The World of International Mobility CERC Panel: Anne Chalmers, Teck Resources Limited Julie Lessard,...

The World of International Mobility CERC Panel: Anne Chalmers, Teck Resources Limited Julie Lessard, BCF Matt Altro, MCA Allen Koski, Cigna S eptember 22, 2014

Disclaimer This presentation contains general information only and the speaker and represented firm are not, by means of this presentation, rendering legal, business or other professional advice or services. This presentation is not a substitute for such professional advice or services nor it should be used as a basis for any decision or action that may affect your business. The speaker and represented firm shall not be responsible for any loss sustained from such decisions or actions. 2

Teck Resources Limited Teck is Canadas largest diversified resource company, committed to responsible mining and mineral development. We produce materials essential to the quality of life of people around the world copper, steelmaking coal, zinc and energy. Our nearly 11,000 employees worldwide have expertise across a wide range of activities related to mining and minerals processing including exploration, development, smelting, refining, safety, environmental protection, product stewardship, recycling and research. Headquartered in Vancouver, Canada, we own, or have an interest in, 13 mines in Canada, the United States, Chile and Peru. We also operate a large metallurgical complex, are partners in a wind power facility, and are a significant producer of specialty metals such as germanium and indium. We are actively exploring for copper, zinc and gold in the Americas, Asia Pacific, Europe and Africa.

Teck Resources Limited

Employ more than 14,000 around the world: More than 8,600 in Canada (some 7,800 in British Columbia) Nearly 2,000 in Chile More than 2,700 in Peru Approximately 600 in U.S. Hundreds more in exploration around the world Teck Resources Limited

Global Overview of Threats to Expats and their Families Kidnap/Extortion Robbery Collateral Damage from Regional Violence Terrorism Political and Socio-Economic Change vs., Radical Religious Fundamentalism Risk Factors Preventative vs., Reactive Teck Examples

The World of International Mobility: Business Immigration Management From Risk to Opportunity Julie Lessard, Lawyer, Partner BCF Business Law

Table of Contents I.BUSINESS PRACTICES ON THE GROUND II.WHY IS IMMIGRATION COMPLICATED (MORE THAN EVER)? III.RISKS INHERENT TO BUSINESS IMMIGRATION IV.BEST PRACTICES FOR RISK MITIGATION V.Q&A AND CONTACT INFORMATION 8

I. Business Practices on the Ground We know the rules, but whats happening in the trenches? 1.The Decentralized Model 2.Modern Approaches to Global Mobility Management: 2.a. The Centralized (In House) Approach 2.b. The Global Project Manager Approach 9

1. The Decentralized Model Philosophy: Immigration as pure compliance exercise or paperwork Goal: quickly moving an employee from one country to another Approach: Ad hoc relationships with local legal providers Measure of success: Time for Employee X to get to country Y with the required authorizations 10

1. The Decentralized Model (cont.) Substantial Challenges in Risk Management: Gathering and tracking key data (expiry dates, audits) Assessing and managing risks in immigration process (tax, audit compliance Consistency of representations before the government Cost Control Assuring host-country legal compliance for the company Maintaining a consistent level of quality vis--vis the business and the expatriate Narrow view of immigration, disconnect from tax and other compliance aspects 11

2. Modern Global Mobility Management Built for Success Philosophy: Global Mobility Management (GMM) requires coherent, multi-dimensional policies and programs to be successful The goal: Mitigation of risks and Elimination of non- compliance Approach: Carefully planned Centralized Control or outsourced GMM Project Manager Measure of success: An optimum GMM organizational structure to maximize the opportunities and to minimize and control risks 12

2.a. The Centralized (In House) Approach Elaborate arrangements for the centralized control of the migration process from the Corporate HQ or within major world regions Limited number of companies build up capacity and expertise to devote resources for in-house preparation of immigration applications in multiple foreign jurisdictions Management of outsourced relationships with multiple providers in each jurisdiction would still be required Concern with regards to unauthorized practice of law 13

2.b. The Global Project Manager Global Manager as a blended approach Bulk of responsibility for the GMM is fully outsourced to the Global Service Provider , typically a group of firms selected in a competitive bid: A. Relocation B. Tax C. Immigration Global Immigration Provider - performs most immigration work in main jurisdictions - negotiates contracts & SLAs with destination providers; - maintains an integrated immigration management database. 14

