Directors’ fees look simple: the company pays a director for sitting on the board. In practice they trigger the same obligations as wages, including tax withholding, payroll reporting and super, and from 1 July 2026 the timing of that super changed significantly.

This guide explains what directors’ fees are, how they are approved, how the company withholds and reports them, when super is payable under the new Payday Super rules, when the company can claim a deduction and how the director is taxed. Figures are for 2025-26 and 2026-27 and were checked against ATO, ASIC and state revenue office pages.

It is written for company owners, executive and non-executive directors, and bookkeepers running payroll for small and medium companies. If you are deciding how to pay yourself from your own company, our guide on how to pay yourself as a business owner compares wages, directors’ fees and dividends.

Directors’ fees obligations at a glance

Obligation	What applies	Where it comes from
PAYG withholding	Company withholds from fees paid to an individual director	s12-40, Sch 1 TAA 1953
STP reporting	Directors’ fees reported and itemised separately	ATO STP Phase 2 guidelines
Super guarantee	12% of ordinary time earnings for 2025-26 and 2026-27	ATO super guarantee rates
Super timing from 1 July 2026	Received by the fund within 7 business days after payday	Payday Super
Maximum contribution base	$62,500 a quarter (2025-26); $270,830 a year (2026-27)	ATO key super rates
Payroll tax	Directors’ fees count as taxable wages, for example in NSW	State revenue offices
Company deduction	When definitively committed to a quantified amount	ATO ruling IT 2534

Sources: ATO super guarantee rates, Payday Super, Single Touch Payroll and PAYG withholding pages, IT 2534 and Revenue NSW, checked 7 October 2026.

What are directors’ fees?

Directors’ fees are amounts a company pays a person for performing the duties of a director, such as attending board meetings, setting strategy and overseeing the company’s affairs. They are different from a salary paid to a director for working in the business day to day, and from dividends paid to a director as a shareholder.

The distinction matters for reporting. Under the ATO’s Single Touch Payroll Phase 2 guidelines, directors’ fees must be separately included, and bonuses or allowances paid to a director are reported under their own categories rather than as directors’ fees.

Who approves directors’ fees?

Under the replaceable rule in section 202A of the Corporations Act, summarised on ASIC’s replaceable rules page, directors are paid the remuneration the company determines by resolution. Many companies replace this with their own constitution, which may let the board or members set fees in a different way. The replaceable rules do not apply to a proprietary company whose sole director is also its sole shareholder.

Whatever the source of the power, document the decision. A minuted resolution showing the amount and the period it covers supports both the company’s deduction and the director’s entitlement. Our company secretarial services team can prepare resolutions and keep the minute book in order.

How are directors’ fees taxed for the company?

PAYG withholding

Section 12-40 of Schedule 1 to the Taxation Administration Act 1953 requires a company to withhold an amount from remuneration it pays to an individual as a director. The ATO’s PAYG withholding pages explain how to work out the amount using the standard tax tables, and the director should complete a TFN declaration like any other payee.

Single Touch Payroll

Directors’ fees are reported through Single Touch Payroll each time they are paid, and the withholding is included in the company’s activity statement. Our payroll services can set up the correct pay category so fees are reported accurately.

Payroll tax

States and territories generally treat directors’ fees as wages for payroll tax. Revenue NSW, for example, requires companies to declare taxable wages paid or payable to a director or non-working director, including director fees and amounts paid to a director’s personal entity for the director’s services. Payroll tax only applies once total wages exceed the relevant state threshold, so check your state’s rules.

Do you have to pay super on directors’ fees?

Yes. The super guarantee legislation treats a person who is entitled to payment for duties as a member of a company’s board as an employee, and the ATO’s who you pay super for page lists company directors. The super guarantee rate is 12% for both 2025-26 and 2026-27.

Super is limited by the maximum contribution base. For 2025-26 it is $62,500 a quarter. From 2026-27 the ATO publishes an annual figure of $270,830 instead of a quarterly one, to fit the new payday-based system.

Payday Super from 1 July 2026

Under the Treasury Laws Amendment (Payday Superannuation) Act 2025, from 1 July 2026 employers must make super guarantee contributions so they are received by the employee’s fund within 7 business days after paying them. The ATO’s Payday Super page explains the change. A company that pays directors’ fees quarterly must now pay the super on each of those payments within the 7-day window, not at the end of the quarter. See our guide to superannuation obligations for employers for the full picture.

When can the company claim a deduction?

ATO ruling IT 2534 explains that a company can deduct directors’ fees in an income year if, before the end of that year, it has become definitively committed to paying a quantified amount, for example by a properly authorised resolution. A vague intention to pay “something” after year end is not enough. The director, by contrast, is assessed when the fees are paid or made available to them.

How is the director taxed?

For the director, fees are ordinary income and are taxed at their marginal rate. For residents in 2026-27 the ATO tax rates are nil to $18,200, 15% to $45,000, 30% to $135,000, 37% to $190,000 and 45% above that, plus the Medicare levy. For 2025-26 the second bracket is 16% rather than 15%.

Directors who are also employees of the company receive one payment summary through STP covering both salary and directors’ fees, and they include the total in their tax return. Fringe benefits provided to a director are also subject to FBT, because the FBT definition of employee includes a company director.

Common mistakes with directors’ fees

• Paying fees without withholding. Fees paid to an individual director need PAYG withholding even if the director is non-executive.
• Forgetting super. Directors’ fees attract the super guarantee, and from 1 July 2026 the 7 business day deadline applies to each payment.
• Reporting fees as salary. STP requires directors’ fees to be itemised separately.
• No resolution before 30 June. Without a definite commitment the company may not be able to deduct the fees in that year.
• Ignoring director penalties. Unpaid PAYG withholding, GST and super can become a personal liability under the director penalty regime.

FAQ about directors’ fees

Talk to a registered tax agent

Directors’ fees touch payroll, super, company law and personal tax at the same time. Nanak Accountants can set up compliant fee arrangements, run payroll and STP, manage Payday Super and prepare the resolutions that support your deductions. Call 1300 626 258 or visit nanakaccountants.com.au.

This article is general information only and is not personal tax or legal advice. Figures and rules were checked against the ATO super guarantee rates, Payday Super, who you pay super for, Single Touch Payroll, PAYG withholding and tax rates pages, section 12-40 of Schedule 1 to the Taxation Administration Act 1953, ATO ruling IT 2534, ASIC’s replaceable rules page and Revenue NSW on 7 October 2026. Rates and thresholds change, so confirm the current position before acting.