a timer. Make the process fun. Enlist the help of friends, co-workers, and associates. Put on music. Set up your supplies. Have boxes, files, labels and markers ready. Focus on the good feelings associated with completing the task and reward yourself after each small victory.
Start with an area that you use most often. Remove a small portion of the clutter to another room. Sort this way:
If you haven’t worn it, watered it, sat on it, lent it or done anything with it for a year…get rid of it (unless you are legally required to keep it)
Organize common things together
KISS (Keep it simple stupid)
Emphasize quality not quantity. Better one stapler that works than three that don’t
Take advantage of available organizational aids. Be creative and original. Organize in baskets, bottle, hats, cups, tires.
Alphabetize and label everything!
Don’t think that every space needs to be filled. Leave space and room for new objects
For every item that comes in, one must go out.
Dispose of what has outlived its usefulness and reserve space for new items that bring you pleasure.
Adopt a paperwork system that flows and works for you.
It wasn’t so bad…was it?
More time to do what you really want
Once your space is decluttered, you will experience a feeling of calm, serenity and control. This will enable you to focus on managing your Time.
Organizing your Space, Time and Life may seem like hard work. True, it is hard to change old, deeply ingrained habits or to honestly assess what you are doing but the rewards are enormous. You will have more time to achieve your goals, spend more time with loved ones and enjoy your life.
Ann Max, President of Organized to the Max is an Organizational
Effectiveness and Productivity expert. Ann can be reached at 613.594.4533