AUSTRALIAN TAXATION MARKET & SALARY SURVEY IN ASSOCIATION WITH.

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1 IN ASSOCIATION WITH

2 FOREWORD BY NOEL ROWLAND, CHIEF EXECUTIVE OFFICER, TAXATION INSTITUTE OF AUSTRALIA INTRODUCTION BY MARK BREWER, PARTNER & FOUNDER, BREWER MORRIS GLOBAL TAX RECRUITMENT 2010 has witnessed many significant events in tax, notably the release of the Henry Review of the Tax System, which may possibly provide the roadmap for future years of tax reform. In addition, after many years in gestation, the profession saw the implementation of a new Regulatory Regime for tax and BAS agents. The scope of the latter has led some to describe it as the birth of the tax profession. For many years leading up to the Global Financial crisis the global taxation employment market had been extremely talent short. The Australian market was no different. In Australia, the talent shortage experienced in most exceptionally strong growing economies was exacerbated by the phenomenon of that well-trodden path of newly qualified Australian tax professionals both lawyers and accountants - relocating abroad, mostly to the United Kingdom. But the year was not replete with just one major review, with the Cooper Review into the Superannuation system also completed. In addition, major decisions in cases such as Bamford and significant and controversial Rulings on topics such as Unpaid Present Entitlements made 2010 a very busy year for tax professionals. We continue to see the changing role of the tax professional, with taxpayers increasingly valuing and recognising the tax professional s depth and breadth of technical and commercial expertise. This highlights the tax profession s ability to adapt to change and be at the forefront of applying their technical knowledge to produce commercial outcomes. The recent financial downturn was a challenging time for all, and the Taxation Institute was not immune to its effects, particularly in the area of training and education. A healthy increase in these areas this year indicates that employers and individuals are again engaging and seeking to expand their knowledge to stay on top of what is a dynamic area. With the recent turnaround in the Australian economy, employers are again faced with a tough market to attract the best tax talent. Attracting tax professionals with the right experience and credentials is critical to the success of any organisation. The Institute understands the critical role that expert recruitment firms such as Brewer Morris play in identifying these talented individuals for your business. More importantly selecting candidates that are Members of the Taxation Institute will further enhance your recruitment outcomes by hiring those at the forefront and best equipped to meet the constantly changing tax system. The Global Financial Crisis turned this dynamic 180 degrees, of course. It is a period I view as the most tumultuous I have seen in my thirty years in the recruitment industry; in most jurisdictions globally we experienced a sudden and dramatic freeze in recruitment in October 2008, through to mid As we moved past what we believed was the back end of the GFC and into a period where our businesses and the majority our clients globally were reporting strong upturn, the advent of the new financial year in July 2009 saw signs of improvement with a trickle of new instructions and opportunities in our Australian division. By late 2009, Christian and his team were experiencing significant demand from the chartered firms particularly the larger mid tiers, strong demand from a selection of the top tier law firms and greater confidence in growing and / or replacing talent within in-house group tax functions. The 2009/10 financial year produced strong results for one of The SR Group s most recent significant investments. Brewer Morris Australian division has already established a reputation for integrity and a deep specialist knowledge of the taxation market, and we are especially excited to now be in a position where we can provide seamless international talent solutions to clients globally; and a range of exciting career options to candidates throughout the world. MARK P BREWER SEPTEMBER 2010 NOEL ROWLAND 2

