Following up on our earlier post about the Ontario Non-Resident Speculation Tax that became effective June 1, the following is a summary of current status as obtained from reliable sources but which cannot and should not be relied upon as legal or tax advice and Weichert clients should review this tax law status with their applicable tax advisors.
Quite simply, several material developments have occurred that corporate clients and relocation companies should be aware of as they undertake home sale transactions within the Greater Golden Horseshoe* Region (GGH).
Foreign national purchasers (essentially any buyer who is not a Canadian citizen or permanent resident or a couples purchase in which neither spouse is a Canadian citizen) will be subject to paying the 15% purchase price speculation tax, and relocation companies and clients should be prepared accordingly. Please note that some special foreign purchaser exemptions may apply, and would need to be pursued by experienced local counsel with the Ontario Ministry of Finance.
Today, we have a lot of Jetsons-style technology, literally at our fingertips. Who doesn’t love FaceTime, Google searches and the Roomba (Ok, maybe not the Roomba)? To remain competitive and keep your rising mobile talent happy, it’s vital to acknowledge that the construct of family has also progressed. Let’s visit some of the major points that are part and parcel of 21st century mobility management.
What Makes A Family A Family
As technology has changed, so too has our definition of “family.” No longer defined by Dad, Mom and 2.2 children, families can be multigenerational, include domestic partners, be single parent in nature and even have members of a different species. Being sensitive to your mobile employee’s particular situation strengthens the corporate relationship, increasing the likelihood of a successful assignment.
When your mobile employee is not flying solo, it’s imperative to lend support and consideration to a spouse or partner who may be feeling less than thrilled about uprooting his or her life. Often, there is an entirely separate, established career to consider and offering career counseling assistance can help. The loss of a second income may be the kind of financial hit the family just can’t take and can influence whether or not your preferred assignee signs on. Continue Reading →
Today’s post was authored by guest blogger Dave Leboff, President, US Operations for Immedis Inc., a premier global payroll solutions provider based in Dublin and New Jersey.
The Brexpat vote is a year in the rear view mirror and it continues to create growing ripple rings for Europe, the US and the world. A year ago I wrote a short article about the potential effects of Brexpat on exchange rates and, therefore, on expatriate allowances. That prediction is bearing out.
If we take a look at employees with Cost of Living Allowances the effect over the past year can be illustrated by looking at the Cost of Living Allowance (COLA). Continue Reading →
Last week, Marianne Schmidt, our VP of US Domestic Tax and Reporting, conducted an engaging webinar on ways companies can save cost by re-examining their tax gross-up processes. Attendees had a lot of questions, and while we didn’t have time to address them all during the Q&A segment of the webinar, we have, as promised, presented them here, along with Marianne’s responses, for your reading pleasure. Marianne remains happy to continue this dialogue with anyone interested; feel free to reach out to her directly or through your Weichert contact.
In what situation would a person only gross up deductible items for FICA only? If items are deductible wouldn’t they normally be non-reportable on the ER side?
Deductible moves and deductible expenses are two entirely different subjects. A deductible move is one that meets all the criteria (is closely related to the start of work, meets the distance test and meets the time test). HHG and final move expenses (except meals and mileage > IRS limit) are not reportable if paid to a third party and are only reportable (not taxable) if they are reimbursed to the employee. Deductible expenses are taxable expenses that have been paid to or on behalf of your employee and are the types of expenses that are deductible on schedule A of your 1040. Those deductible expenses should be grossed up for FICA only, otherwise your employees will experience a tax gross up windfall.
I thought the US payroll is pay-as-you-earn, therefore you need to issue the withholding payments and report the income when the transaction occurred to be compliant?
We do not withhold taxes from payments, we only provide gross up calculations to payroll. Once payroll assigns a check date, normally the taxes are due the next day.
What is the risk involved with moving to gross-up once per year?
Moving to an annual reporting schedule is the decision of your company, the risk would be whatever you make it or not. From my perspective, however, the risk is no different than other frequencies. Our clients have always been compliant and have never failed or been questioned under audit. Continue Reading →
On April 20, 2017, the Province of Ontario enacted a 15 per cent non-resident speculation tax (NRST) on the purchase or acquisition of properties in Metropolitan Toronto and its surrounding areas, referred to as the “Greater Golden Horseshoe” (GGH).
