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Directors' Fees Guide — Tax Rules, PAYE, and Reporting for Company Directors in NZ

the directors' fees taxation in New Zealand. The guide covers the PAYE withholding on the directors' fees, the schedular payment rules, the GST registration for the directors, and the IRD reporting through the employment information.

PAYE and Schedular Payments

The directors' fees paid to the directors of the companies are generally subject to the PAYE withholding at the source. The company must deduct the PAYE using the NZ tax code or the STC (the special tax code) and report the fees through the employment information (the EI) each pay period. The schedular payment rules apply if the director is paid as the independent contractor — the company must deduct the withholding tax at the 33% rate (or the 39% rate if the annual director's fees exceed $180,000) unless the director holds the certificate of exemption. The directors may also receive the fees as the non-resident directors subject to the non-resident withholding tax. See our Company Tax Guide → for the broader company tax rules.

GST and Reporting

The directors may need to register for the GST if the director's fees and the other business income exceed the $60,000 threshold. The GST-registered directors must include the GST on the invoices and file the GST returns. The directors' fees are reported on the annual IR3 or IR4 tax return. The company must also file the annual return and the financial statements with the Companies Office. The director's fee structure may be reviewed for the optimal tax treatment — the standard PAYE deduction or the contractor arrangement. See our PAYE Guide → for the PAYE rules.