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4 WELCOME TO BREWER MORRIS AUSTRALIA The late legendary American newscaster David Brinkley famously said a successful person is one who can lay a firm foundation with the bricks that others throw at him or her. Most of us will never forget what occurred on Wall Street in September 2008; and how in the months that followed, the entire globe was besieged by a crisis of confidence in the financial markets and the resultant collapse in demand for (amongst many other things) professional services. As the United Kingdom s leading tax recruitment consultancy and as part of The SR Group which operates market leading legal recruitment practices from offices in, Dubai, Hong Kong, Singapore, Sydney and Melbourne; the entry into the Australian market of our specialist taxation division - Brewer Morris Taxation - had been planned for several years leading up to 2008, with leaders of the Australian practice having been appointed in late 2007, and with a launch date scheduled for October A global financial meltdown can never come at a good time, of course. However in terms of the timing of launching a specialist recruitment division in a new market, the timing of the financial crisis could barely have seemed less helpful. However Brewer Morris stayed the path and opened its Sydney and Melbourne offices on 10th October Prepared for some difficult initial months, several prospective clients commented wryly on the timing of the launch of the Australian division. One high profile tax partner commented you re either very brave or very silly..or both. NB: He is now one of our most valued clients. At the time, we were cognisant of what seemed extremely unfortunate timing. The severity of the global economic downturn was just beginning to become evident. The black clouds crossed the Atlantic and spread throughout Europe and subsequently to the Australian and New Zealand markets. However what we experienced in the months that followed was a decisive silver lining to those initial black clouds. 4

5 WELCOME TO BREWER MORRIS AUSTRALIA Virtually all of the large employers of tax advisors (law firms and accountancy firms) were making redundancies much less recruiting. We persevered and invested in relationships with prospective clients, but also continued to provide tax specialists who had lost their jobs with advice that was truly in their best interests, despite this seeming a less commercial approach in the short term. The combination of the market conditions at the time and this deliberate long term strategy resulted in three largely unintended consequences: 1. The commerce, industry and financial services markets received a significant amount of focus from the new business, resulting in some key relationships in group tax functions (and in the human resources teams that support group tax) being forged quickly; 2. A focus on developing genuine relationships with accountancy and law firms. Firms that if not for the bleak economic conditions, would have been recruiting in tax, and had historically found recruiting high calibre tax professionals extremely challenging. In late 2008 and throughout the first two quarters of 2009, there were virtually no recruitment needs; a prolonged hiatus from urgent recruitment enabled firms the time and freedom to develop talent retention and talent acquisition strategies, and to develop relationships with external consultants that were based on long term relationship-based partnerships rather than short term opportunism on the part of external recruitment firms; 3. Due to the large number of redundancies made by the large accountancy firms and top tier law firms, there were significantly more tax professionals in the market. Moreover, these were largely individuals with extremely strong experience in high quality environments, servicing sophisticated clients. It was October 2009 when things took a dramatic turn for the better and since that point the demand for tax professionals, particularly tax lawyers and chartered accountants with blue chip client experience, has increased to levels which in some environments now mirror pre-gfc conditions. There is little or no expectation that demand for tax advisors across Australia will decline in the near future and our clients, whilst pleased to be so busy, are already expressing their frustration that we have so quickly returned to the days where jobs are plentiful and good candidates are again in such short supply. We d like to thank the many clients who have welcomed Brewer Morris Taxation into the Australian market. We look forward to a long and mutually beneficial relationship. Fee Revenue by FY and Sector FY2008/09 FY2009/10 Professional Services Commerce / In House Figure 1: Brewer Morris Australia s first two financial years of trading. Note the larger proportion of activity within professional services in FY2009/10, indicating greater market confidence within law firms and accountancy practices. 5

6 THE SURVEY Brewer Morris is widely regarded globally as being the premier international specialist tax recruitment consultancy. In Australia, we work with all of the large and the majority of the mid sized national chartered accountancies; across the top tier and boutique law firms, and with a large proportion of the larger listed Australian companies and inbound foreign owned multinational corporations. This Market and Salary Survey draws on market data in connection with salaries, bonuses, recruitment and hiring trends from a past, current and future perspective. Remuneration has been heavily scrutinised over the past 18 months as the financial crisis affected almost every professional industry, including the taxation market. We have attempted to reflect the current trends in salaries and bonuses as accurately as possible, but exceptions can always be found. Please take this into consideration when reviewing the data. The figures in the survey are set out in easy to read salary bands, commensurate with a candidate s grading within their firm, or level of post-qualified or post-admission experience. There are a number of profitable boutique firms who are leading the market with salary packages and these figures are incorporated into the top tier bracket. Occasionally an individual s salary may fall outside the bands illustrated. However the norm for staff performing at the required level of achievement will typically be somewhere between the extremes of the bands. In-house salaries are far more varied and more difficult to track, not least because group tax teams tend to be far smaller than tax groups or tax and revenue groups in firms. There are therefore less like-for-like specialists at each level of seniority, thus remuneration levels are more disparate. In-house salary bands are therefore broader, reflecting the true nature of remuneration bands within a very broad range of sectors and employer types. The bands acknowledge the diversity of the breadth of experience at each level and allow candidates and clients to find the information that is most relevant to them. This survey has been compiled with reference to: salaries offered to candidates by their current employers following the recent (June / July 2010) review; offers of employment made to candidates looking to move laterally; and information provided to us by employers. 6

