Alberta to recruit American war vets to work in oilsands
The question is — with working in Canada for long periods of time, what are tax return and reporting responsibilities for these workers — both for Canada CRA and US IRS?
CALGARY— Alberta is seeking to recruit an army of oilsands workers — literally.
The province is on the march to attract thousands of demobilized U.S. military personnel to help develop what’s been touted as Canada’s economic engine for coming decades, the oilsands.
The project’s success would also act as a goodwill gesture for Canada’s controversial oilsands, said Alberta Energy Minister Ken Hughes.
“We’re trying to understand how we could produce employment opportunities for American service people returning from overseas,” Hughes said Friday. “I’ve detected some interest in the States.”
The mission has attracted the attention of U.S. Ambassador to Canada David Jacobson and the encouragement of the U.S.’s former consul general in Calgary, Laura Lochman, said Hughes.
Hughes said there are a half-million unemployed or underemployed younger military veterans in the U.S. — a force that could be tapped to satisfy a chronically-hungry energy industry in Alberta.
. . .
*Well stated. The US has a massive unemployment problem while next-door Alberta has job openings which could well be filled by qualified US persons, particularly those who are being releasd from overseas military duty.
But because of the unique-to-the-US policy of citizenship-based taxation which applies to all US persons, regardless of whether they live within the US or outside of its borders, it would indeed be worthwhile for those Americans considering these employment opportunities in Canada and the employers who might be considering hiring them, to be able to have available a document which clearly describes the Canadian and continuing US tax obligations, as well has how this simultaneous subjection to the tax laws of both countries affects Social Security, retirement plans, reporting of bank accounts and financial assets, etc.
With such a document up-front, this would avoid the after-the-fact surprises of the kind US persons resident in Canada are currently experiencing.
Who could and would be willing to prepare such a document? It would also be important that the contents be reviewed and assured to be correct by both the US and Canadian tax authorities.
.
Roger,
I “borrowed” your words and put your excellent comment on the Calgary version of this story. Thanks.
But, alas, it hasn’t shown up in the Comments.
I don’t see them either and not too sure anyone is commenting would have any idea what is being discussed. Don’t think many would be very sympathetic.
Wonder where the right place to put this info would be?
I’ve written Alison Redford about this but the insanity continues. Maybe the whole thing is out of the provinces hands? I guess that the companies will go to wherever they can and the U.S. is close at hand.
In my response to the call for parties who are affected by FATCA to contact Finance, one of my points was that Canada can’t afford to have any more Americans. I pointed out that more U.S. persons represent an unlimited liability for the Canadian treasury and that the border should be closed to them. These workers will easily exceed the FEIE and be liable to pay U.S. taxes on a lot of their employer benefits.
All I can say is that I’ve tried and no one seems to listen.
*some will be if for real tax shock if they are returning from a war zone tax exemption area. If they do not contribute to Social Security, the double dipping legislation will reduce their benefits by up to 60%
Canada is recruiting
future crop of sacrificial lambs to harvest huge tax-penalties and huge
business for US based cross-border tax-filers. Dual-citizens can get more ex-Army
members for Isaac Brock Society, while the US can reduce burden on their big social-security payments for the ex-Army personal (by forcing them to renounce Citizenship to protect their kids).
Why don’t some of you Canadians draft such a document as Roger suggests? If the federal Canadian government won’t distribute it, maybe Alberta would? Perhaps with a disclaimer that these are the interpretations of volonteers from IBS who are trying to give the workers a heads-up on the potential pitfalls? Perhaps re-analyzed and edited by ACA, AARO, and discussed with the Americans Abroad Caucus as well?
If homelanders find that they can’t go nextdoor and find a job in these hard economic times in the US for fear of getting royally screwed by the IRS, maybe they will put more pressure on their legislators. What is this “globalization” shit really good for anyway? Export jobs to China to get cheap products while screwing lower-skilled workers in the US out of jobs, export higher-skilled work to India, while not allowing people to try their luck abroad without having a 300-pound IRS gorilla on their back?
US policies screw USPs abroad, and ultimately will make the US economy worse. They should offer us money to come back to the US as well as a full exoneration from past expatriate taxes to encourage us to help build companies there that export to our current countries of residence and citizenship.
