Moving from US to Canada - Salary Negotiation Help

ethannathan · Post by **ethannathan** » Fri Dec 12, 2008 12:54 am

All,

I am in US on work visa now being offered to get transferred and work in our branch in Toronto, ON holding same position performing simillar duties. I get paid 70K/ year in US (California). My question is...

1. Should I ask them to continue to pay me in 70USD while in Canada?
2. Ask them to pay 70K CAD.
3. Convert 70KUSD to current CAD that is 84KCAD and ask them to pay that amount?

When I am in Canadian office payroll and get paystub from them, is it possible to get paid in USD?

Considering fluctuating exchange rates and the cost of living in Toronto, I am not sure about what is the best approach and benefit to me. Experts and friends please let me know.

- Nathan

nelsona · Post by **nelsona** » Fri Dec 12, 2008 6:09 am

You would be crazy to accept 70K Cdn.

The other 2 options are equivalent.

Likely, there are others who have transferred. The Cdn firm will be paying you, so it will be in Cdn.

More important that what currency you will be paid, is to establish what types of benefits you will be getting. Will you keep your US-type benefits (401(k) and FICA) or will you now fall into the Cdn retirement and Social security.).

If the transfer is for less than 5 years, I would fight to keep my US-style benefits, with finding undertaken by the US firm. This would avoid getting into a life-long commitment to keeping abreast of Cdn tax and retirement rules, just for a 2-year secondment.

ethannathan · Post by **ethannathan** » Fri Dec 12, 2008 9:41 am

Nelsona: Thanks for your reply. I think you have raised some serious questions. I am glad I posted in this forum.

Here are additional information. Please advise.

I am the first to be transferred. We do have employees in Canadian firm that were directly hired in Canada.

US firm is the parent company, Canadian company is 100% fully owned subsidiary of US company. So, in funds stand point I am sure they will not be ready to pay anything more than what they are payinig me now that is 70KUSD. To them it is like me working from home in California or Texas.

I am not a resident of US. I am here in non-immigrant temporary worker visa. I do have 401k here. I do not have any property or roots in US. It is just me and my wife. When I get transferred to Canada I have plans to apply for PR and live there for few years -- Havent been to canada so I am not sure.

I was assuming that If I work in Canada, legally I should be paying Canadian tax and social security?

Please let me know your thoughts.

Thanks.

nelsona · Post by **nelsona** » Fri Dec 12, 2008 9:59 am

As to your salary, I simply said that you should not accept 70K Cdn -- tat would be a drastic pay cut, regardless of where to lived in canada. The other 2 options are identical. I'm not intho playing currency games. 70K US or 86 Cdn are the same today.

The cost of living in Cali or TO are equivalent, for example.

Obviously you will be paying Cdn INCOME tax. You will be living and working in Canada.

The question of your SOCIAL SECURITY however, should be of primary concern to you, even if you are not a US citizen. In fact it become MORE importnat, depending on how many years you have been paying to the US system.

As a transferree, you may have an option to continue contributing (along with your employer) to your US social security account. This option might help you GREATLY, if you are approaching, for example, the required 40 quarters of contributions, which would lock-in SS retirement benefits AND (if you end up retiring in US) MEDICARE for you. OR you may simply wish to begin your Cdn social security.
Contibuting for a couple of years to Cdn Social security (known as CPP) will never bring you as much return at retirement than topping up your SS.

Much depends on what other countries you have or will work in, and on whther those other countries have special arrangements with the US, like Canada does, which work to qualify you for Social security in US and in the country you work in.

Any SS and Fica you pay will be fully recognized as a tax payment in canada, so this would be like an added pension plan.

So, what will help youmake this decision is to know what countries you have worked in, for how long, How long have you worked in US. How long you plan to live in canada and where you plan to retire.

