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elle12345(Newbie)Newbie
17 June 2024

Hi there,


I have been going around in circles trying to find an exact answer to my question with no luck so far.


We have a non-executive director who has issued an invoice (under a company name with an ABN) for payment of their director fees (i.e. they will not be paid through our payroll).


Since the director will not be paid via payroll, from my understanding, it is up to the director to withhold their own PAYG and report / pay their own superannuation (under their company's ABN).


However, what I am unsure about is whether we (the company) need to report payment of the director fees (via the issued invoice) through STP? I'm not sure if this is considered a contractor relationship (in which STP wouldn't be reportable) or if it is our responsibility to still report the payment of the directors' fees via STP regardless of how they are paid (i.e. through payroll or through an invoice).


Any assistance would be greatly appreciated!

5,722 views
6 replies
5,722 views
6 replies

Most helpful response

Most helpful reply

PayrollDeanne(Taxicorn)Taxicorn
17 June 2024

Hiya @elle12345 👋


Directors' fees are payments subject to withholding, taxed as per Schedule 1, like salary and wages.


Directors' fees are OTE for super guarantee, as per SGR 2009/2 paragraph 40.


Directors' fees are mandatory to report via STP, as per the ATO STP2 Employer Guidance.


An individual is appointed as a Director and therefore the fees are assessable income.

They can send you an invoice if they like but you pay via payroll.


Deanne

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