Searching Offshore For A CEO? Now The Near Impossible Is Only Just Hard Work

900,000 Australians have decamped to take up employment far from this country’s sunny shores. That is 13% of the working population. Research indicates they earn more and are taxed less. Some of them are CEOs. So it is only fair Australian companies should import CEOs in return. Australia is a net importer of talent overall. However, where it succeeds on the shop floor it fails in filling the chair on the top floor. Very recently tax changes make the search for a new CEO from offshore that much easier.

From July 1, temporary residents (i.e. off-shore recruited CEOs) will not be taxed on worldwide income. This has been a very significant disincentive to accept a job offered by companies wanting to hire a foreign national for Australian based executive roles. The two largest current sources of top executive talent for Australia, the USA and UK, have much lower taxes on their top talent’s income earning assets.

Foreign national CEOs will be taxed only on Australian sourced investment income, total employment income, and income from Australian shares, options or other equity rights. There are no time limits for exemption as a “temporary” resident, allowing for more variety and certainty in contractual arrangements.

So now the board chairman only has to match the level of pay the new CEO would get outside Australia (including, perhaps, US style shares and options not related to performance), with perhaps a suitable gross up for the higher local income taxes. This should make the task only difficult, rather than near impossible.

© Guerdon Associates 2024
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