But many in the US (voters, congresscritters, administrative officials) are still insular, callous, ignorant, and afflicted with hyperhubris that they refuse to see what is happening. So few see the light. But IBS and other facets of our movement have turned a few people, especially in the press. We need to keep Brocking-On to our last breath.
Is it not another example of the wolf and sheep’s clothing?. All these high-paying jobs (in harsh environment, I might add — they earn it) being offered to the veterans of the Iraq and Afghanistan wars. Sounds like a wonderful offer to those unemployed men and women. I think it is just entrapment.
I, too, wrote to Premier Redford about this one of the last times it was in the news. I got an acknowledgement so I know my words were read, but no response one way or the other.
I have sent a link of this post to Roy Berg at Moodys Tax. Perhaps that firm could determine what would await such workers coming to Alberta in terms of tax responsibilities. I just think these workers’ decisions to make such a big move, after the service they have already given their country in lands far away, has to be made knowing all the consequences. Would most of these workers be equipped to carry out this compliance responsibility? I sure was not able to “comply” on my own and needed professional help. I doubt that the oil and gas, pipeline and service companies are going to foot the bill for admiistration of taxes for this level, their out-in-the-field personnel.
Why is an Albertan – a Canadian politician working on looking to provide employment opportunities for Americans? We’ve got plenty of Canadian service people, and unemployed young men and women in various regions across Canada. Any investment in Canadian young people would stay here – where they pay taxes and have family.
Are Canadian politicians now working for the US Department of Labor, or the US Federal government or Army?
@badger,
It appears that is the case. Are we approaching the unification of Canada and Mexico with the US and the common currency called an Amero http://en.wikipedia.org/wiki/North_American_currency_union? I hope I don’t see it in my lifetime, but don’t you think happenings here say we might be moving in that direction? We’ll allow it all to happen with continued complacency.
*@Badger, I presume it is because these jobs are not being filled by eligible Canadians. Certainly they are not being excluded because of their Canadian citizenship. This is tough work in a very hostile environment which not everyone is interested in doing. Just because the applicant is a US citizen does not mean that he is qualified either. But obviouly here is a potential source of workers
Canada’s unemployment rate is substantially lower than the US, so the prime minister is doing exactly what Germany and Switzerland are doing: Recruiting foreign citzens to full job openings in their own countries for which there is a shortage of their own qualified citizens to fill these job vacancies.
*Certain of the oilsands employers provide tax preparation and consulting for expatriate employees as those companies are aware of the personal US – Cdn tax issues.
@Carol Sadler,
Thanks for that information. It is encouraging and a bonus that “certain” oilsands employers provide (free?) tax preparation and consulting for expatriate employees.
The fact remains that ALL US, especially, (and other) out-of-country workers, before taking on Alberta / Canadian oilpatch jobs, have up-front full disclosure of tax compliance responsibility (including FBAR reporting of any “foreign to the US” bank accounts they open in Canada — regular accounts they may need to conduct their lives while in Canada), whether or not they will have to shoulder the burden of this excessive cost or if their employer will provide that as an employee benefit. Such information should not just be in the small print of any contract they sign or a passport they carry. The procedure and consequences are not easily understood. There is quite enough carnage already, ‘US Persons’ who have made Canada their home, as a result of the extra-territorial citizenship-based taxation of the US. The “unintentional consequences” will increase significantly when (if) FATCA and resultant intergovernmental agreements are in place, breaching Canadian privacy law and Canadian sovereignty.
Thanks again for weighing in on this important issue.
*@calgary 411, if a Canadian employer picks up the tab for the additional tax that US citizens are requred to pay to the IRS, such reimbursements are themselves cosidered to be taxable income under US tax laws. Likewise most non-cash in kind” benefits that expats often receive when deployed abroad are taxable income to US citizens deployed abroad, even though they might be non-taxable under Canadian law.
So for these reimbursements to not be taxed by the IRS they have to be “grossed up” sufficiently to cover the US tax thereon, so that what is left after being taxed covers these benefits. Americans in Canada are also subject to US tax on their Canadian employer’s share of payments to the Canadian Social Security Sytem.
I haven’t checked the US-Canada treaty, but sometimes, but not very often, these tax treaties contain certain exclusions from US taxation.
I don’t know if there are similar laws in Canada, but US employers are prohibited by US anti-discrimination laws from providing additional compensation to persons which is based on “national origin.” Fortunately foreign citizens living and working in the US never face double taxation by their countries of citizenship.
