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Overseas Employment Tax Credit: Are Your Assignees Eligible?

CompassGUIDES - Nov 2005

By Diana Matwichuk, Assignment Planning Specialist

The end of another year is fast approaching, and the issue of expatriate employee tax reporting looms ahead. Many companies are unaware of the substantial tax savings to both the company and the assignee due to the availability of tax credits.

In the face of increased CRA scrutiny, it is important that companies plan now to follow the proper procedures. Assignment managers should take several important steps now to ensure that their companies comply with Canadian and host country tax legislation and regulations.

Each year multi-national employers must obtain approval from the CRA to reduce the tax withheld from employees, and establish whether the assignees are eligible for available Canadian tax credits. It is important that these approvals be in hand before making January 2006 payrolls.

Applications for reductions of 2006 tax withholdings must be carefully crafted, and prepared in a format that can be easily understood by the CRA. We prepare such applications and have had considerable success in obtaining the necessary approvals. Assignment costs can be minimized if the company shares the benefits of these credits with assigned employees.

Should your company require assistance with the preparation of these and other assignment tax-related applications, please contact our office at (403) 531-2200 or inquire via our International Assignment Planning Helpdesk .