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Edited version of your written advice
Authorisation Number: 1012978878430
Date of advice: 2 March 2016
Ruling
Subject: Director Fees
Issue 1
Withholding tax
Question 1
Are director fees payable by a company for attendance at meetings subject to Pay As you Go Withholding (PAYGW) pursuant to section 12-40 of Schedule 1 to the Taxation Administration Act 1953 (TAA)?
Summary
An entity must withhold an amount from remuneration or allowances it pays to an individual as a company director.
Detailed reasoning
Pay As You Go Withholding (PAYGW)
Part 2-5 (sections 10-1 to 20-80) of Schedule 1 to the Taxation Administration Act 1953 (TAA) relates to the PAYG withholding system.
Section 12-40 of Schedule 1 to the TAA provides that an entity must withhold an amount from remuneration or allowances it pays to an individual as a company director.
A company is defined under section 995-1 of the Income Tax Assessment Act 1997 (ITAA 1997) as a 'body corporate', or 'any other unincorporated association or body of persons'.
The entity is a company and therefore must withhold tax from payments it makes to its directors.
How much an entity is required to withhold is set out in Tax Tables published by the Commissioner or in the Income Tax Regulations 1936 (section 15-10 of Schedule 1 to the TAA).
Section 16-155 of Schedule 1 to the TAA provides that an entity (the payer) must provide a payment summary to another entity (the recipient) if during the income year the payer made one or more withholding payments to the recipient. A withholding payment is a payment from which an amount must be withheld under Schedule 1 to the TAA.
Issue 2
Superannuation Guarantee
Question 1
Are the director fees payable by a company for attendance at meetings subject to Superannuation Guarantee (SG) under section 12 of the Superannuation Guarantee (Administration) Act 1992 (SGAA)?
Summary
The Commissioner is unable to make ruling on question regarding superannuation. The Commissioner therefore declines to rule on this question
Detailed reasoning
A private ruling is a written expression of the Commissioner's opinion about the way in which a relevant taxation provision applies or would apply to you.
Section 359-45 of Schedule 1 to the TAA permits the Commissioner to make a private ruling under relevant provisions. Provisions that are relevant to rulings are defined in section 357-55 of Schedule 1 to the TAA. Superannuation is not one of these provisions therefore the Commissioner cannot provide a ruling on this matter however guidance in respect of employer's obligations to pay Superannuation Guarantee will be provided to you in a separate letter.
You may wish to review Taxation Ruling TR 2006/11 Private Rulings for more information.
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