Canadian Payroll Reporter

CANADIAN PAYROLL REPORTER L E G I S L AT I V E RO U N D U P C H A N G E S I N PAY RO L L L AW S A N D R E G U L AT I O N S F RO M AC RO S S C A N A D A ■ CANADA most jurisdictions, the holiday is called Victoria Day. In Quebec, it is called National Patriots' Day. Reminder: Victoria Day a statutory holiday in most jurisdictions ■ NEW BRUNSWICK Victoria Day, which falls on May 20 this year, is a statutory holiday under employment/labour standards law in the following jurisdictions: •Alberta •British Columbia •Manitoba •Northwest Territories •Nunavut •Ontario •Quebec •Saskatchewan •Yukon •Canada Labour Code (for federally regulated employers and employees). In New Brunswick, the day is a holiday under the Days of Rest Act. In Reminder: Personal income tax rates changing July 1 Effective July 1, personal income tax rates in New Brunswick will change. In its 2013-14 budget, the province announced it would raise income tax rates to the level they were at in 2006. (See table below.) ■ NORTHWEST TERRITORIES Reminder: National Aboriginal Day a Statutory Holiday June 21, is National Aboriginal Day in Northwest Territories, which is a statutory holiday. ■ QUEBEC Reminder: National Holiday is June 24 June 24, 2013, is National Holiday in Quebec, which is a statutory holiday. New Brunswick personal income tax rates Annual taxable income Tax rate Prior to July 1, 2013 $0.01 - $38,954.00 9.10 per cent $38,954.01 - $77,908.00 12.10 per cent $77,908.01 - $126,662.00 12.40 per cent $126,662.01 and over 14.30 per cent Proposed tax rate Effective July 1, 2013 9.68 per cent 14.82 per cent 16.52 per cent 17.84 per cent Expats expect comparable take-home income Continued from page 3 that pie is being divvied up between the two countries." Employers should also consider the employee's after tax dollars, Nagratha says. Using another example with the same employee, Nagratha says the employee was left with $70 after tax when she was working in Toronto. If the employee is relocated to Switzerland, she may be taxed $40 on her $100 income. "(The employee) is going to be coming back to the employer saying, 'Okay, this isn't fair because I used to have $70 left in my pocket but now I only have $60,'" Nagratha says. Most workers expect to make a comparable total take-home income when being asked to work outside of the country and will want to know how they are going to be compensated for the difference, he says. "That's where it's really impor- tant for employers to understand the mechanics of the tax situation that the employee's going to be under so they know how that will impact the individual's assignment and what they're left with from an after-tax perspective," he says. Employers should also be aware of whether a social security totalization agreement exists between Canada and the country the employee will be working out of, Aoun says. "(This will) avoid unnecessary payment of dual social security charges," he says. Aoun is also quick to point out any tax and/or social charges resulting from the foreign assignment are not supposed to have an impact on the way an organization determines the expatriate's salary. "Any additional tax or social security charges resulting from such an assignment are expected to be transparent to the expatriate on a temporary assignment, despite the addi- tional cost incurred by the employer," he says. Common error Companies may underestimate the total cost of an expatriate compensation package if the tax liabilities on long-term incentives are not factored into the equation, Aoun says. "Companies can be hit by tax bills related to equity plans after the expatriate has completed his/her foreign assignment," he says. Repercussions for errors It's the individual's responsibility to file their taxes on time, but it's the employer's responsibility to make sure they're withholding the appropriate tax in Canada and/or abroad, Nagratha points out. "There could be interest in penalties if withholdings are not done properly in both jurisdictions," he says. Canadian HR Reporter, a Thomson Reuters business 2013 5

• Cover