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Assignment Tax Calendar 2006/2007: Key Deadlines, Action Steps and Helpful Hints for International Assignment Managers and Assigned Employees with Canadian Companies

CompassGUIDES - August 2006

1.0 INTRODUCTION

Our CompassGUIDES™ International Assignment Tax Calendar – 2006 / 2007 assists both the International Assignment Program Manager and the assigned employees of Canadian Companies to meet key 2006 / 2007 Canadian tax reporting deadlines. Due to the increasing number of Canadian companies sending employees to the United States, we have also included US deadlines as well. In recent years, both Canada Revenue Agency (“CRA”), the International Revenue Service (“IRS”) in the United States, and tax authorities in many host countries have sharply increased the number and severity of penalties for failure to meet reporting deadlines. At CompassGUIDES™, we work with Canadian companies to minimize compliance costs and implement assignment tax programs. Should you have any questions, please call our office or visit our online International Assignment Planning Helpdesk.

2.0 INCOME TAX CALENDAR FOR INTERNATIONAL ASSIGNMENT MANAGERS WITH CANADIAN COMPANIES - 2006/2007

DATE  ACTION STEP  HELPFUL HINTS 
Sept 29, 2006  Review levels of current year tax withholdings to determine if withholdings are sufficient.  Some employees may become subject to Alternative Minimum Tax (“AMT”) on income earned in the latter part of the year and withholdings may need to be increased for the remainder of 2006. 
Sept 29, 2006

Where employees are working in the United States, ensure that the appropriate tax withholding are sent to the IRS (and States, if applicable).

 

Oct. 31, 2006

Review remuneration earned by expatriate employees to determine if taxable benefits should be included in income for the year.

The CRA lately seems to be interested in taxable benefits. Companies should re-check if all relevant benefits will be included for 2006.

Nov. 15, 2006

Ensure all employees working in the United States have obtained Social Security Numbers (“SSN’s”).

It is becoming a more difficult process to obtain US Social Security Numbers.

Nov. 30, 2006

Seek approvals from the CRA for reductions of levels of tax withholdings for 2007.

Approval should be obtained before paying out salaries for January, 2007. Our CompassGUIDES publications can help with this process.

 

Nov. 30, 2006

Send reminders to expatriate employees to ensure they are maintaining a record of days worked outside Canada, as this will be needed for completion of Form T626 Overseas Employment Tax Credit.

It is often difficult to have expatriate employees keep such a record. Record-keeping is simplified with CompassTax’s Client Forms.

Nov. 30, 2006

Obtain Form TD1 2005 Personal Tax Credits Return from expatriate employees, where applicable.

Companies with expatriate employees should request this form annually as a matter of course, as the personal circumstances of expatriate employees seem to change more often than that of domestic employees.

Nov. 30, 2006

Obtain Form TD4 Declaration of Exemption – Employment at a Special Work Site from employees, where applicable.

 

Companies should obtain this form each year, again because of potential changes in circumstances.

Dec. 15, 2006

Adjust payroll system to reflect lower levels of new year withholdings for those expatriates who will be claiming the OETC.

Once CRA approval to lower levels of withholdings has been obtained, the level of withholdings should be checked to comply with the method set out in the CRA approval letter.

Dec. 15, 2006

Consider Implementing a formal Assignment Tax Program (ATP ) for 2007

ATP’s enable your assigned employees to be more productive, motivated and retained if they know their tax filings are taken care of by CompassTAX.

Jan. 1, 2007

Review current year (2007) eligibility for the OETC, paying attention to all the relevant conditions.

Eligibility conditions are many in number and subtle. For assistance, please contact our office.

Jan. 15, 2007

Last day for employees to file or revoke designations to defer benefits or stock options received in 2006.

 

Jan. 30, 2007

Last day for employees to pay interest on loans from employer to reduce interest benefit.  

Jan. 31, 2007

Determine which employees are eligible to receive Form T626 OETC for 2006 and to claim the tax credit in their 2006 income tax return.

This determination should not be taken lightly. At CompassTax, we assist companies with reviews of employee eligibility.

Jan. 31, 2007

Obtain evidence of foreign tax paid by / on behalf of expatriate employees. Review 2006 income analysis and ensure proper information will appear on T4 supplementaries.

Due to non-calendar tax year-ends in some foreign countries and more leisurely annual tax reporting deadlines, this information can often be difficult to obtain on a timely basis.

Feb. 28, 2007

Provide 2006 Expatriate Employee Remuneration information.

For expatriate employees working outside Canada, this information may consist of:

  • T4 Supplementary
  • Form T626 Overseas Employment Tax Credit
  • Foreign tax returns/receipts
  • T2200 Declaration of Conditions & Employment
  • CompassTAX Rotational Employee Report - Days Worked Outside Home Country
  • Details of Assignment Tax Program (if applicable)

Feb. 28, 2007

File Form T4A-NR for foreign-based consultants working temporarily in Canada.