The GGH incorporates the greater Toronto area, including Toronto itself as well as Brant, Dufferin, Durham, Haldimand, Halton, Hamilton, Kawartha Lakes, Niagara, Northumberland, Peel, Peterborough, Simcoe, Waterloo, Wellington and York.
Similar to the 15% NRST tax imposed for greater Vancouver area in British Columbia in August 2016, the Ontario NRST, which went into effect on April 21, 2017, is intended to hamper the bid-up by foreign buyers/corporations in the metropolitan Toronto residential housing markets. The announcement was included as part of the 16-point proposal introduced in the Ontario government’s Fair Housing Plan, which aims to bring stability to Ontario’s real estate market.
While research shows a growing number of millennials choosing to purchase homes, the majority of this demographic still prefer to rent, especially in metropolitan areas, which are far more attractive to skilled employees looking for work/life opportunities in vibrant cities.
Of course, as the experts say, living in these locations ain’t cheap. Especially in New York City, where the median rent for a two bedroom apartment is $1,638 in the metro area and $3,895 in Manhattan. Groceries in NYC cost 28-39% more than the national average and public transportation is about 75% higher than the average city.
Companies certainly feel that this can be a deterrent to mobile employees, which is why cost-of-living allowances are on the rise. According to Worldwide ERC’s recent Relocation Assistance, U.S. Domestic Moves survey, 39 percent of companies reported using such allowances in 2016 versus 32 percent in 2012. Among companies reporting difficulty in transferring employees to high-cost areas, the most frequently cited reason (by 80 percent of respondents) was “very high housing costs.” Continue Reading →
On November 1, 2016, China’s State Administration of Foreign Experts Affairs (SAFEA) launched a pilot work permit program in select regions of Beijing, Shanghai, Tianjin, Anhui, Guangdong, Hebei, Shandong, Sichuan and Ningxia. The program is widely anticipated to roll out nationwide on April 1, 2017.
China’s previous foreign work permits have been integrated into the Permit System for Foreigners in China, a single work permit based on a three-tiered classification system. The permit provides a federal model, eliminating the often troublesome and inconsistent regionally administered policies.
The three-tiered system classifies foreign workers as A, B or C level candidates, based on their education, salary level, age, time spent working in China and Chinese language skills. Applicants who receive more than 85 points are given the letter A, 60 to 85 points, B, and less than 60 points, C. Continue Reading →
While the 2nd and revised Executive Order (EO) banning visitors from specific countries is suspended and subject to review by the 4th Circuit Court of Appeals in May, individuals from the targeted countries have been greatly concerned about their ability to travel freely to and from the US.
Furthermore, the temporary removal of premium processing of H-1B visas has shut down the ability of persons working legally in the U.S. from obtaining permanent status. In the past, with premium processing, they could expedite the transition process and be able to travel more quickly and freely. Without it, newly arrived H-1Bs are “stuck” in the US until their status is finalized.
There is also talk of reducing the H-1B cap altogether, which potentially reduces foreign born workforce in the US. Why does this matter? Overall, higher scrutiny and an approval process with more qualifiers and restrictions may impact access to H-1Bs in the future. Changes may include controls for employers to take additional steps to fill positions with U.S. workers, a significant minimum salary increase for H-1B holders and removal of the master’s degree exception, phasing out work eligibility for trailing spouses of H-1B holders, and prioritizing H-1Bs for foreign students who have studied in the U.S.
UK Customs (HMRC) has announced changes to customs procedures for household goods and motor vehicles entering the UK that will impact assignees being relocated to this region. This change goes into effect on 31 March 2017 and shifts responsibility for completing the Transfer of Residence (ToR) application from the shipper to the owner of the goods being shipped (in this case, the assignee).
Under these new guidelines, assignees moving to the UK are required to complete an online application for ToR relief. This form can be found here.
Once the online ToR form is completed and approved, the assignee will be sent a unique reference code which will allow the freight to be cleared and released by the HMRC. This reference code is critical and it is the responsibility of the assignee to ensure that it is issued in good time; therefore, your assignee should advice his or her Weichert contact as soon as it is received. If a shipment arrives in the UK without a reference code, it could be delayed or refused clearance.