Whenever a company decides to expand nationally or internationally, they can find a great challenge with relocation finances.
A relocation finance plan contains more than just a budget. You need to know the competitive landscape for relocating in your own industry. In addition, a relocation professional can help you budget the costs from point A to point B.
So, do you want to find out more? We have prepared a detailed guide to help you.
A defined benefit is a relocation benefit that has parameters defined but no capped amount. For instance, if a company agrees to provide 30 days of temporary accommodation, they define the duration of temporary accommodation, but not what the cost will be. These are highly beneficial to the relocating employee. Capped Relocation Allowances may not always budget enough for a move, but employees with Defined Benefits have nothing to worry about.
There has been a general move away from defined benefits to more predictable Capped Relocation Allowances.
This often comes down to those companies with a history of defined benefits. It can also be if companies have older demographics (with bigger social footprints) relocating, or competitive circumstances unique to each company. Defined benefits still exist in many policies, but they may be blended with smaller Relocation Allowances. Ask us if Defined Benefits (or some) are right for you.
A classic relocation allowance model gives the employee a pre-determined, capped monetary allowance to relocate. But there are different ways you can offer this to your employee: in a lump-sum or with a managed allowance.
A lump-sum is also called a naked Relocation Allowance. It is a single payment of money, as opposed to a series of payments made over time. The employee manages his/her own relocation.
First, it must be said that companies cannot pay lump sums of money to employees without taxing these funds at source, and they may have a difficult time paying recruits who are not yet on payroll.
But the Lump Sum acts as a little stipend given to an employee who is relocating and has no other means of support.
For companies, lump-sum payments can appear to be a better way to control and forecast expenditures. In addition, their administration is considerably easier.
Employees benefit from having more influence over the relocation activities they participate in and the freedom to shop around for the most cost-effective relocation choices.
However, transferees may find themselves lost as to which way to turn. What activities must I do for this relocation? Which vendors are reliable? What future costs don’t I know about? What should save money for? In the era of duty of care, an easy way to protect your employees from bad relocation, vendor or monetary choices, is to offer them a managed allowance.
In this form of Capped Relocation Allowance, the employee is provided access to pre-vetted suppliers and relies on your Relocation Management Company’s advice to know where to spend their money wisely, saving money for cost categories they may not predict without expert help.
For reimbursements, they have a single point of contact. The Relocation Company can also advance funds, if employees have cash-flow challenges.
The tax code advice is one of the essential aspects of a Managed Relocation Allowance for Canadian businesses.
Employees are advised on how to use their money effectively, so they spend them as much as possible on non-taxable relocation benefits rather than taxable ones. This ensures they obtain a dollar-for-dollar return on their investment, and neither your company nor your employee end up on the wrong side of the tax regulations. HR’s should not be reimbursing relocation benefits without knowing if they are taxable or not.
If you are relocating someone within Canada or to Canada, a Relocation Management Company can give them this tax guidance. And, if the Relocation Allowance is not enough, All Points can guide them to save certain costs that may be tax deductible in next year’s tax filing.
Global taxes become more complex again, and they are hard to discuss within such a short article. However, All Points is here to help you guide employees to use their funds to their best potential.
It may seem a lot to think about in corporate relocation, but these are the times to look at your relocation services, pay attention to the duty of care and offer the best policies to your employees.
Learn more about how All Points can help you achieve your goals at our website.