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Visiting Grandma – Sending Assignees through the Electronic Curtain

CompassTAX - May 2005

By Diana Matwichuk, CompassGUIDES HelpDesk Coordinator

Once upon a time, there lived a happy engineer in the pastoral kingdom of Utopia. Jack was renowned for his building prowess, which was in high demand, both in Utopia and the neighbouring kingdom of Brutopia. Splitting his time between moat construction and family obligations, Jack would make the most of his idyllic weekends by crossing the river that divided the two kingdoms in order to visit his aging grandmother. This trip he planned to work at Grandma’s, repairing the thatched roof of her modest cottage.

As Jack rounded the forest pathway toward the bridge (the building of which had launched his career), he whistled in eager anticipation of the baking delights that awaited his arrival at Grandma’s, and swung the basket of oranges and scones that were to be his customary gift.

Suddenly, he stopped.

Five very large and unpleasant-looking trolls with beady eyes, protruding warts and unkempt hair were blocking entrance to the bridge, apparently intent on interrupting his passage. Grandma’s dinner would have to wait, because Jack was about to about to experience a border crossing like none other.

Border Crossings of the Past

It used to be the case that we, like Jack, could merrily cross borders on a whim, flitting from one country to the next. The Assignment Manager’s job was considerably easier. Assignees could be relocated to foreign locales simply with a phone call to the movers, a plane ticket and few words of advice about adjusting to a new culture.

The Electronic Curtain

The information era and 9-11 changed all of that. In our modern world, we are now faced with increased scrutiny when crossing international borders. US-Canadian border guards question our travel intentions at length and electronically record immigration information. Not surprisingly, this computer data is passed through to the tax department, and health and welfare if applicable.

The current reality of crossing international borders involves reams of paperwork, significant cash outlays, harassment and high rates of rejection.

Back to the Fairy Tale

Jack was accustomed to dutifully showing his driver’s license to a rather sleepy bridge-keeper lounging on a weathered log, who would promptly nod right back into his reveries. Today he faced an imposing iron gate and several closed circuit cameras.

An Immigration Troll lumbered towards Jack, grumpily demanding, “Why are you traveling to Brutopia? Where is your passport? Have you filled out Work Permit Form 692345?” Before Jack could utter a response, the troll whipped out a camera, completed a retina scan and took a picture of Jack’s tongue for cataloguing purposes.

An agitated Customs Troll promptly followed suit, requesting a declaration of goods by way of Form AB 792, insisting that Jack pay duty on the wicker picnic basket, and seizing the oranges intended for Grandma. He then alerted the Health Inspector Troll, who lazily peered up from his meal of lizards and bog greens, to the fact that Jack’s oranges had presented with detectable fungus. Form 292ABC was thrust into Jack’s hands for completion.

As if that weren’t adequate scrutiny, the Tax Collector Troll approached Jack, preceded by an aura of intimidation and curiously foul breath. This troll demanded Jack’s tax identification number, the GST due for his work on Grandma’s house, tax withholdings to finance the King of Brutopia’s new Rolls Royce, tax returns for the past 6 years, and Forms TX721B, AB922 and X-5-X12.

Jack placed a call to Grandma, who with her recently renewed pilot’s license, decided to visit Jack in Utopia instead. The decidedly uncouth, but electronically savvy border trolls, however, promptly discovered Grandma’s name on a no-fly list and led her to the Brutopian jail, further complicating Jack’s weekend.

And you thought your assignees had border troubles.

Admittedly, this tale is fictitious, but the message strikes a familiar chord with assignment managers. Employees relocating on assignment, and crossing borders to do so, are prone to increased stress, general frustration and reduced levels of productivity. Understanding the border challenges they face is critical to ensuring that assignments are set off on a positive note.

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.