iarapilot

Here are some important points I think are applicable to this cost equalization. If you notice under the existing FDA section in the contract, there is no mention of tax equalization. But with the LOA, the existing rules governing an FDA are changed to include the equalization language. Also, the bonus is changed. These are give backs to the company. More important, I think, is that this equalization has been negotiated between HK and FedEx as a requirement for FedEx to operate out of HK. That way HK is assured to get taxes from our pilots who are only going to earn money in HK for 4 hours per pairing. That is, for the time we spend driving to China to start the trip and then the return at the end of the trip. If a pilot elected to get to CAN... Guangzhou.. on his own to start the trip, you would not be in HK earning money. Now, I know that would be tough with no visa, getting into China for your trip......just hypothetical.. All other work we will be doing is not going to be done in HK. Therefore, HK has leverage through FedEx to tax our wages, and if there is a problem with a pilot not filing taxes with the HK authorities, instead of HK having to try to get taxes from someone who does not live in HK, they use FedEx as their proxy. And, they issue our visa, so they could pull it. I am not saying pilots shouldnt pay HK taxes.....just making an observation here to add things up with regard to the company wanting the equalization language.

My personal feelings are that this LOA is beyond substandard, to put it mildly. I also think that FedEx HAS to have this LOA for them to be able to operate out of HK with an FDA. If it is voted down, they will have to come up with something better for us. Based on my theory that HK and FedEx have agreed to this equalization, if we vote this down the company would be hard pressed to send any pilots, junior, new hire, or otherwise, to operate in HK. Just food for thought!

MX727

If that is the case, then we are going to get the stuff that FedEx HAS to have anyway. The rest will of the LOA will disappear.

The postal LOA failed and that was the last we heard. Many thought that FedEx HAD to have that to fly the postal freight. They didn't get it and the freight moved. We left money on the table on that one, but we avoided some onerous work rules. I think we did the right thing on that one.

I'm not sure what we gain if we leave the money on the table this time.

The main reason, in my mind, that they even negotiated an LOA is that they would like to get more seniority in the Captain seats. They ran the costing and it was worth it. When this is voted down, they will impose the tax provisions they need and accept the seniority level that that results in.

I do not believe that there is ANY fear in management's mind that the captain seats will go unfilled. The unfilled F/O seats will go to new hires. The 757 is coming slowly and they will have time to fill it. I don't think HKG will be stood up instantly either, so they have time to fill it too.

I'm still leaning towards NO, but I'm concerned about what happens after that....

fedupbusdriver

For the record, I am totally against this LOA. That being said, I think some people are confused about tax equalization. Here is a link from Price Waterhouse concerning HKG tax equalization.

http://www.pwchk.com/home/eng/tax_ias_equalization.html

GreaseA6

There is a line in the current CBA, Chapter 6 Relocation Expenses that I am curious about:

6.C.14 Income tax gross up benefits as provided in the Personnel Policy and Procedures Manual (3-86) dated October 2003.

Anybody got a clue?

Huck

It will be a hot ticket when all other upgrades stop for 3 - 5 years this fall.....

fdxflyer

you are an 11fo apparently huck. cost that out. why would it be a hot ticket?

fedupbusdriver

I think basically, that the taxes paid by the company for you is reported as income, so they must "Gross up" your pay to make up for the additional tax burden caused by the overseas taxes being paid by the comany and reported as income.

prezbear

iarapilot,

This is from the PriceWaterhouse site concerning Hong Kong and Chinese taxes:

Hong Kong-China Double Taxation Arrangement

In order to eliminate double taxation of cross-border activities between Hong Kong and PRC, the Hong Kong government and the PRC government first entered into an arrangement, namely 'the Arrangement between the Mainland of China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation on Income' in February 1998. The arrangement entered into in February 1998 has now been replaced by a more comprehensive arrangement entered into in August 2006. It is possible for a frequent traveler to obtain a relief from the PRC individual income tax under this arrangement.

Prez

TonyC

The Personnel Policy and Procedure Manual (The People Manual) is available on the FedEx INTRAnet at http://library.fedex.com/library/cor...ople/index.htm . The latest Print Undate was June 25, 2006; the latest Online Update was June 1, 2007.

From Section 3-86 Relocation (Last revised June 25, 2006):


Policy
Guidelines

Income Tax

• Total relocation expenses, as defined by this policy, paid by the employee or on behalf of the employee

Any additional federal income tax liability incurred by an employee as a result of a relocation and determined to be covered under the gross-up provisions as defined by this policy will be paid either directly to the Internal Revenue Service (IRS) or reimbursed to the employee. The employee must show proof of payment of the tax.

All state taxes are subject to a maximum combined tax gross-up of 5%.

At the end of a year in which an employee receives any relocation benefits, the employee’s W-2 reflects the amounts paid to the employee or on behalf of the employee by the Company. In addition, the employee receives an itemization which identifies the relocation expenses and allowances paid by the Company (e.g., relocation allowance, household goods movement, closing costs). The itemization is provided in order to assist the employee identifying expenditures that may be treated as deductible. The employee must file an IRS Form 3903 with his tax return in order to claim moving expense deductions. Where applicable, some relocation expenditures may be deductible in determining state and local taxable income.

If an employee believes that an additional tax liability was incurred as a result of a reimbursement of relocation expenses, the employee must provide the following information to the Relocation Department by April 30 of the following year in which the relocation/income was incurred in order to determine the amount of the additional tax liability: