Tax Incentives for Employees: International Business (IB) Specialists

A company in the International Business Activity (IBA) program can apply to register an employee as an IB Specialist

International Business (IB) Specialists

In all cases, the employee’s annual compensation must be greater than $100,000. (Compensation is salaries, wages, commissions, and other remuneration, but does not include any amount described in section 7 (employee stock options) of the Income Tax Act (Canada)). Employees of patent business are excluded.

There are three categories:

International Financial Activity Specialists

This category applies to companies carrying on an international financial business. The employee must meet these requirements:

  • The individual was either a non-resident of Canada immediately before entering into a written employment contract with the registered corporation or was previously registered as an IB specialist
  • The individual specializes in international financial activities other than administrative support activities or back-up office services activities
  • The terms of the written contract of employment require that at least 70% of the individual’s working time is devoted to performing qualifying international financial activities in which the individual is a specialist for the corporation’s international financial business.

Administrative Support Specialists and Back–Up Office Services Specialists

This category applies to businesses carrying on administrative support and back–up office services as specified in sections 2(2)(r) and (s) of the International Business Activity Act (IBAA). To qualify, employees must meet the following requirements:

  • The individual was either a non-resident of Canada immediately before entering into a written employment contract with the registered corporation or was previously registered as an IB specialist
  • The individual has entered into a written contract that requires the individual to work for the corporation in relation to the international financial business of the corporation.
  • The individual must have been a non-resident of Canada at the end of the year before the year of application.
  • The individual must enter into the written employment contract on or after March 3, 2010.
  • The individual, and any person related to the individual, must deal at arm’s length with the registered corporation.
  • There is no requirement for administrative support or back-up office services specialists to devote a certain per cent of their time to the international financial business of the corporation. However, a corporation may only apply to register a combined total of four specialists in this category of specialists for the corporation, including all affiliated corporations.

Designated International Business Specialists

This category applies to companies carrying on a designated international business, which is currently film distribution. To qualify, the employee must meet these requirements:

  • The individual was either a non-resident of Canada immediately before entering into a written employment contract with the registered corporation, or was previously registered as an IB specialist.
  • The terms of the written contract of employment require that at least 70% of the individual’s working time is devoted to performing activities in which the individual is a specialist for the corporation’s designated international business.

The Refund

  • The employer of the Specialist must first register the company with the BC Ministry of Finance in the IBA program in order for the individual to be eligible for the tax refund.
  • A refund is paid only after all British Columbia and federal income taxes for the taxation year are paid.
  • Returns must be filed within 18 months of the end of the taxation year.

Did you know?

  • The IBA Program includes a personal income tax incentive for international employees.
  • Vancouver is among the top-10 wealth management centres in the world.
  • BC has a lower tax rate than Hong Kong and Singapore.
  • All five of Canada’s largest banks have significant operations in BC.
  • You may be eligible for a refund of BC corporate tax on income from international business activities.