In this presentation, FMC Partner Shawna Vogel and Associate Yasmeen Nizam team up with MNP Partner David Yager and Associate Kathy Bonazew to deliver information about foreign workers, international tax and oil & gas market updates. The following topics are discussed:
- We Need Foreign Workers Now
- New Developments in Permanent Residence Applications for Workers
- State of Canada’s Oil & Gas Industry and Future Employment Needs
- Taxation in Canada
4. A. LMO and A‐LMO
1. Key Elements
• Advertise position
• Qualify candidates
• Apply for and obtain Labour Market Opinion
Confirmation (“LMO”)
• Obtain work permit
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5. 2. Changes ‐ A‐LMO – Accelerated LMO
• 10 day processing
• Advertising and all other requirements still apply –
post issuance VERIFICATION
• Only applies if positive LMO issued to employer in last
2 years
• Positions – NOC O, A, B (management, professional,
technical)
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7. B. Alberta Programs
Work Permit
• (specific semi‐skilled worker occupations)
• No LMO
PR Programs
• Skilled Worker, Semi‐skilled in certain industries
(employer driven)
• International graduate
• Certain Trades, Certain Engineering professions
(employee driven)
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8. C. New
• Compliance Requirements
• AB Pilot project for working‐age dependent children of
skilled workers
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9. D. Tips
1. Passport expiry
2. Medical, TRV, Criminality
• Delays due to need of medicals (where employee has
been in “medically‐required country for 6 months in
last year)
• Delays (and change of venue of application) because of
nationality (and not residence) of employee
• Criminal record – be prepared
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19. Group B – no sub‐caps (2011 NOC code)
• 7315 Aircraft mechanics and aircraft inspectors
• 7318 Elevator constructors and mechanics
• 7371 Crane operators
• 7372 Drillers and blasters ‐ surface, mining, quarrying and
construction
• 7373 Water well drillers
• 8231 Underground production and development miners
• 8232 Oil and gas well drillers, servicers, testers and related
workers
• 9232 Petroleum, gas and chemical process operators
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22. Skilled Federal Worker Class
• In April CIC to announce:
– A cap on the number of applications that will be accepted in the first
year
– A new list of priority occupations
– The organizations that will be designated to conduct educational
assessments
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24. Inadmissibility
• Permanent Residence Applications will be refused if applicants
are inadmissible to Canada for reasons such as serious
criminality, health reasons, accompanying and non‐
accompanying family member is inadmissible
• No appeal right to the Immigration Appeals Division for
refused permanent residence applications in Federal Skilled
Trades Class, Federal Skilled Worker, and Canadian Experience
Class
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25. State of Canada’s Oil & Gas Industry &
Future Employment Needs - March 2013
26. Four questions to answer
1. Where have we been?
2. Where are we at?
3. Where are we going?
4. What is the manpower
challenge?
27. 1) Where have we been?
• Growth - 1991 to 2003
• Boom – 2004 to 2008
• Bust – 2009, 1st half of
2010
• Growth – 2nd half of 2010
to Q1 2012
• Oilsands explodes
• Switch from gas to oil
30. 2) Where are we at?
• January off to a decent
start for drilling
• Oilsands steady but
projects being
postponed
• Gas prices remain soft
• Oil prices, particularly
bitumen, depressed
31. Commodity Price Snapshot
Mar 11 Mar 12 Forecast*
2013 2012
Gas - AECO 12 Month Strip ($C/mmcf) $3.29 $1.71
Gas - Henry Hub Spot ($US/mmbtu) $3.64 $2.17 $4.13
Synthetic Crude ($C/bbl) $101.20 $89.75
Oil - WCS ($C/bbl) $75.53 $70.14 $69.80
Oil - WTI Cushing Spot ($US/bbl) $92.06 $106.34 $91.30
Oil - Brent ICE ($US/bbl) $110.22 $125.34 $104.15
*12 Month Futures Prices as at March 12 for March 2014 CME
34. Maintaining production will be steady business
Jurisdiction Crude Liquids Gas MM
MM B/D MM B/D MMCF/Day BOE/Day
Russia 10.1 0.4 47.1 18.4
United States 9.0 0.2 47.2 17.1
Saudi Arabia 9.8 1.4 6.5 12.3
Iran 4.2 0.1 10.7 6.0
Canada 3.3 0.7 14.8 5.9
China 4.0 - 7.3 5.2
Alberta 2.5 0.4 12.8 4.6
35. 3) Where are we going?
• CAPP forecast CAPEX
steady
• Continued shift from gas to
oil
• Bias towards the negative
• No overall industry growth
36. Industry Capital Spending
Cdn $billions
Oil & Gas Investment Spending:
2011: $62 billion
2012: $61 billion (estimate)
2013: $63 billion (forecast)
Northern Canada
2011 2012E 2013F
$0.3 $0.3 $0.5
Oil Sands
2011 2012E 2013F
$22.7 $23 $23
East Coast Offshore
Western Canada 2011 2012E 2013F
2011 2012E 2013F $1.5 $1.5 $1.5
`11 `12E ‘13F
$37.6 $36 $38 AB $26 $26 $27
BC $6.7 $4 $4
Note: Excludes spending on mergers & acquisitions
SK $5.1 $6 $7
41. 4) How many jobs?
