Do I need a new engagement letter every year?
For recurring filings, yes, and the reason is not administrative. A cross-border file changes with the year: residence can change, an account can close, a country can drop out of the picture or arrive in it. The letter records the scope for a stated period, so a letter written around one year's facts may be describing work that is no longer the work required. Rewriting it each year forces the conversation that should happen anyway — what has changed, and what does that add or remove. Where nothing has changed, the new letter says so in a sentence and takes a few minutes to agree.
What should an engagement letter say if I have two accountants?
It should name the filings, not the topics. We handle the Canadian side is the sentence that causes trouble, because a foreign-asset disclosure sits on one country's return while describing the other country's assets, and both advisers can read that sentence as putting it on the other desk. A usable letter lists each return and schedule by name and says who prepares it, who reviews it, and who answers a query about it. It should also say which adviser's figure feeds the other's return, since that decides the order of work. Anything neither adviser is named against is work nobody has been engaged to do.
Does an engagement letter let my accountant deal with the tax authority?
No. The letter is an agreement between you and the adviser about what work will be done and what it costs. Access to your record with a tax authority is a separate authorisation, given to that authority in the form it requires, and it can exist without an engagement letter or be missing while one is in force. The two are often signed in the same sitting, which is why they get confused. Where a file involves more than one country, that authorisation has to be given to each authority separately; the engagement letter can say both will be obtained, but it cannot substitute for either.
Who signs the engagement letter for a company?
Someone with authority to bind the entity that is the client — and identifying that entity is the part worth care in a group. A letter signed by a director of the parent does not by itself engage anyone in respect of a subsidiary's own return, and a subsidiary in another country usually files in its own right. The letter should name the entity or entities it covers, and if the group wants several covered, each should be listed. Where an individual shareholder's personal return is also wanted, that is a different client and a different letter, even where the same person signs both.
Can an engagement letter be changed once work has started?
It can, and on a cross-border file it often has to be. The usual trigger is a fact arriving late: an account, an entity, a year that was never filed, a query from an authority about something filed long ago. The change is recorded as an addition — the new work described, the fee for it agreed in writing — rather than by rewriting the original scope after the event, so the file still shows what was agreed when. Keeping the amendments visible matters later: if a position is questioned, the letter and its additions show what the adviser was engaged to look at, and from when.
What is the difference between an engagement letter and a quote?
A quote is a number attached to a description of work. An engagement letter is the agreement, and the number is one of its terms. The parts that are not the number tend to matter more on a cross-border file: which returns are covered and which are not, who else is working on the file and where the line between them sits, what you are providing and by when, who reviews the filing before it goes out, and what happens if the facts turn out to differ from the ones described. A quote that answers none of those has priced work neither side has defined.
How does the treaty tie-breaker work when both countries say I am resident?
As a sequence, stopping at the first test that gives an answer: where you have a permanent home available; if in both or neither, where your centre of vital interests is; then habitual abode; then nationality; and if all of those tie, the two tax authorities decide by agreement. It is evidential rather than elective — you do not choose your treaty residence, you demonstrate it, which makes the record of homes, family and time the substance of the claim. See tie-breaking dual residency.
Which country do I pay tax to first?
Generally the source country — where the income arises — taxes first, often by withholding before you receive it. Your country of residence then taxes the same income and credits what the source country took. That order is why timing matters: a residence-country return filed before the source-country tax is settled has nothing to credit yet. Getting the sequence right is most of the work. See international tax planning.
