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"Don't Worry, We Will Do the Paperwork Later": The Unpublished Relocation Policy

CompassTAX - JUNE 2005

By Diana Matwichuk, CompassGUIDES Tax Specialist

The company’s assignment relocation policy? There it is, on the corner of your desk … a stack of manila folders, coil-bound glossies and scraps of paper with phone numbers. The answer to any assignee question is sitting right there – or is it?

Many companies misguidedly procrastinate on documenting relocation policy, but failure to make the publication of this document a priority can translate to wasted company time and frustrated assignees who can’t find answers to their assignment questions.

No Detail Available

The biggest problem with assignment documentation is that there very often is none. And if there happens to be any at all, it is often vague and lacking in detail. This is not much help to the expatriate in Bahrain who wants to understand the company’s policy on Overseas Employment Tax Credit (OETC) applications.

Assignment documentation should definitively outline for each type of employee – long term, short term, rotator and business tripper – all relocation policy details. The format should be organized in such a way that details are easily accessible. It is very non-productive for the assignee to be spending inordinate amounts of company time researching answers to their assignment questions.


Savvy assignment managers recognize that the provision of relocation package documentation that is readily available to assignees makes life simpler for everyone involved. Web-based models allow for this and can be achieved by posting the documentation on the company website, or providing a link to a tax service provider site.

At CompassTAX we offer our clients the possibility of a secure web gateway to their personalized assignment documentation. We also document assignment policy for clients, at the same advising on key points which should be included in order to make it comprehensive.

With web-based assignment documentation, assignee morale is elevated by the prompt availability of answers to their questions and planning-oriented explanations of tax issues. Assignment managers are also not bogged down with assignee questions from around the world.

Tax Issues

In the rush to relocate assignees, tax issues are often not fully considered. Many of these tax credits and ways of handling social security tax, for example, are complex and require advance planning. Inaction can lead to significant unrealized opportunities for tax savings to both the assignee and the corporation.

Once assignment tax policy has been developed, it is just as important to inform assignees of the details so that they can take advantage of these savings. Rifts between the assignee and the corporation can develop if opportunities to save are missed through the assignee not being informed and therefore not able to plan!

Anything Can Happen – Anticipate Problems

Assignees are human, and not surprisingly, just about anything can happen on assignment. Expect the unexpected. With assignment documentation, it is important that the assignment manager anticipate problems and ensure that the documented assignment policy details reflect how any unusual situation would be handled.

Unexpected assignee issues usually warrant immediate answers, and the documented package should be structured to provide for this.

Assignment Documentation – What is Involved?

Thorough assignment documentation should include answers to most questions that would arise from assignees, and should address the following topics:

  • Differences between rotational, short-term, long-term and business-tripper assignments
  • Compensation (including cost of living adjustments)
  • Benefits (including medical, insurance)
  • Leaves
  • Pre-Departure Tax Counseling
  • Explanation of available tax credits
  • Canadian income tax obligations, and provisions to blend this with foreign income tax
  • Pre-Departure cultural counseling
  • Work permits and visas
  • Living arrangements
  • Transportation
  • Shipment and storage of Goods
  • Housing
  • Education
  • Spousal support
  • Repatriation planning

In Summary

Assignment managers who make documentation of relocation policy a priority will encounter fewer inquiries from assignees, contain assignment costs and minimize assignee frustration. Develop the policy, approve the policy and then communicate it by way of well-written and organized assignment documentation.

Additional information

At CompassTAX™, we develop cost-effective assignment tax programs for Canadian companies sending employees around the world and bringing international consultant 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 coming to Canada temporarily, Canadians moving back to Canada, and individuals living outside Canada with Canadian business ties.

The author wishes to thank Peter J. Simpson, C.A. for his contribution to this article.