A reminder regarding changes to the law concerning directors fees which came into effect on the 1st July 2019.
If an individual takes drawings from the organisation with the intention to declare these as wages or Director’s fees the individual must be registered as an employee of the organisation in order to claim a tax deduction.
This means that a employment declaration must be completed and lodged with the ATO prior to the first payment being made. These payments are also subject to PAYG withholding, Superannuation Guarantee and possibly WorkCover declarations.
The correct amount of PAYG withholding must also be withheld by the payer. If the payer fails to pay the withholding tax to the ATO, the payments may become the personal liability of the directors.
If you would like further clarification on this matter, please don’t hesitate to contact us.