II. Why is Immigration Complicated (More than Ever)? Understanding the New Immigration Landscape 1.Immigration Law Complexity & Frequent Changes 2.Trends towards Restrictive Interpretations of Law 3.Increased Government Surveillance 4.Complexity of Global Business Models 15

1. Immigration Law Complexity The United States example: Complexity of the Immigration & Nationality Act (INA) equals only to the IRS Tax Code (Congressional Research Report on Immigration) The Canadian example: changes made through either law, operational bulletins, interpretation. In Canada, major reforms one after the other since 2011. 16

2. Trends towards Restrictive Interpretations of Immigration Law 17 L-1B Adjudications Trends 2003-2013, National Foundation for American Policy, 2013

2. Trends towards Restrictive Interpretations of Immigration Law L-1B Specialized Knowledge Intracompany Transferee Program widely used by multinationals No changes to the U.S. regulations governing L-1B applications in 2003 2013; HOWEVER, refusal and Request for Evidence Rates in L-1B applications skyrocketed during this period Canada followed suit in 2013 in introducing stricter interpretation of Specialized Knowledge definitions for Intracompany Transferees 18

3. Increased Government Surveillance Smart Borders : Post 9/11, governments worldwide have invested billions in sophisticated technology to make borders safer Governments create and maintain accurate, current, traceable information on the movement of foreign nationals within their borders Search of personal electronic devices at the border Increased savvy of border agents who use public domain information (Google, LinkedIn, Facebook) to screen travelers 19

4. Complexity of Global Business Project Work in the Global Economy Firms often bid, secure and sometimes attempt to fulfill contracts without any review of immigration aspects of the projects prior to bidding Chains of subcontractors with unclear responsibility for securing immigration documents Mobile Employees of Various Profiles Frequent Travelers Temporary Assignees Permanent Transferees Complex Corporate Structures - Joint Ventures - Corporate Changes (M&A, divestments) 20

III. Risks Inherent to Business Immigration While risks are many, we highlight a few very important ones 1.Civil and Criminal Liability 2.Risks assumed through Corporate Restructuring 3.Global Project Delivery Models and Business Visitors 4.Employer-Employee Litigation & Illegal Practice of Law 21

1. Civil and Criminal Liability In Canada, stronger enforcement and tougher penalties under the changes to the Temporary Foreign Worker Program: Massively increasing the number and scope of inspections so that one in four businesses employing temporary foreign workers will be inspected by the TFWP each year. Increasing the number of program requirements that inspectors can review from 3 to 21. Improving and expanding the TFWP Tip Line and creating a new "Complaints" website. 22

1. Civil and Criminal Liability In Canada, stronger enforcement and tougher penalties under the changes to the Temporary Foreign Worker Program: Expanding the ability to publicly blacklist employers who have been suspended and are under investigation, as well as those who have had an LMIA revoked and are banned from using the program. Additional funding for the Canada Border Services Agency to allow for an increase in the number of criminal investigations. Improving information sharing among departments and agencies involved in the oversight of the TFWP, including provincial and territorial governments. Introducing significant monetary fines of up to $100,000 following adoption of new legislative authorities included in the Budget Implementation Act (Bill C-31). 23

1. Civil and Criminal Liability In other jurisdictions: US$16,000 employer fine for continuing to knowingly employ or recruit an individual not authorized to work in the United States (USA) 5,000 and 3 years jail sentence for employing a worker without a work permit (Italy) $500 - $25,000 equivalent penalties in the UK, China, Russia, Philippines 24

2. Risks Assumed through Corporate Restructuring Mergers and Acquisitions: A.Likelyhood of purchasing some non-compliance along with all of the others assets and liabilities B.Possibility of losing work authorization temporarily or permanently for part of the workforce (Intracompany transferees in some scenarios depending on the structure of the deal, U.S. Treaty Investor / Treaty Trader visas tied to the concept of Company Nationality ) A.The M&A itself creates risks through changed reporting procedures, job duties, salaries, corporate entities, etc. 25

3. Global Project Delivery Models & Business Visitors Information gathered by authorities on entry can (and often is) being shared with immigration and tax authorities Countries are redefining permanent establishments, coupling tax and immigration issues for employers and individuals, searching for travel patterns with the goal of imposing immigration rules and Permanent Establishment (PE) taxation rules 26

