Directors fees

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  • Updated 2 months ago
Hello,
What is the best way to set up Directors Fees as a new payroll item? How do you set this up so it records on the PAYG Payment Summary correctly, as the ATO says that this should be shown at Item 2 on your individual Tax Return.
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Kellie Malmberg

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Posted 2 months ago

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Bruce

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Set them up the same way you would for regular salaries - i.e. deduct PAYG, pay sup'n, attract payroll tax etc.
Just allocate them to a separate account line "Directors Fees" so that they are easily identifiable on your P&L
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Kevin Russell, Accredited Partner

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Yeah, Bruce, are you sure about that? 
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Bruce

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Kevin
Most definitely - PAYGW issue in this link https://www.ato.gov.au/business/business-activity-statements-(bas)/pay-as-you-go-(payg)-withholding/

I should have said
  • Payroll Tax - yes if Victoria, not sure about other states
  • Sup'n - yes unless employee has exemption due to aggregate supn contributions being greater than the concessional limit
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Kevin Russell, Accredited Partner

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Excellent Bruce. I am always wary of giving tax advice on a Reckon Forum. It's not really what its here for. 
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Kellie Malmberg

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Great, thank you for your help Bruce.
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Kevin Russell, Accredited Partner

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Kellie, directors fees are NOT payroll items. For example, are they having PAYG withheld? Are they paying super on these "fees"? Typically these are classed as drawings, not wage and salary income. 
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Bruce

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Kevin, Kellie
see my response to Kevin's comment above