Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Cross-Border Business Law: Immigration and Tax Solutions for Canadians Traveling to the US on Business

498 views

Published on

Practical solutions to manage the immigration risks and tax compliance obligations for business travelers from Canada to the US, presented by Evelyn Ackah, Immigration Lawyer, BA, LLB ( Alberta, Ontario), Founder and Managing Lawyer at Ackah Business Immigration Law, Canada; and Laura McLeman, CPA, CA, CPA (Illinois), of Citizen Abroad Tax Advisors

Using NAFTA
- The preferred tool to facilitate cross-border movements between Canada and the United States is the North American Free Trade Agreement - NAFTA
- Used for temporary entry - not permanent
- NAFTA was established in 1994 to support economic and trade relationships between the United States, Canada and Mexico
- As part of NAFTA, three main nonimmigrant categories were created:
1) Business Visitors (B-1 Visa)
2) Professionals (TN Visa)
3) Intra-company transferees (L-1 Visa)

Benefits of HR and Leadership Training on Cross-Border Business Issues
- Create awareness of the rules for business leaders and HR
- Allows business to address the issue and make informed business decisions regarding risk vs actual cost
- Increases the compliance of employees who are taxable
- Informing employees of their responsibility
- Puts the risks on employee and reduces the employer’s risk if employees ignore and attempt to push the consequences to management
- Protects Employer from significant tax, interest and/or penalties
- Address the issue instead of ignoring the issue



Published in: Business
  • Be the first to comment

Cross-Border Business Law: Immigration and Tax Solutions for Canadians Traveling to the US on Business

