Question

Mr. John Handel an Australian was expatriated for 3 years to the multi-national’s Regional Office in middle east. Although his position was designated as Marketing Manager, he also performed a critical strategic role for global business development. Company CEO Mr. Demise want to set the compensation package for Mr John for his international assignment. As there is 5% tax in Middle East but being an Australian citizen, he must pay tax in Australia. Mr John worked in Middle East for three years. His yearly salary is 10000 OMR of which he was paying 10 % tax in Australia which is equivalent to OMR 500 per annum .his compensation package is based on his home country package.(balance sheet approach ).One of his main roles was ‘intelligence gathering and the identification of business opportunities’ for his former supervisor back at the Australian head office. The former supervisor, although located in Australia, was in the best position to evaluate the market and environment research with material that the expatriate was collecting. The Australian expatriate’s appraisal was therefore conducted by his former supervisor at head office, rather than by a senior manager in the Middle East Office. On return it was not excited to John though gained valuable experience. Anne, his wife faced a difficult time as she was missing her profession as analyst on his international assignment. His two teenaged children too faced difficulty with far distant International Schools.

Answer the below question based on above case.

Q:1: What is the suitable tax approach you can justify for Mr john from the above case and why? (3 marks)

Q: 2: which approach of international compensation is suitable in the above case and discuss the major category of outlay of the above compensation approach. (4 marks)

Q: 3: Explain any three allowance which are mandatory in the compensation of Mr john for his international assignment. (3 marks)