7 PRIVATE PRACTICE CHARTERED ACCOUNTANCIES The 12 month period of FY2009/10 represents a period that has seen a dramatic turnaround in terms of large chartered accountancies in Australia, and their to approach to recruiting tax professionals once again. In July and August of 2009, only a couple of months had passed since significant redundancy programmes within all of the Big 4 firms (these were most severe in Sydney and Melbourne), as well as smaller cost reduction programmes within the mid tier firms. Despite many firms reporting a marked improvement in workflow from their clients at that time, there was reluctance by partners and their HR support functions to re-commence recruiting too quickly, for fear of a second downturn in market conditions; and concerns regarding internal and external perception, so soon after significant redundancy programmes. Yet by March and April of 2010, every one of the Big 4 firms were recruiting again in tax in at least three capital cities nationally, and more than half of the mid tier firms were once again finding it difficult to attract the outstanding tax talent they sought. The Perth market proved to be by far the most resilient and indeed almost immune to the effect of the Global Financial Crisis. It remains the market where demand most significantly outstrips supply (for tax talent). Salary information relating to the chartered accountancy sector for tax advisors is outlined below. Comments / Context Big 4 CA Firms Mid Tier CA Firms Tax Consultant Usually a law or commerce Sydney $55,000 - $69,000 Sydney $52,000 - $66, years graduate, has recently Melbourne $55,000 - $68,000 Melbourne $51,000 - $65,000 commenced CA studies Perth $55,000 - $68,000 Perth $51,000 - $65,000 Brisbane $53,000 - $63,000 Brisbane $50,000 - $59,000 Senior Tax Often recently qualified / Sydney $69,000 - $96,000 Sydney $64,000 - $95,000 Consultant / Admitted. Melbourne $68,000 - $94,000 Melbourne $63,000 - $92,000 Tax Senior Generally tax compliance Perth $68,000 - $94,000 Perth $62,000 - $92, years focused experience. Brisbane $64,000 - $90,000 Brisbane $62,000 - $89,000 Tax Manager Experience can vary greatly Sydney $99,000 - $132,000 Sydney $94,000 - $123,000 5 to 10 years Individuals are often in their Melbourne $96,000 - $129,000 Melbourne $92,000 - $123,000 second role. Mid tiers often Perth $95,000 - $124,000 Perth $93,000 - $120,000 paying more, like-for-like. Brisbane $93,000 - $120,000 Brisbane $88,000 - $114,000 Senior Manager / Often with second or third Sydney $125,000 - $190,000 Sydney $119,000 - $160,000 Associate Director employer. Melbourne $125,000 - $183,000 Melbourne $118,000 - $158,000 6 to 13 years At this level, Big 4 firms tend Perth $129,000 - $180,000 Perth $120,000 - $153,000 to pay more than Mid Tiers. Brisbane $120,000 - $169,000 Brisbane $117,000 - $148,000 Director / Vast range at this level. Sydney $179,000 - $260,000 Sydney $149,000 - $190,000 Executive Director / Individuals tend to categorised Melbourne $170,000 - $254,000 Melbourne $146,000 - $183,000 Principal / as either Directors-for-life or Perth $163,000 - $249,000 Perth $141,000 - $179,000 Salaried Partner on Partner-track. Brisbane $160,000 - $229,000 Brisbane $137,000 - $171,000 8 to 25+ years Equity Partner If you are an equity partner within a Big 4 or large mid tier firm, we would be delighted to discuss potential 9 to 25+ years opportunities with you. We are aware of the need for a highly confidential and extremely sensitive approach to you and your situation. Please contact us. NB 1: NB 2: there is generally a bias in this data toward corporate tax experience, as opposed to indirect taxes, employment taxes and / or human capital experience. figures represent base salary and superannuation, but exclude any other benefits or potential bonuses. 7