3. Global Project Delivery Models & Business Visitors Little awareness of tax and immigration issues when persons operate outside of defined company mobility programs Even when there is awareness, difficulty remains tracking mobile employees: 45% of respondents in Certified Equity Professional Institute Survey, Santa Clara University, are still developing an effective approach to managing data capture for tracking movement of cross-border employees . 27

4. Risks Related to Employee-Employer Litigation and Illegal Practice of Law In-house Immigration Specialists helping employees: where is the line not to be crossed? Whistleblower or disgruntled employee? The resulting math may be the same... US$35 Million for Illegal Use of Visas in Infosys Inc. investigation triggered by Infosys vs. Palmer Dropping the Green Card Process: It may be expensive for you. DerKevorkian v. Lionbridge Techs, Inc. 28

IV. Best Practices for Risk Mitigation Thriving on global mobility 1.Identifying Principal Risks 2.Assessing Existing Practices 3.Choosing and Maintaining the Right GMM Model 29

1. Identifying Principal Risks Failure to adapt to the forces driving business immigration process is counterproductive and risky for your business Understanding and identifying the risks is half of the battle won 30

2. Assessing Existing Practices Strategic Vision: How do you define your needs? Immediate Project Needs vs Long-Term talent development strategies? Line of Command: Who is responsible for daily GMM operations. Are roles well-defined? Who takes final responsibility for risk? Tools and Practices: How do you track movement of your workforce? Which software do you use? How is data reported and synced with other areas of compliance (tax, security)? 31

3. Choosing and Maintaining the Right GMM Model Launch your GMM Model: Mapping your global needs Conducting cost-benefit analysis Consulting industry experts and success stories Implementing clear and transparent plan and getting the management to buy-in early in the process Operational Stage: Stay on top of the game: Frequently refreshing and re- educating players, reviewing policy documents See the target: mitigating risk and eliminating non- compliance, not eliminating any risk as this is an impossible task in business or immigration 32

UNDERSTANDING THE GLOBAL PERSPECTIVE: It is the world is flat or the world is curved? Presented by Allen Koski, CEBS Cigna Global

INTRODUCTION Confidential, unpublished property of Cigna. Do not duplicate or distribute. Use and distribution limited solely to authorized personnel. 2014 Cigna Global Benefits are in flux: Host of issues that complicate benefits, health care management, compliance for employers, expatriates and local national employees Benefit programs need to reflect the wider range of countries in which expatriates are sent and local nationals reside The US is not the only country in the midst of National Healthcare and/or Health Insurance Reformation Emerging Markets (BRICS and CIVETS) vs. Previous Leading Destinations vs. Hardship Locations 34

GLOBAL PEOPLE STRATEGY Confidential, unpublished property of Cigna. Do not duplicate or distribute. Use and distribution limited solely to authorized personnel. 2014 Cigna 35 Formation Start-up Growth Maturity Expats Locally Hired Foreigners Locals S-T Assignees & External

1 Gap in communication of benefits and programs: Employers providing services, but expats not very aware of these services 2 One size does not fit all: Customization by country of assignment is necessary 3 Human resources: Expats demand more support of HR need more understanding & support of their challenges abroad 4 Medical preparedness and care: Preparedness viewed as very important factor; all ages accessing care during assignment 5 BRICS: Really the most difficult countries of assignment? (Assignments in the U.S. need attention too) NFTC/Cigna Global EXPATRIATE TRENDS STUDY 2013: KEY FINDINGS 2 3 4 5 1

Why Wellness: Working Well: A Global Survey of Health Promotion, Workplace Wellness and Productivity Strategies, July 2014 Buck Survey Sponsored by Cigna Confidential, unpublished property of Cigna. Do not duplicate or distribute. Use and distribution limited solely to authorized personnel. 2014 Cigna 38 Canada: Reducing employee absences due to sickness and disability U.S.: Reducing health care or insurance premium costs Europe/L.A./Australia: Improving workforce morale/engagement Asia: Improving workplace safety Going Global: 56% have a global health promotion strategy, up from 34% (2008) Wellness design: flexible work schedules, PTO, EAP, Regular Communications, Immunizations, Biometrics, Ergonomics, HRA, Coaching, Health Challenges, On-Site Occ Top excuses: Differing cultures, laws and practices; no global oversight; lack of vendors

Risk Management for Corporate Relocations: Canada & U.S.A Tax, Financial & Estate Planning Presented by Matt Altro, B.Comm., CFP (Canada), CFP (U.S) MCA, Cross Border Advisors Inc.

