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Australia Board Member Fees Tax Guide

Australian tax rules for board member and director fees. The guide covers: the director fees as the assessable income — the 'director fees' (the 'board fees' paid to the 'directors' and the 'non-executive directors' of the 'Australian companies') are the 'assessable income' for the 'director' under the 'Section 6-5 of the ITAA 1997' (the 'ordinary income'); the 'director fees' are the 'income from the personal services' and are 'included in the tax return' of the 'director'; the 'director fees' may be 'paid by the company' in the 'cash' or the 'non-cash benefits' (the 'shares', the 'options', the 'superannuation contributions'); the PAYG withholding on the director fees — the 'company' must 'withhold the PAYG' from the 'director fees' (the 'PAYG withholding' under the 'Taxation Administration Act 1953'); the 'director fees' are 'subject to the PAYG withholding' at the 'marginal tax rate' of the 'director' (the 'PAYG schedule for the individuals'); the 'director' must provide the 'TFN declaration' (the 'tax file number declaration') to the 'company' to 'avoid the 47% withholding'; the superannuation on the director fees — the 'company' must pay the 'super guarantee (the 'SG')' at 11.5% on the 'director fees' if the 'director is the 'employee' for the 'super purposes' (the 'director who is the 'employee' under the 'super guarantee law' — the 'director who receives the director fees for the 'personal services' and the 'company is the 'employer''); the 'non-executive directors' are generally 'not employees' for the 'super guarantee purposes' — the 'company may still pay the 'super contributions' to the 'director' as the 'part of the director fee arrangement'; the 'director' can make the 'personal deductible contributions' (the 'concessional contributions') to the 'super fund' to 'reduce the tax on the director fees'; the deductions for the directors — the 'director' can claim the 'deductions' for the 'expenses incurred in earning the director fees': (i) the 'travel expenses' (the 'travel to the board meetings' — the 'transport', the 'accommodation', the 'meals'), (ii) the 'home office expenses' (the 'home office' for the 'board work' — the 'fixed rate of 67 cents per hour'), (iii) the 'professional development' (the 'courses', the 'conferences', the 'seminars' for the 'director development'), (iv) the 'insurance' (the 'directors and officers insurance — the 'D&O insurance'), (v) the 'subscriptions' (the 'professional memberships' — the 'AICD membership', the 'Governance Institute membership'), (vi) the 'legal and the accounting advice' for the 'director duties'.

Director Fees & PAYG

  • Assessable income: The 'director fees' are the 'ordinary income' and are 'included in the tax return' of the 'director'.
  • PAYG withholding: The 'company' withholds the 'PAYG' from the 'director fees' at the 'marginal rate'. The 'director' provides the 'TFN declaration' to the 'company'.
  • Non-cash benefits: The 'shares', the 'options', and the 'super contributions' paid as the 'director fees' are 'assessable income' for the 'director'.

For the company forms and the director obligations, see our Company Forms Guide →.

Superannuation for Directors

  • SG on director fees: The 'company' pays the 'super guarantee at 11.5%' on the 'director fees' if the 'director is the employee'.
  • Non-executive directors: The 'non-executive directors' are generally 'not employees' for the 'SG purposes'. The 'company' may pay the 'super contributions' as the 'part of the fee arrangement'.
  • Personal deductible contributions: The 'director' can make the 'personal deductible contributions' to the 'super fund' to 'reduce the tax liability'.

For the super guarantee and the employer obligations, see our Superannuation Employer Guide →.

Director Expense Deductions

  • Travel expenses: The 'travel to the board meetings' is 'deductible' — the 'transport, the accommodation, the meals'.
  • D&O insurance: The 'directors and officers insurance' premium is 'deductible' for the 'director'.
  • Professional memberships: The 'AICD membership' and the 'Governance Institute membership' are 'deductible'.

For the business expenses and the deductions, see our Business Expenses Guide →.