8 PRIVATE PRACTICE LAW FIRMS June 2010 s legal practice salary reviews have been the most keenly awaited in recent memory. The previous two years comprised both the salary freezing/redundancy crushing effects of the GFC as well as the rapid turnaround we ve all now been enjoying for the last 9 months. The question in most lawyers minds now is will my review in 2010 make everything ok? Undoubtedly the answer for most seems to be no. Since January 2010, we ve met with a huge variety of tax lawyers who have higher expectations of post-gfc remuneration than the firms can realistically offer or match. Most lawyers have received an increase this year and things are expected to return to normal year-on-year increases, but reviews are cautious rather than groundbreaking or double-digit in most cases. Salary increases this year currently range between 5% and 10% with only a couple of notable exceptions with firms who have pushed things further. There is limited evidence of firms offering those who may have had their salaries frozen for two years a double whammy review. Interestingly, the trend identified back in 2008 of many of the mid-tier firms competing very ably with the top-tier firms on remuneration has continued; there is now little difference between the tiers from a compensation perspective, certainly up to Senior Associate level. This opens up a world of possibilities to the candidates who no longer have to remain top-tier to retain top-tier salaries. The mid-tier is putting up a good fight in the war for talent on the grounds of improved career progression, better work/life balance and collegiality helped by what is often very comparable remuneration. Mid tier firms also tend to be significantly more market-aggressive and agile in terms of their ability to identify opportunities for growth and then instruct a specialist (tax and legal) executive search firm accordingly. 8

9 PRIVATE PRACTICE LAW FIRMS Top Tier Law Firms Mid Tier Law Firms Sydney 1 year $72,000 - $83,000 $60,000 - $70,000 2 years $85,000 - $96,000 $75,000 - $85,000 3 years $93,000 - $110,000 $85,000 - $100,000 4 years $110,000 - $130,000 $100,000 - $125,000 5 years $130,000 - $150,000 $110,000 - $130,000 6 years $145,000 - $180,000 $130,000 - $160, years $160,000 - $240,000 $150,000 - $220,000 Melbourne 1 year $67,000 - $78,000 $60,000 - $70,000 2 years $78,000 - $90,000 $70,000 - $80,000 3 years $90,000 - $100,000 $80,000 - $95,000 4 years $95,000 - $125,000 $85,000 - $110,000 5 years $115,000 - $140,000 $95,000 - $130,000 6 years $115,000 - $160,000 $110,000 - $150, years $140,000+ $140,000+ Perth 1 year $65,000 - $75,000 $55,000 - $75,000 2 years $75,000 - $85,000 $65,000 - $80,000 3 years $85,000 - $110,000 $75,000 - $95,000 4 years $100,000 - $130,000 $90,000 - $120,000 5 years $110,000 - $140,000 $95,000 - $130,000 6 years $125,000 - $170,000 $100,000 - $145, years $145,000+ $125,000+ Brisbane 1 year $55,000 - $78,000 $50,000 - $65,000 2 years $70,000 - $85,000 $60,000 - $75,000 3 years $80,000 - $95,000 $75,000 - $90,000 4 years $95,000 - $115,000 $90,000 - $110,000 5 years $115,000 - $140,000 $100,000 - $120,000 6 years $125,000 - $150,000 $110,000 - $150, years $140,000+ $130,000+ Adelaide 1 year $50,000 - $65,000 $40,000 - $55,000 2 years $55,000 - $80,000 $43,000 - $65,000 3 years $60,000 - $95,000 $60,000 - $80,000 4 years $70,000 - $110,000 $65,000 - $85,000 5 years $74,000 - $125,000 $74,000 - $110,000 6 years $100,000 - $140,000 $90,000 - $130, years $130,000+ Partners If you are an equity partner within a top tier or mid tier firm, we would be delighted to discuss potential opportunities with you. The period has seen significant market movement of senior tax lawyers in the market in Sydney and Melbourne in particular. We are aware of the need for a highly confidential and extremely sensitive approach to you and your situation. Please contact us. NB: Figures represent base salary and superannuation, but exclude any other benefits or potential bonuses. 9