  1. 1. CROSS-BORDER BUSINESS: PRACTICAL IMMIGRATION SOLUTIONS Evelyn L. Ackah Founder/Managing Lawyer January 30, 2018
  2. 2. About Evelyn Ackah Evelyn Ackah is the Founder and Managing Lawyer of Ackah Business Immigration Law. Her practice focuses exclusively in the area of Canadian and cross-border US business immigration law. She has been practicing law for 20 years – first in Toronto and then Calgary. Prior to launching her own firm in 2010, Evelyn was a Partner at an international law firm. She and her dynamic team provide expertise to corporations and individuals in the development and implementation of immigration strategies and they advise clients on immigration matters involving employee mobility and relocation. Ackah Business Immigration Law embodies Evelyn’s independent spirit, her passion for law and her desire to provide the best possible client service. (403) 452-9515 3
  3. 3. Introduction ACKAH BUSINESS IMMIGRATION LAW • Immigration rules and regulations can be confusing, stressful and always changing • Ackah Business Immigration Law focuses exclusively on cross-border immigration law • Our goal is to simplify and expedite the immigration process and smooth the way to Canada and the United States for professionals and their families Crossing Borders Seamlessly
  4. 4. Cross-Border Immigration Law 5
  5. 5. Using NAFTA • The preferred tool to facilitate cross-border movements between Canada and the United States is the North American Free Trade Agreement - NAFTA • Used for temporary entry - not permanent • NAFTA was established in 1994 to support economic and trade relationships between the United States, Canada and Mexico • As part of NAFTA, three main nonimmigrant categories were created: 1) Business Visitors (B-1 Visa) 2) Professionals (TN Visa) 3) Intra-company transferees (L-1 Visa)
  6. 6. NAFTA Business Visitor/ B-1 Visa • Intended for short-term entry – meetings, training, sales activity • Employers should ensure NAFTA Business Visitor employees always have a travel letter when crossing the border • Remuneration must be paid from home country • Cannot be engaged in “work” activity • Must ensure employees are prepped before attending at port of entry
  7. 7. NAFTA Business Visitor/ B-1 Visa Examples of business activities: • Consulting with business associates • Traveling for a scientific, educational, professional purposes, business convention, or a conference • Settling an estate • Negotiating contracts • Participating in short-term training
  8. 8. NAFTA Business Visitor/ B-1 Visa To be eligible for NAFTA business visitor status, you must demonstrate that: • You are a Canadian or Mexican citizen • The purpose of your visit to the United States, is for qualified business activities of legitimate nature • The business activities must be international in scope • You have no intention of entering US labour market • Your primary source of remuneration remains outside the US
  9. 9. NAFTA Business Visitor/ B-1 Visa • Must ensure business visitor is prepped before attending at port of entry for successful entry • Ideally you should always have a letter that confirms the reason for your cross-border business travel – to support your verbal submission (i.e. a letter or email inviting you for an interview or meeting in the U.S. etc.) • The most important thing when dealing with cross- border business travel is knowing what to say and what not to say • Must not say “work” if entering as a business visitor – that is a four letter word! 10
  10. 10. Eligibility Criteria • Your principal place of business remains outside the United States • You are resident outside the United States and will depart upon completion of your business visitor entry • You have enough funds to cover the expenses of the visit and your stay in the United States • You will comply with existing immigration requirements for temporary entry and • You are otherwise admissible to the United States
  11. 11. What Is Your Intention? Non-Immigrant Intention is very important • You must be able to satisfy US CBP of your non-immigrant intention upon appearing at the customs desk • You must present sufficient proof to establish that you are entitled to the NAFTA Business Visitor non-immigrant classification • You must maintain a foreign residence and have no intention of abandoning that residence • Your entry must be for a short-term purpose
  12. 12. Maximum Length Of Stay • NAFTA business visitors can stay within the United States for a maximum of 6 months at the initial point of entry • Extensions can be granted for up to 6 months so long as you can satisfy US immigration of non-immigrant intention
  13. 13. NEXUSPASS • Highly recommend obtaining NEXUS to facilitate business travel to the United States • NEXUS is designed to expedite the border clearance process for low-risk, pre-approved travelers • Must be a US or Canadian citizen - Permanent Residents don’t qualify
  14. 14. NAFTA Professional/ TN Visa • Renewable indefinitely – 3 year terms at a time • Must meet educational or experience criteria • Must be exercising the skills of the profession • Must have an offer or contract • NAFTA lists 66+ professions including Engineer, Nurse, Lawyer, Teacher • “Manager” or “Director” titles are not eligible positions
  15. 15. NAFTA Professional/ TN Visa • To qualify for TN status, the intended U.S. activity must be in a profession listed in Appendix 1603.D.1 of NAFTA and you must posses the necessary credentials to be considered a professional • You must actually perform professional-level activities in the U.S. • Almost all of the professions listed require a Bachelor’s degree or higher • Only Bachelor degree exceptions: Management Consultant, Scientific Technician/Technologist, Technical Publications Writer, Medical Laboratory Technologist 16
  16. 16. NAFTA Professional/ TN Visa TN VISA DEFINITIONS Canadian Bachelor’s Degree • A Canadian three-year bachelor’s degree program satisfies the degree requirement; the important element is the requisite degree and not the length of the course of study Post-Secondary Diplomas and Certificates • defined as a credential issued, on completion of two or more years of post secondary education, by an accredited academic institution in Canada, the U.S. or Mexico 17
