Sending Assignees to Brutopia – CompassGUIDES HelpDesk Roadmap for one Assignment Manager
By Diana Matwichuk, CompassGUIDES HelpDesk Coordinator.
The following question recently arrived at our web-based CompassGUIDES HelpDesk from a new assignment manager at a Canadian-based company. She had been involved in various aspects of domestic assignment planning, but had no international experience. The project had a green light to start immediately, and quite naturally, there was a deadline of yesterday.
“My company just recently landed a construction contract and I have to send a group of engineers to Brutopia immediately. I am familiar with certain parts of the planning process, but I am sure that there are tax considerations which could possibly affect everything else. Where should I begin?”
Our Assignment Manager’s HelpDesk Response
“You need a roadmap to chart your direction, keep assignment costs down and ensure a smooth transition for the assignees.”
Benefit of a Planned Approach
This assignment manager made a prudent move in requesting help. The temptation in an urgent planning situation is to jump into the quagmire and try to swim.
Stepping back for a minute, however, to adopt a planned approach can make the difference between an over-budget, non-productive assignment, and one which provides a smooth and cost-effective transition for assignees .
7 Key Cornerstones of Assignment Planning
There are seven key cornerstones which provide a solid framework for assignment planning:
1. Assignment Letter
Whether your assignees are employees or consultants, long term or short term, rotational, permanent, or business-tripper, they should have an assignment letter outlining the terms of employment. With increasing employee-initiated litigation, assignment letters thwart and provide defenses against potential employment-related lawsuits.
2. Relocation Policies and Procedures
The Assignment Letter should include relocation policies and procedures, leaving no details to question. Many companies have unclear policies or none at all. This is often a product of the First Flight Syndrome, in which assignments are arranged in an ad hoc, reactive manner, sending assignees on the first flight to the host country with no accompanying documentation.
3. Assignment Tax Policy
The Assignment Letter should also include an Assignment Tax Policy, which outlines all aspects of assignee taxation for both the home and host country. Due to the increasing frequency of assignees having to pay host country tax, integration with Canadian tax is becoming more complex. As a result, establishing and documenting tax policy has become more of a necessity.
4. Assignment Tax Review
Corporate structure, contracts, foreign country tax requirements and assignee residency should comprise a review to uncover hidden traps. A tax program which addresses these aspects is an attractive benefit to assignees, an important consideration in the current global talent war.
5. Host Country Taxes
Establish the extent and requirements of host country taxation, and if needed, appoint a host country tax agent to provide these services.
6. Informed Payroll Administrator
The payroll administrator should be knowledgeable about withholding, remitting, and reporting responsibilities. Confusion and monetary penalties can be avoided through a complete understanding of these requirements.
7. Informed Assignees
Communication of assignment details, including policies, procedures, and pre-departure tax counseling can ease the transition for assignees, and reduce the workload of assignment managers. Informed assignees are more productive, motivated and will be retained when sent on international assignments.
CompassGUIDES Roadmap for this Assignment Manager
We immediately directed this assignment manager to our online Assignment Manager’s Planning Checklists. Comprised of over 250 questions, these checklists provide prompts to launch assignment planning, or confirm that key steps have not been missed.
At CompassGUIDES, we also provide templates to companies developing assignment policies and procedures, and wishing to prepare assignment letters for their employees. These templates can reduce assignment planning time and costs in that the documentation does not have to be re-invented.
Since CompassGUIDES deals with a number of service providers in the assignment planning process, we are able to provide references for outsourcing. By coordinating all of this expertise, a new assignment manager can learn about unfamiliar aspects of assignment planning, and apply that knowledge to future assignments.
Our CompassGUIDES library of international tax material acts as a valuable resource in answering many of the questions which pass through our helpdesks.
Our CompassGUIDES HelpDesk is your quick link for answers to international assignment tax questions. All queries posted to the HelpDesk are answered within a day by seasoned tax professionals. To access our HelpDesk, visit the CompassGUIDES website at http://www.compassguides.ca/content/helpdesk/index.php.
Alternatively, you can contact us at 1-866-531-2281 or (403) 531-2200.