10 COMMERCE & INDUSTRY, BANKING Unsurprisingly, demand for in-house tax professionals within the commerce market, similarly to the experience of professional services firms, slowed during 2009 as corporations tightened their belts due to the effects of the global economic downturn. However, there were not the widespread redundancies within group tax teams that were witnessed in other areas of the taxation profession, highlighting the commercial value and cost-benefit of the in-house tax advisor. It is worth noting that although overall recruitment volumes slowed during late 2008 and into the very early stages of 2009, from mid-year we saw a steady increase in recruitment across most in-house sectors as companies expressed more positive sentiment. This renewed optimism appears to be continuing in the mid and late stages of 2010, particularly in Brisbane and Perth, where even highly attractive, sought-after in-house roles in large multinational corporations are often difficult to fill. Over the last 18 months there has been a small increase in the use of fixed term contract tax advisors, due to uncertainty of longer term requirements. Whilst these arrangements have historically been to replace individuals on parental leave or internal secondments, this was more often viewed as a flexible way for group tax functions to resource their in-house needs without committing to an increase in permanent headcount. Relatively poor market conditions in Europe, Middle East and Asia have resulted in an increased number of individuals returning from overseas that has bolstered the number of tax candidates on the ground in Australia. Many of these returners are interested in exploring in-house roles. These individuals tend to return with strong tax consulting and transactions tax / international tax experience. Provided Australian tax functions are prepared to absorb individuals who may have been working outside of the Australian tax jurisdiction for a small number of years often working within exceptionally large multinationals and banking groups, in in particular - these candidates represent an outstanding opportunity to Australian tax functions. There has been a continued trend for employers to offer flexible working arrangements to their existing tax team over the last 12 months, whether that be part-time, one or two days working from home or shorter working days or weeks. The ability for an organisation to attract and retain staff through non-financial incentives has become paramount to employers competing for talent and seeking to manage costs. Whilst there has been a reluctance in the past for chartered firms and even more seldom, law firms, to provide their best advisors on secondment to in-house teams (largely for fear of losing them to those clients), we saw a higher volume of secondments throughout late 2009 and early The benefits of this have been threefold: firms used it as an option to provide further development for staff; firms have been able to keep their staff busy in times when there have been redundancies and under-utilisation; and companies (the firms clients) have been able to maintain the size of the in-house teams without increasing permanent headcount in uncertain economic times. However, this dynamic is likely to change again as firms continue to see uplift in workflow from clients, and are therefore in a position to be more profitable on a per hour, per lawyer / accountant basis. MOTIVATION The most common reasons for tax advisors seeking to move out of practice environments and into in-house functions tend to be: Desire to work in a more commercial environment; Desire to move away from time-sheet, time increment environment; Lack of desire to strive for partnership within current environment; (Perceived or real) lack of opportunity in current environment; An increase in the quality of work retained in-house; Strong wish to become more involved with the business, gain ownership and work on matters from conception to completion; Ultimate goal to move out of the taxation profession and into a business role; Exposure to more flexible working conditions and work/life balance. 10