Agenda Introduction Risk Management Issues Tax Residency Financial Considerations Estate Planning Case Study Conclusions Q&A

Cessation of Canadian Residency Under Canadian domestic law Primary ties (residence, spouse, dependents) Fewer secondary ties to Canada Under Canada-US Tax Treaty Treaty Tie-Breaker Tests Permanent home Centre of vital interests (personal and economic relations) Habitual abode Citizenship

Canadian Departure Tax Tax impact of becoming a non-resident of Canada Deemed disposition of property at FMV Realization of accrued gains prior to emigration Capital Gains Tax There are exceptions, not all assets are subject to departure tax Final personal tax return (exit return)

Canadian Assets and Departure Tax

Tax Residency What is the difference between maintaining Canadian residency while on assignment or exiting Canada for tax purposes? Tax ResidenceCanadian TaxationU.S. Taxation Maintain Canadian Tax Residence Taxed by the CRA on worldwide income Utilize foreign tax credits on tax paid to the U.S. Taxed on U.S.-source income* Become a U.S. Tax Resident Subject to Departure Tax upon exit from Canada Taxed on Canadian-source income (if applicable) Taxed by the IRS on worldwide income *Additional filing may be required if you meet the Substantial Presence Test

RRSP Planning for U.S. Residents Maintain RRSPs Special reporting with the IRS File Form 8891, FBARs and FATCA Withdraw RRSPs Non-residents can withdraw RRSPs at lower rates 25% or 15% Ability to leverage Foreign Tax Credits Pre-Departure Planning Realize accrued capital gains before becoming a U.S. tax resident

U.S. Estate Tax A Canadian who moves to the U.S. may be subject to U.S. estate tax on worldwide assets upon death Exemption - $5,340,000 Rate Up to 40% Planning Points Structure assets before moving so they do not form part of the estate for U.S. estate tax purposes Estate planning should be done in the jurisdiction where your assets are

Case Study Tom, Vice-President of Marketing at ABC Inc. Has been working in Toronto for 10 years and ABC Inc. is sending him on a temporary assignment to New York from October 2013 to July 2014 In August 2014, ABC Inc. decided to make the transfer permanent 47 years old Married Two children Tons AssetsValue House in Toronto, ON$1,500,000 Cottage in Muskoka, ON$900,000 Condo in Florida$750,000 RRSP$500,000 Non-registered investments$3,000,000 TFSA$50,000 Life insurance$3,000,000 Total Net Worth$9,700,000

Tax Residency Scenarios Case Study Tom goes to the U.S. on a L1 visa He is on temporary assignment from October 2013 to July 2014 Scenario 1 Cut Ties to Canada He rents out his house in Toronto He buys a condo in New York His family moves with him to New York His kids are enrolled in New York schools Scenario 2 Maintain Ties to Canada His family stays in Toronto He keeps his home in Toronto He stays in a hotel while in New York

Case Study Analysis: Timeline

Case Study Analysis: Managing Tax Residency Risk If you are on a temporary assignment in the U.S.: Maintain your Canadian home (do not rent it out) Your family should stay in Canada Maintain your Canadian drivers license Leave your non-registered investments in Canada Do not apply for an immigrant visa/green card Maintain Canadian club memberships Etc. When the decision is made to move permanently, allow 6 to 12 months for planning and implementation

Case Study Analysis: Financial & Estate Planning Considerations Financial Considerations Prior to exit from Canada Liquidate TFSA Liquidate Canadian mutual funds (PFICs) Post-exit from Canada Withdraw $500,000 RRSP for tax savings Move $2,000,000 of non-registered investments to the U.S. Estate Planning Plan for U.S. estate tax with a pre-entry trust or an irrevocable life insurance trust prior to exiting Canada Estate planning in the jurisdiction where your assets are

Questions? Anne Chalmers, Teck Resources Limited [email protected] Julie Lessard, BCF [email protected] Matt Altro, MCA [email protected] Allen Koski, Cigna [email protected]

The World of International Mobility CERC Panel: Anne Chalmers, Teck Resources Limited Julie Lessard,...

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