Thanks, Roger, for pointing that out. So we’re back to square one. US works need to fully be informed of and understand all implications of additional tax requirements they will, one way or another, have in accepting work in the oilpatch of Alberta. It is not a slam-dunk all-golden opportunity. Full disclosure is what needs to be in place.
*@carol sadler: If the Canadian employer provides at no charge to the US citizen employee professional services and assistance in preparing their tax returns, the value of this supposedly “free” service is subject to US taxation at its fair market value. It is income “in kind” rather than cash. And that is subject to US tax.
Likewise, if the US citizen’s FBAR reports, in which he must include the value of bank accounts over which he has signature authroty even though he has no personal ownership in them, are prepared for example by his employer’s tax department, then the cost to the employer in preparing these reports is taxable income “in kind,” and subject to US tax. If the US citizen is a corporate officer of a large corporation in a foreign country, sometimes these FBAR reports consist of perhaps hundreds of pages detailing the firms bank accounts. The cost of preparing these reports by his employer can itself be a sizealble item of taxable income for the US citizen abroad with these kinds of responsibilities.
The IRS is very fussy about these things.
I also wonder how fussy the company is about releasing its confidential information. Also wonder how fussy the SEC is in releasing corporate information outside of the company and its effects upon insider trading. Also wonder how fussy the German or Japanese equivalent of the SEC would be about releasing secret corporate financial information.
*@Mark Twain,
Clearly the factors you mention could adversely affect the ability of a US person to qualify for the CEO or any other high management position in a foreign corporation.
Supposedly FBAR reports are only for the “eyes” of the US Treasury Department, but conceivably the release of this information to any third party, let alone to a foreign government, might well be a violation of the privacy and insider information laws of some countries. These days supposedly all kinds of confidential data, even top secret data of the US Government, leaks out and is published far and wide. The leakers may be arrested, tried, found guilty and sentenced to prison, but once the Genie is out of the bottle there is no way to get him back in.
We live in a Hacker’s world.
The effect of citizenship based taxation on the American leaving the US to work abroad is much like that of those shopping carts whose wheels lock when you take it out of the store.
it would be even stronger than that, I imagine. I don’t see how the German borse would allow for release of that info to anyone—they couldn’t recognize the US gubbermint as having any golden authority. On the private side, a pink slip and a lawsuit would follow such disclosure under the confidentiality agreements I’ve been forced to sign. Fortunately, I don’t have a position that gives me authority such as that, but I have friends that have friends that are CFO’s and ought to be more worried than they are.
@calgary 411
Crikey, reading some of those comments, I don’t have much confidence that many Canadians won’t be calling us tax cheats and traitors to Canada either!
@bubblebustin,
It may be that we will be hated on both sides of the border — for something they imagine and know nothing about.
*@Mark Twain, as far as I am concerned the only accurate description for the US policy of Citizenship based taxation is to call it a Sin Tax. It’s purpose is not primarily to generate revenue for the US Treasury, but to punish US citizens who have the audacity to live and/or work ouside of the United States.
It is certainly not a crime, but this kind of US tax policy treats it as such, and is filled with traps and provisions to make you pay through the nose if you do.
It virtually disqualifies the person from accepting employment abroad where he has authority over his employer’s expenditures, and as several have pointed out may require him to divulge information to the Treasury Departmet of the US in violation of the laws of the foreign country.
Unquestionably it destroys far more tax revenue than it generates by making US citizens competitively unemployable for most jobs outside of the US. The tax revenue that fails to be generated as a reslult of the US trade deficit is around $136 billion/year. Citizenship based taxation generates about $6 billion in tax revenues for the US Treasury. Tell me how this kind of a trade-off makes any fiscal sense.
If US citizens were not unemployable abroad, then they too could be going abroad and selling US exports and thus transform this trade deficit into a trade surplus, or at least balanced trade, like Canada and most of the rest of the high-wage industrialized countries of the world do. But in this area we have the blind leading the blind in setting US tax policy.
An overseas employer has got to want a US citizen as an employee pretty badly in order to justify paying what it costs such an employee to survive after being simultaneously subjected to the usually-conflicting tax laws of two countries.
That’s my opinion, and I stand by it.
yup. You only forgot to mention that what you said is not really an opinion, but very well founded and repeatable.
oh yeah, we forgot to mention that we can’t volunteer to be an officer for our kid’s soccer club, either.