 

Apr 1, 2007

Filing deadline for NR4 summary and suppplementaries for payments to non-residents

 

3.0 INCOME TAX REPORTING CALENDAR FOR INTERNATIONALLY-ASIGNED EMPLOYEES WITH CANADIAN COMPANIES 2006/2007

DATE ACTION STEP HELPFUL HINTS
Nov. 30, 2006 If the level of 2007 withholdings needs to be reduced for the impact of foreign tax paid, ensure your employer has sought approval from the CRA.

Reduced withholding levels means more net income in your pocket and you have the use of those funds in 2007.

Dec. 1, 2006

If you are a non-resident with Canadian rental income, ensure your property manager has you sign Form NR6 and submits this form to the CRA.

We find that many property managers do not understand their tax reporting responsibilities or are unwilling to handle the reporting.

Dec. 15, 2006

Final Canadian quarterly installment of tax due.

 

Dec. 22, 2006

Final trading day on which to settle a trade or a Canadian stock exchange for 2006.

Three trading days required to settle a trade.

Dec. 30, 2006

Final payment date for a 2006 tax deduction or credit for a variety of payments such as alimony, donations, tuition fees etc.

Taxpayers normally report on a ‘cash’ basis.

Jan. 1, 2007

Review what tax information you will need to include with your Canadian tax return.

Ensure tax receipts will be sent to the correct address, and advise employers, banks, etc.

Jan. 1, 2007

If you are a non-resident with Canadian rental income, ensure your property manager has received approval from the CRA to reduce the level of your tax withheld from rental income.

Form NR6 must have been filed by the property manager well in advance in order to receive the necessary approval by this date. See Action Step for Dec 1, 2006.

Jan. 15, 2007

Stock option benefits – last day for employees to file or revoke designations to defer benefits on options exercised in 2006.

 

Jan. 15, 2007

Provide a detailed record to your Canadian employer of all days worked outside Canada.

We provide an organizer to assignees to help them track days worked outside of Canada.

Jan. 15, 2007

Make the fourth payment of your 2006 US estimated tax if applicable.

At CompassTAX we can help you with your US filings.

Jan. 30, 2007

Pay interest on loans from employer to reduce interest benefit

 

Jan. 31, 2007

If you worked in the US in 2006 your employer should provide you with Form W-2.

 

Feb. 15, 2007

Last day to reimburse employer for costs to reduce operating cost benefit.

 

Feb. 15, 2007

Last day to reimburse employer for costs to reduce operating cost benefit of employer – provided automobile.

 

Feb. 15, 2007

If you were exempt from US withholding for 2006, file a new form W-4 by today to continue your exemption for 2007.

Contact us at CompassTAX for assistance in determining exemption.

Feb. 28, 2007

Regular 20065 contribution deadline and Home Buyer’s Plan repayments due this day.

 

Mar. 15, 2007

First 2007 quarterly installment of Canadian income tax due.

 

Apr 2, 2007

If you are a non-resident with Canadian rental income, your property manager should file Form NR4 by this date and give you copies.

Property managers are often not familiar with NR4 filing procedures or the need to do so. Contact our office if you require assistance.

Apr. 16, 2007

US individual tax returns due by today (an extension may be available). Final 2006 and 2007 estimated tax payments for individuals due today.

 

Apr. 16, 2007

Last day to get automotive 4-month extension on your taxes. Tax owing is however due. Last day to get additional two month extension.

 

Apr 30, 2007

Canadian personal tax returns due today, except for returns where individual or spouse had business income (June 15 due date).

International assignees with significant ties to Canada (and therefore considered residents of Canada) are taxed on their foreign income.

Jun. 15, 2007

Canadian tax returns due today where individual or spouse had business income.

 

Jun. 15, 2007

Second 2007 quarterly installment of Canadian income tax due.

 

Jun. 30, 2007

Tax return for non-resident reporting of rental income due today.

 

Sept 15, 2007

Third 2007 quarterly installment of Canadian income tax due.

 

4.0 CONTACT US

At CompassTAX™, we develop cost-effective assignment tax programs for Canadian companies sending employees around the world and bringing international consultant/employee expertise to their Canadian projects. These Assignment Tax Programs provide detailed advanced tax planning, including policies, procedures and employment contracts, which serve to minimize costs and mitigate any risk of litigation. CompassTAX™ also offers clients with international assignees pre-departure and re-entry tax planning with a view to minimizing tax and providing experienced tax representation with the Canada Revenue Agency (CRA). CompassTAX™ specializes in all areas of cross-border taxation for consultants/employees coming to Canada temporarily, Canadians moving back to Canada, and individuals living outside Canada with Canadian business ties.

Our International Assignment Planning HelpDesk is your quick link to answers to international assignment tax planning questions.

 


Tel: (403) 531-2200 
Fax: (403) 263-1826


Web: www.compasstax.ca
Suite 600, 1333 8th Street SW
Calgary, Alberta Canada  T2R 1M6


Tel: (403) 531-2200 
Fax: (403) 263-1826


Web: www.compassguides.ca
Suite 600, 1333 8th Street SW
Calgary, Alberta Canada  T2R 1M6