  17. 17. NAFTA Professional/ TN Visa • TN Visas are not dual intent – meaning very difficult to move to Green Card status (not easy but possible) • There are ways to move from TN to H1B Visa (which is a dual intent Visa category) and then to Green Card • There is no limit on the number of TN Visas issued annually – different from the H-1B Visa 18
  18. 18. NAFTA MANAGEMENT CONSULTANT/TN Visa • Must have a Bachelor’s degree, licenciatura degree or five years experience in a related field • Management consultants provide services which are directed toward improving the managerial, operating and economic performance of public and private entities by analyzing and resolving strategic and operating problems and thereby improving the entity’s goals, objectives, policies, strategies, administration, organization and operation • Arm’s length versus Employee 19
  19. 19. NAFTA Intra-Company Transferees/L1 • For employees at “Executive” or “Managerial” level or who have “Specialized Knowledge” • Must have worked 12 consecutive months in preceding 3 years for the foreign related entity • Must prove proper corporate affiliation of entities • Up to 5 years for specialized knowledge workers and 7 years for managers/executives • Non-NAFTA Intra-Company Transfer category for those who are not American or Mexican
  20. 20. Practical Pointers At The Border • Educate the person crossing the border • Know the purpose of entry and your itinerary • Always be courteous with immigration officers - they have a lot of power and discretion • Always be honest - this avoids potential misrepresentations • Always travel with proper supporting documentation • Try to travel during regular business hours during the week - never travel on holidays • Never insist on entry if problems occur - withdraw the application, this is better than a refusal • Dress like a professional - appearance is important
  21. 21. Practical Pointers At The Border Watch out for: • Ineligibility due to criminal convictions or prior refusals • Ineligibility due to medical inadmissibility • Entry visa requirements • Changes in laws, policies or procedures
  22. 22. ACKAH BUSINESS IMMIGRATION LAW We provide the following cross-border immigration law services: • Temporary Status – Work Permits (TN, L1, H1B, E- Visa), Study Permits, Visitor Visas, LMIAs, Intra-company transfers, NAFTA (Professional), Spousal Work Permits, Criminal Rehabilitation, Restoration of Status, NAFTA Work Permits • Permanent Status – Express Entry PR, Live-in Caregiver PR, Provincial Nominee Program, Canadian Citizenship, US Green Card and US Citizenship 23
  23. 23. Conclusion and Questions Contact Ackah Business Immigration Law for immigration advice to help you navigate the complex maze of rules and regulations involved with Canadian and United States immigration law with confidence www.ackahlaw.com 1-800-932-1190 eackah@ackahlaw.com THANK YOU!! QUESTIONS
  24. 24. Laura L. McLeman, CPA, CA CPA (Illinois) Tax Implications of Cross-Border Employees January 30, 2018
  25. 25. Laura L. McLeman, CPA CA • Laura is the founding partner of Citizen Abroad Tax Advisors. Focused on making expat taxes as simple and easy to understand as possible, she has helped U.S. and Canadian citizens meet their cross-border and expatriate tax filing requirements for more than 20 years. • Laura is professionally designated as a Chartered Professional Accountant and a Certified Public Accountant. • Laura and her partners advise mid- to large-sized companies on the payroll and income tax obligations of their cross-border employees—serving those employees directly and individually to relieve organizations from having to manage their tax considerations.
  26. 26. Individual Income Tax – Types of Cross- Border Employees • Business Trip Travelers or Frequent Business Travelers (FBT) Less than 30 days in US, typically not a project employee Could be up to 90 days in US • Short Term Temporary Assignment 3-12 months • Long Term Temporary Assignment 1-5 years • Permanent Assignment Indefinite period of time • Stealth Traveler
  27. 27. Why Talk About This Now? “If it ain’t broke…” • Increased Frequent Business Travelers (FBT) • Heightened Sensitivity to Cross-Border Travel – Governments want “their share” – BEPS Action 7 - Permanent Establishment caused by key employees or FBTs • Voluntarily complying vs complying in response to audit or review • Technology improving for tracking travelers • More information regarding cross-border obligations (making non-compliance more of a willful issue)
  28. 28. 10 years ago CanCo. Customer / US Co / or US project Canada USA
  29. 29. Now CanCo. Customer / US Project Canada USA - Key Execs / Sales teams - Project Managers / Engineers - Installers
  30. 30. Why NOW?
  31. 31. So What? • Payroll Tax – Penalties and Interest for failure to withhold or obtain waiver of withholding – Reporting Requirements; Recovery of tax is easier • Corporate Tax** – Inadvertent creation of permanent establishment for Canadian company in United States – Inadvertent creation of Nexus in State • Employee Individual Income Tax – Employee may be required to file US tax returns and pay tax in the United States and may seek to recover from Employer • Burden of “Getting Caught” – Impact on Corporate reputation/ Bad Publicity – Time and energy with respect to audit vs time and energy with respect to compliance (often easiest to do it right the first time)
  32. 32. So What? For project driven companies (i.e. service provider companies such as those in engineering) - Without proactive compliance, the company has lost the opportunity to price the cost of potential US tax implications and US tax compliance into contracts with client
  33. 33. Payroll Tax - Employer Obligations in the United States • Employers are required to: – Determine where Cross-Border employees worked – Determine the amount of taxable income earned in US / State – Withhold and remit US Federal and State tax (monthly) OR obtain waiver of such requirement – Reporting of wages to IRS and State (form W2 or 1042-S) • Very few exceptions to the withholding requirement