11 Medium Sized Large Very Large Very Large Small Listed / ASX20 to ASX100 ASX20 / Financial Services Large Private Large In-bound & Banking Tax Accountant, 1 3 years PQ, Focus: Income Tax Compliance; FBT; BAS Sydney $69,000 - $93,000 $72,000 - $99,000 $83,000 - $115,000 $81,000 - $120,000 Melbourne $67,000 - $89,000 $70,000 - $97,000 $81,000 - $108,000 $78,000 - $113,000 Perth $67,000 - $88,000 $67,000 - $97,000 $77,000 - $102,000 N/A Tax Advisor / Assistant Manager, 3 5 years PQ, Focus: Tax Advisory; Corporate Tax Compliance Sydney $84,000 - $118,000 $86,000 - $122,000 $90,000 - $135,000 $90,000 - $149,000 Melbourne $80,000 - $111,000 $82,000 - $119,000 $88,000 - $129,000 $88,000 - $145,000 Perth $79,000 - $110,000 $80,000 - $115,000 $88,000 - $125,000 N/A Indirect Tax Specialist / Indirect Tax Manager, 4 6 years PQ, Focus: GST; FBT Sydney $90,000- $118,000 $93,000 - $120,000 $96,000 - $129,000 $109,000 - $135,000 Melbourne $87,000 - $113,000 $89,000 - $116,000 $93,000 - $126,000 $103,000 - $128,000 Perth $87,000 - $113,000 $89,000 - $115,000 $93,000 - $125,000 N/A (Stand Alone) Tax Manager, 9 15 years PQ, Focus: Broad role; reporting to CFO; Management of Advisors Sydney $130,000 - $165,000 $140,000 - $219,000 N/A N/A Melbourne $128,000 - $157,000 $130,000 - $205,000 N/A N/A Perth $118,000 - $153,000 $130,000 - $190,000 N/A N/A Senior Manager / Tax Manager, 7-14 years PQ, Focus: Tax Advisory; Projects; Tax Compliance Management Sydney N/A $122,000 - $185,000 $133,000 - $215,000 $140,000 - $260,000 Melbourne N/A $120,000 - $169,000 $129,000 - $199,000 $136,000 - $232,000 Perth N/A $120,000 - $167,000 $129,000 - $190,000 N/A Group Tax Manager / Head of Tax, years PQ, Focus: Leadership, Function Effectiveness; Management; Strategy; Risk Management Sydney N/A $165,000 - $275,000 $239,000 - $445,000+ $260,000 - $790,000+ Melbourne N/A $160,000 - $260,000 $120,000 - $390,000+ $245,000 - $390,000+ Perth N/A $157,000 - $239,000 $120,000 - $370,000+ N/A NB: figures represent base salary and superannuation, but exclude any other benefits or potential bonuses. RECRUITMENT METHODOLOGIES AVAILABLE Contingent Recruitment Interim / Contract Solutions Nationally and Internationally Advertised Assignments Interviewing facilities in Sydney, Melbourne,, Dubai, Hong Kong and Singapore Executive Search; Advertised Search Salary Surveys and General Advice on Market Trends Many current vacancies and all salary surveys may be viewed on our website. 11

12 CONTACTS IN AUSTRALIA Christian Outhred Associate Director Melbourne +61(0) David Buckley Partner Sydney +61(0) Andrew Hirst Consultant Sydney andrewhirst@brewermorris.com.au +61(0) If you are currently based in the UK or Europe and are looking to make a move internationally, please contact: Matthew Dwyer Senior Consultant matthewdwyer@brewermorris.com +44 (0) CONTACTS IN UNITED KINGDOM OR EUROPE: Mark Brewer Partner Mark Pryor Partner Matthew Gravelle Manager Tax Commerce Mark Glubb Manager Tax Practice Tom Wilkinson Associate Director Hu Kabir Associate Director Mo Hanslod Associate Director Ben Thrower Consultant Yasna Klarin Consultant Kate Surgeoner Consultant Sarah Tan Consultant Guy Wilmot Consultant Sydney Level 12, 25 Bligh Street, Sydney, NSW 2000 Melbourne Level 2, Rialto North Tower, 525 Collins Street, Melbourne, Victoria Queen Victoria Street,, EC4V 4HN BREWER MORRIS IS A MEMBER OF THE SR GROUP.