CHAPTER 15 Compensation Expatriates

Chapter 15

Compensation Expatriates

 

Multiple Choice Questions

1.      Which Internal Revenue Code section is designed to minimize double taxation by allowing expatriates to credit foreign income taxes against the US income liability?
  1. 910
  2. 191
  3. 911
  4. 901

Answer:

2.      Andre is going to be stationed overseas for about 18 months, so his foreign service premium will increase his base pay by about how much?
  1. 5 – 10 %
  2. 15 – 20 %
  3. 10 – 30 %
  4. 20 – 40 %

Answer:

3.     What is referred to as a purchasing power equalizer?
  1. currency stabilization
  2. inflation
  3. exchange rate
  4. cost-of-living allowance

Answer:

4.      The State Department’s Quarters Allowance table contains which main sections?
  1. allowances for family status and salary range, inflation rate, exchange rate
  2. exchange rate, survey data, inflation rate
  3. survey date, exchange rate, allowances for family status and salary range
  4. inflation rate, allowances for family status and salary range, survey data

Answer:

5.      Using the State Department’s Index, what percent increase to base pay might a family of seven receive as a supplement?
  1. 40%
  2. 30%
  3. 20%
  4. 10%

Answer:

6.      Under Section 911 of the IRC, how much of an expatriate manager’s $200,000 salary might be excluded from US income tax?
  1. up to $70,000
  2. up to $60,000
  3. up to $50,000
  4. up to $40,000

Answer:

7.      About how many countries are deemed as hardship locations by the US State Department?
  1. 100
  2. 200
  3. 150
  4. 50

Answer:

8.      The State Department’s Index compares the foreign costs of goods and services with which US city?
  1. Seattle
  2. Chicago
  3. Washington D.C.
  4. New York

Answer:

9.      How are hardship allowances usually paid to expatriates?
  1. over a two year period
  2. added to monthly salary amount
  3. several small payments
  4. single lump sum

Answer:

10.    Which base-pay method works best for expatriates who move from one foreign assignment to another and rarely, if ever, work in their home countries?
  1. Expatriate-based
  2. host-country-based
  3. home-country-based
  4. headquarters-based

Answer:

11.    An international assignment is considered long-term when it lasts at least how long?
  1. 3 months
  2. 6 months
  3. 24 months
  4. 12 months

Answer:

12.    Which of the following are the three main incentives for international compensation?
  1. foreign service premiums, hardship premiums, mobility premiums
  2. mobility premiums, hardship premiums, tax advantages
  3. tax advantages, mobility premiums, foreign service premiums
  4. hardship premiums, tax advantages, foreign service premiums

Answer:

13.    Renata Marie has been given a mobility premium as a reward for moving from one assignment to another.  In what form did she receive this premium?
  1. lump-sum payment
  2. monthly payments
  3. a year-end bonus
  4. none of the above

Answer:

14.    Which of the following would be considered an appropriate reason to use the balance sheet approach
  1. the host country would be an appropriate reference point for economic comparisons
  2. the assignment length is undetermined
  3. the expatriate will probably go to another foreign assignment upon completion
  4. the assignment is of limited duration

Answer:

15.    Benjamin is going on his first expatriate assignment to a country considered a hardship location.  About how much will you have to increase his base pay?
  1. 50% – 70%
  2. 5% – 25%
  3. 20% – 40%
  4. 5% – 15%

Answer:

16.    If your company hired an Australian manager to work in your plant in China, she would be considered which type of international employee?
  1. foreign country national
  2. third country national
  3. host country national
  4. non-host country national

Answer:

  1. Your company is sending Sheila on a six-month assignment to Sweden, so you should probably use which method to determine her base pay?
  2. headquarters-based
  3. host country-based
  4. home-country based
  5. foreign country-based

Answer:

18.    What happens under tax equalization?
  1. expatriates realize tax benefits whenever actual taxes are less than the hypothetical tax
  2. the employee pays the foreign income tax, but not the U.S. government tax
  3. employers reimburse expatriates for the difference between the hypothetical tax and the actual income tax
  4. the employer takes the responsibility for paying the income tax on behalf of the expatriates

Answer:

19.    Juanita was told that on her first overseas assignment she would be getting a foreign service premium.  That probably means she will be there at least how long?
  1. 12 months
  2. 6 months
  3. 18 months
  4. 24 months

Answer:

20.    Stephan is going to be getting a mobility premium for going to Saudi Arabia. How are you going to give it to him?
  1. when he completes the assignment
  2. over the length of his assignment
  3. in 3 installments
  4. a lump-sum payment

Answer:

21.    Which of the following is considered an enhanced benefit for expatriates?
  1. emergency leave
  2. education reimbursement
  3. host country holiday pay
  4. pay for host country vacation days above what the company usually gives

Answer:

  1. Since he started at American Eyeful Pictures, Inc., David has worked in Japan, China, and Thailand. The company has probably set his base pay using which method?
  2. host-country-based
  3. home-country-based
  4. headquarters-based
  5. third-country based

Answer:

23.    When determining Ms. Jenkins’ relocation assistance amount what will you need to consider?
  1. distance, length of assignment, her rank in the company
  2. her rank in the company, family size, length of assignment
  3. length of assignment, pay level, distance
  4. hardship ranking of assignment, distance, family size

Answer:

24.    These three are considered part of incentive compensation.
  1. foreign service premiums, hardship allowances, mobility premiums
  2. rest and relaxation payments, relocation assistance, mobility premiums
  3. relocation assistance, foreign service premiums, hardship allowances
  4. home leave benefits, rest and relaxation payments, foreign service premiums

Answer:

25.    The U.S. State Department establishes its hardship status using these three broad categories.
  1. continent its on, health conditions, its relations with the US
  2. government type, health conditions, living conditions
  3. its relations with the US, living conditions, physical hardships
  4. living conditions, physical hardships, health conditions

Answer

26.    AT&T plans on sending R.J. to Peru to work for at least 3 years.  They will probably use which method to set his base pay?
  1. host-country-based
  2. home-country-based
  3. headquarters-based
  4. third-country based

Answer:

  1. Under IRC Section 901, expatriates can apply foreign tax excess as a deduction from future U.S. income tax for up to how many years?
  2. 5
  3. 2
  4. 7
  5. 10

Answer:

28.    Which of the following are used by the State Department to determine the per diem schedules for?
  1. length of stay, family size
  2. location and family size
  3. cost of living, family size
  4. length of stay, location

Answer:

29.    International employees are categorized into one of these three titles?
  1. expatriates, third country national, headquarter national
  2. host country national, third country national, expatriates
  3. repatriates, host country national, third country nationals
  4. headquarter national, expatriates, home country nationals

Answer:

30.    What does the term repatriation refer to?
  1. sending an expatriate’s family to the foreign country with him
  2. an expatriate going back to an overseas assignment she had been to before
  3. an expatriate returning home, from an overseas assignment, to work
  4. teaching an expatriate about the customs and culture of a foreign country

Answer:

 

Essay Questions

  1. What are the considerations HR professionals should take into account when designing fringe benefit programs for expatriates?

 

 

 

  1. What is the balance sheet approach? When is its use most appropriate?

 

 

 

  1. What are hardship allowances? What are their features? How does the U.S. Department of State determine the value of these allowances?

 

 

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