• Oilfield services not
growing, pause (or end?) of
multi-year trend
• Excess capacity
• Downward pricing pressure
• Employment challenges
remains
42. The new realities
• New oilsands projects on hold
• Oil prices softer, discounts remain
• Pipeline solutions two years out
• Oil companies laying off staff
• Demographics will still affect labor
markets regardless of CAPEX
scenarios
43. Current Oil and Gas Workforce
3%
11%
In 2011, the industry directly employed
186,635 workers:
47%
• 87,087 in oil and gas services
• 72,746 in exploration and production
(or E&P) 39%
• 20,304 in oil sands
• 6,498 in pipelines
*Percentages represent employment share
to total oil and gas workforce in Canada.
Source: PHRCC
44. Current Oil and Gas Workforce
Top 10 Occupations Based on 2011 Employment Numbers
1. Field workers (32,371)
2. Supervisors, drilling & service (9,100)
3. Engineers (chemical, mechanical, petroleum) (8,985)
4. Non-steam ticketed operators (6,951)
5. Heavy equipment operators (6,567)
6. Drilling coordinators/primary production managers (6,513)
7. Truck drivers (6,052)
8. Millwrights and machinists (4,890)
9. Geologists and geophysicist (4,676)
10.Steam-ticketed operators (4,578)
Source: PHRCC
45. Size of Industry Does Not Means Jobs
Low gas prices offset employment gains in oil and oilsands
100,000
84,529 87,087 85,739
90,000
80,000
Number of Jobs
70,000 62,103
73,511 72,746
60,000
50,000
Source: PHRCC
40,000
26,144
30,000
18,989 20,304
20,000
10,000 6,500 6,498 7,031
0
2010A 2011E 2012F 2013F 2014F 2015F
Oil and Gas Services E&P Oil Sands Pipelines
46. Employment Scenarios
High growth (oilsands plus West Coast LNG) will create greater
manpower demands
260,000 246,887
Growth Scenario
Source: PHRCC (2011)
240,000
214,579
220,000
Number of Jobs
200,000 186,635
Most Likely
177,039 181,017 Scenario (2012)
180,000
177,892
160,000
166,548 Growth Oil/Low
174,779 Gas Scenario
140,000
(2011)
120,000
100,000
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
47. Hiring 2013 - 2015 Source: PHRCC
Top 10 Petroleum Occupations Based on Hiring Due to Industry Activity to 2015
By Number of Jobs By Percentage of 2011 Employment
1. Field workers, laborers and operators 1. Project engineers (19%)
(1,521) 2. Steam-ticketed operators (19%)
2. Steam-ticketed operators (891)
3. Mining engineers (18%)
3. Heavy-equipment operators (597)
4. Electrical/instrumentation engineers
4. Heavy-duty equipment mechanics (16%)
(214) 5. Mechanical engineering technologists
5. Electrical/instrumentation engineers (11%)
(105)
6. Heavy-duty equipment mechanics
6. Project engineers (99) (10%)
7. Instrumentation technicians (94) 7. Heavy equipment operators (9%)
8. Industrial electricians (57) 8. Environmental technicians (7%)
9. Mechanical engineering technologists 9. Quality assurance analysts (7%)
(44)
10. Drafting technologists (6%)
10. Quality assurance analysts (39)
48. Demographics a Challenge
Age-related attrition will create 9,500 jobs in 201 – 2015 period
Year-Over-Year Net Hiring Requirements for Canada’s Oil and Gas
Industry
6,000
3,531 2,256 1,548 2,116
5,000
4,000
Number of Jobs
3,000
2,000
1,000
0
-1,000
Source: PHRCC
-2,000
-3,000
2012F 2013F 2014F 2015F
Due to Industry Activity Due to Age-related Attrition
49. Net Hiring 2012 - 2015 Source: PHRCC
Top 10 Petroleum Occupations Based on Net Hiring Requirements to 2015
By Number of Jobs By Percentage of 2011 Employment
1. Field workers, laborers and operators 1. Project engineers (28%)
(2,764) 2. Steam-ticketed operators (27%)
2. Steam-ticketed operators (1,238)
3. Mining engineers (26%)
3. Heavy equipment operators (1,132)
4. Electrical/instrumentation engineers
4. Engineers (chemical, mechanical, (24%)
petroleum) (429) 5. Heavy-duty equipment mechanics
5. Drilling coordinators/primary (18%)
production managers (429)
6. Mechanical engineering technologists
6. Heavy-duty equipment mechanics (18%)
(381)
7. Heavy equipment operators (17%)
7. Supervisors, drilling and services 8. Quality assurance analysts (15%)
(303)
9. Drafting technologists (14%)
8. Millwrights and machinists (275)
10. Environmental technicians (14%)
9. Truck drivers (254)
10. Industrial electricians (225)
50. Total Hiring Outlook to 2015
Year-Over-Year Total Hiring Requirements for Canada's Oil and
Gas Industry
6,000 4,887 3,662 2,914 3,482
5,000
4,000
Number of Jobs
3,000
2,000
1,000
0
-1,000
-2,000
Source: PHRCC
-3,000
2012F 2013F 2014F 2015F
Due to Industry Activity Due to Age-related Attrition Due to Leakage
51. Recommendations
• Industry can:
o Recruit skilled workers from outside industry
o Retain skilled workers during slowdowns
o Invest in retention practices
o Build internal capacity
• Government can:
o Communicate with industry and focus policies and programs
o Enhance community housing, infrastructure and services in
hard-to-recruit locations
o Improve timely access to workers outside Canada
Source: PHRCC
52. Conclusion
We’ll come up
with something.