As to your retirement benefit, you already have a 401(k), now you will have a Cdn retirement account too.

ethannathan · Post by **ethannathan** » Fri Dec 12, 2008 11:30 am

Nelsona: I really appreciate your inputs, now my take away from this discussion is....

I will not settle for 70K CDN. Do not just focus on current salary but think of the big picture considering retirement and SS.

I will start thinking in those lines and will post you if I have any further questions.

Thank you so much!

- Nathan

nelsona · Post by **nelsona** » Fri Dec 12, 2008 12:55 pm

Since you dod not give any information as to how long you have been paying into SS, I can't help you decide whether you should or should not keep doing so.

And, just to be clear, the option of paying into SS is only available if your US firm attests that this is a temporary transfer of 5 years or less. There may be some need by the US firm to keep paying you, or at least paying you thru the subsidiary.

nelsona · Post by **nelsona** » Fri Dec 12, 2008 1:24 pm

Further info on this from SSA:

"A U.S. employer includes a corporation organized under the laws of the United States or any state, a partnership if at least two-thirds of the partners are U.S. residents, a person who is a resident of the U.S. or a trust if all the trustees are U.S. residents. The term also includes a foreign affiliate of a U.S. employer if the U.S. employer has entered into an agreement with the Internal Revenue Service (IRS) under section 3121(l) of the Internal Revenue Code to pay Social Security taxes for U.S. citizens and residents employed by the affiliate.

ethannathan · Post by **ethannathan** » Fri Dec 12, 2008 2:46 pm

Nelsona: I am sorry, I did not realize the fact that you were asking for more information for further advice. I will be happy to provide additional information.

I am in US and paying SS since 2003 December. I have only worked for the current employer ever since I got to US (past 5 years).

Honestly, I do not know where I would retire. US greencard and citizenship takes forever. I am from India and have worked in India for 4 years prior to 2003.

My only worry when I posted the first time is -- By getting transferred to Canada I do not want to lose the money that I can potentially make/ save in US at least for next few years with my current employer. I am sure I will be working in Canada for atleast next 3 years.

But after your inputs, now I think about what will happen to the money I have put in US SS, 401(k) etc.,

Please feel free to let me know your thoughts. I appreciate your interest in helping general public.

nelsona · Post by **nelsona** » Fri Dec 12, 2008 3:45 pm

As an Indian, your SS contributions are not protected unless you get 10 years of work in US, or a combination of 10 years in US and Canada (or some other of the 20 or so countries that have agrreements with US).

So, to not lose your SS, you need to work 10 years over here to geta penny of SS. You will get CPP with as little as one year contribution.

But, as i said earlier, the SS program is MUCH more lucrative than the CPP, and since the SS that you pay will simply be credited to you as tax paid, I would try to convince the US employer to keep you on the SS payroll (ie have them and you contiue to pay SS) while in Canada.

This will at least keep your SS contrbutions going, and getting closer to the 40 quarters you need. You might even return to US.

Becuase you will be working for the Cdn firm, it is unlikley that you will be able to keep contributing to your 401(k). But the RRSP and Cdn pension system is commensuarte with the US one. Plus you won't be sinking so much of your wages into medical premiums.

ethannathan · Post by **ethannathan** » Fri Dec 12, 2008 4:13 pm

Wow Nelsona! That is news to me, very valuable information. Thanks.

Most likely they will not keep me in US payroll during the time I work in Canada - I can try asking, I doubt it.

In that case since I have already worked in US for 5 years, now if I go to Canada and work for another 5 years and come back to US. Will I be eligible to collect SS in US (Combination of 10 years)? Is my understanding right?

ethannathan · Post by **ethannathan** » Fri Dec 12, 2008 4:52 pm

phew! After what you said, I did some research and did some reading from the below links.

http://www.foreignborn.com/self-help/so ... .htm#table

http://www.ssa.gov/international/Agreem ... anada.html

learned a lot! I went back and read your previous replies to me which makes much more sense now. Thanks for the eye opening Nelsona.

Have a good weekend!