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Say goodbye to your Canadian Friends

Overseas Employment Tax Credit

Currently, employees who are residents of Canada and who qualify for the Overseas Employment Tax Credit (OETC) are entitled to a tax credit equal to the federal tax otherwise payable on 80% of their qualifying foreign employment income, up to a maximum foreign employment income of $100,000.

The budget proposes to phase out the OETC over four years, beginning with 2013. In particular, during the phase-out period, the 80% applied to an employee’s qualifying foreign employment income will be reduced as follows:

· 60% for 2013

· 40% for 2014

· 20% for 2015.

The OETC will be eliminated for 2016 and subsequent years.

The phase-out rules will not apply to qualifying foreign employment income earned by an employee if the employer has committed in writing (e.g., the employer tendered an irrevocable bid in writing for a project) before March 29, 2012. In this case, the 80% will apply for 2013, 2014, and 2015. However, the OETC will be eliminated for 2016 and subsequent years.
CRA

I just lost my biggest incentive to work offshore.
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Wow! That's a bit of s blow!!

Just as you have stated.. just lost your biggest incentive to work offshore.... I wonder how much impact that will have on other Canadians thinking of working overseas (not just offshore) now that this is being phased out.

The overall loser might be CRA as more people choose not to work overseas and stop bringing dollars into the country as a result. No government wants to see net importation of cash fade away. I sense another bit of fiscal meddling which the Fed government may need to back down on when Canadian companies start complaining that they can't get Canadians to work overseas any longer and are losing business as a result.

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