We always do.
54. Taxation in Canada
• Foreign workers will likely have to pay income tax in Canada
• Canadian taxation is based on residency
• Residency status will determine taxation in Canada
55. Factual resident
• Resident of Canada for income tax purposes based on facts and
circumstances
• Residential ties in Canada include:
– Home
– Spouse or dependants
– Personal property (automobile, furniture, etc.)
– Economic ties
• Subject to Canadian income tax on income from all sources
• Can claim non-refundable tax credits
– May be pro rated for a part-year of residency
• Residency status in home country may be a factor
56. Non-residents
• Does not establish or otherwise have significant residential ties with Canada
and has not been in Canada for more than 183 days
• Subject to Canadian income tax only on income from Canadian sources
• Can claim non-refundable tax credits if 90% or more of the worker’s income is
from Canadian employment
– Basic personal amount, the spouse or common-law partner amount, if applicable or the amount for
an eligible dependant.
• Can claim non-refundable tax credits for Canadian Pension Plan (CPP) and
Employment Insurance (EI) premiums
57. Deemed non-residents
• Worker that:
– Has been in Canada for more than 182 days in the year and
– Is Considered resident of another country with which Canada has an income tax treaty
• Taxed in the same manner as non-residents
58. Deemed residents
• Worker from a non-treaty country who has been in Canada for 183 days or
more in a calendar year
• Subject to Canadian Income tax on income from all sources (both inside and
outside of Canada)
• Can claim in full all non-refundable tax credits that are applicable. (i.e. basic
personal amounts, spouse or common law partner amounts or the amount for
an eligible dependant)
• Can claim CPP and EI premiums
59. Double taxation
• A tax treaty between Canada and the worker’s home county ensures that the
worker does not have to pay tax twice on the same income
60. Employer withholding
• Workers that have regular and continuous employment in Canada are subject
to tax deductions in the same manner as Canadian resident employees
61. Form TD1, Personal Tax Credits Return
• All persons working in Canada have to complete a federal Form TD1 and a
provincial TD1 and submit them to their employers
• Helps the employer determine the amount of tax to deduct from earnings
• If a worker does not give the employer a completed provincial Form TD1, the
employer should deduct provincial tax using claim code “0”
62. T4 Information Return and Slips
• Employers are subject to the same reporting requirements for foreign workers
as they are for Canadian resident employees
63. Waiver From Withholding Tax
• A tax treaty between Canada and a worker’s home country may exempt a
certain amount of employment income from Canadian income tax
– Barbados and U.S. - $10,000
– Jamaica - $5,000
– Mexico - $16,000
• If employment income is less than the treaty amount, the entire amount is
exempt from Canadian income taxation
• If employment income is more than the treaty amount, the entire amount is
subject to Canadian income taxation
• Must request a waiver of withholding
• CPP contributions and EI premiums withholding requirements will apply
64. T1 Income Tax and Benefit Return
• Must be filed if:
– Worker is requesting a refund of income tax, CPP and/or EI
– Worker has to pay income tax with respect to employment income earned
– CRA requests that a return be filed
• Recommend that all foreign workers file a return
• Province of employment determines return(s) to be filed
– If employed in more than one province Form T2203 Provincial and Territorial Taxes – Multiple
Jurisdictions must be completed
65. T1 Income Tax and Benefit Return
• Schedule D Information About Your Residency Status
• Schedule 1 Federal Tax
• Form 428 Provincial Tax
• T4 slips
• Schedule A Statement of World Income
• Schedule 5 Details of Dependant
• Form T2203 Provincial and Territorial Taxes – Multiple Jurisdictions
66. Time Limit For Refunds
• Within 3 years of the due date of the original return for income tax refunds
• Within 4 years of the end of the tax year for CPP refunds
• Within 3 years of the end of the tax year for EI refunds
67. Home Country Tax Issues
• A non-resident of Canada is likely resident for income tax purposes in his
home country
– Will have to coordinate tax filings between the two countries
• U.S. taxes citizens regardless of where they live and/or work
– Ongoing U.S. filings and additional reporting requirements
68. Thank you for Joining Us
Shawna Vogel, FMC 780.423.7335 e: shawna.vogel@fmc‐law.com
David Yager, MNP 403.461.8566 e: david.yager@mnp.ca
Yasmeen Nizam, FMC 780.423.7201 e: yasmeen.nizam@fmc‐law.com
Kathy Bonazew, MNP 780.969.1454 e: kathy.bonazew@mnp.ca
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