Australian Tax Reform Would Hit Exec Pay

Tax reform could prove to be a mixed benefit for companies and executives if Australian Prime Minister John Howard prevails. Central to Howard's proposed reforms is a 10% goods and services tax balanced by income tax cuts, which are being welcomed by the business community.

But the proposed tightening of Australia's fringe benefit tax would significantly affect executives with compensation packages that minimize tax take. Under the reforms, companies would have to declare the "grossed-up value" of executive pay packages, which means higher deductions for pensions, medical care, and child-support.

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