  34. 34. Payroll Tax - Exception for FBT • No US Tax Withholding requirement under the following conditions – Employee of Canadian Corporation – Temporarily present in the US for no more than 90 days in the calendar year – Pay relating to their services in the US does not exceed $3,000 USD
  35. 35. Payroll Tax – Waiver under treaty • Employee qualifies for exemption under Canada - US Tax Treaty • Applying for waiver of withholding of US tax at employee level relieves employer from withholding and remitting Federal US tax – Employee still required to file return and obtain US tax ID Number – Employer still required to report wages to IRS – Administrative burden **First year is the most difficult year
  36. 36. Corporate Tax – Impact of Cross Border Employees • Employees performing services in the US can create – Permanent Establishment for Canadian company in the US – US and State Corporate Tax Filing requirements – Transfer Pricing issues - if seconding or transferring employees to related US company (i.e. US subsidiary) or Canadian employees performing services for US subsidiary
  37. 37. Individual Income Tax – Employees traveling to the US for employment purposes • If an individual has income from effectively connected income in the US, he/she is required to file a US tax return and report the income and calculate tax • Canada-US Tax Treaty can provide relief from taxation • Exemption from tax doesn’t mean exemption from filing a return and claiming the Treaty position • Filing a late return with treaty exemption (Nil tax), can still result in penalty • State may not follow the Canada-US Treaty (e.g. California) and state tax may still apply
  38. 38. Challenges of managing business travel Which of the following aspects of managing business trips are a challenge for your organization? Tracking business travelers 42% Monitoring and controlling cost 42% Tax and social security compliance 36% Immigration compliance 32% Ensuring the policy is applied consistently 29% Employee concerns on personal security 22% Impact of frequent travel on employee’s home life 17% Processing expenses 17% Source: ERC MOBILITY Magazine, June 2017: ECA International Business Trips Survey 2017 Percentages add up to more than 100% because more than one method may be used.
  39. 39. Tracking tools How are business travelers tracked? Using data from the company’s travel booking platform 50% Employee expense reports 37% Travel reports filed by team administrators 31% Tracking software specifically for business travelers 23% Employee maintains personal travel calendar 18% Other 5% Source: ERC MOBILITY Magazine, June 2017: ECA International Business Trips Survey 2017 Percentages add up to more than 100% because more than one method may be used.
  40. 40. Cost of Non-Compliance Individual and Corporate Obligations What is the “Cost” to comply? 2017 (i.e. First Year) Estimated Employee Time (Hrs) Estimated Third Party Fees ($$) Estimated Tax ($$) Payroll Reporting 3.5 $ 850 0 Individual Tax 2.0 $ 750 0 Total Cost / Employee 5.5 hours $1,600 0
  41. 41. Cost of Non-Compliance Individual and Corporate Obligations What is the “Cost” to Comply? 2018 (i.e. Subsequent years) Estimated Employee Time (Hrs) Estimated Third Party Fees ($$) Payroll Reporting 1.5 $ 300 Individual Tax 2.0 $ 750 Total Cost / Employee 3.5 hours $1,050
  42. 42. The Compliance Burden Cost of Non-Compliance (borne by Corporation) Failure to withhold = 0.5% per month x required withholdings up to maximum of 25% Failure to File Form 1042-S = $100 to $250 per form required OR, if greater, 10% of the total amount of income that was to have been reported Failure to Disclose income (even if exempt from tax under Treaty) - penalty of up to $10,000. Company Exposure to US Tax – by not proactively managing employee time in country, the Company could be exposed to US tax issues. Plus the original costs of compliance. In addition, you may be required to remit the tax that should have been withheld, and, if employees have left – recovery of the withheld tax may not be possible.
  43. 43. Getting Started… • Identify Key “Mobile” Employees Educate on key activities that create potential US tax issues • Understand current exposure (i.e. 2017) for Corporate, Payroll and Individual Tax • Get your Corporate Cross-Border Tax plan in place • Prospectively track Employee movement cross-border US vs Canadian (in country) timecodes Travel Expense review to find “stealth travelers” Understand Risk Thresholds for Employee and Company Provide travel tracking apps to your Employees (GT Global Tracker, Orion Mobility, Concur, Pinpoint) • Estimate Employee time in US at beginning of project If taxable and reportable - consider compliance costs as part of project cost • Consider “assignment” of Canadian employees who can create corporate tax issues
  44. 44. Benefits of Addressing the Issue • Create awareness of the rules for business leaders and HR • Allows business to address the issue and make informed business decisions regarding risk vs actual cost • Increases the compliance of employees who are taxable • Informing employees of their responsibility • Puts the risks on employee and reduces the employer’s risk if employees ignore and attempt to push the consequences to management • Protects Employer from significant tax, interest and/or penalties • Address the issue instead of ignoring the issue
  45. 45. Problems Counting/Tracking the days Determining if Employee is Taxable and Reporting the Income Compliance Costs Visa vs Tax Issues Corporate Reputation Far more work than before = who has time???
  46. 46. Solutions Provide Calendar / App recommendations to Track days Presentation / Memos to Employees Tax Return Preparation or guidance Assistance with determining withholding and remittance requirements Determining if Taxable or Exempt under Federal/State Treaties
  47. 47. Citizen Abroad Tax Advisors - We can determine exposure for company and employee by reviewing 2017 activity - Internal time and energy can be alleviated by External assistance but this can increase costs - We work with company and employee to ensure compliance “best efforts” - Mid-Sized cross-border projects are our area of expertise - Cost Effective solution using experienced Expat professionals

×