Attention Directors!

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Are you aware of the changes to reporting Directors Fees as part of Single Touch Payroll (STP) Phase 2? If not, keep reading…

Directors fees include payments made to a company director or the person performing the duties of a company director and may include payments to cover travelling costs, costs associated with attending meetings and other expenses incurred in the position.

If you pay directors fees, these must be separately shown in your STP Phase 2 report and the full pre-sacrifice value of the fees will be reported as directors fees year-to-date amounts. It is also important to note that directors fees are subject to super guarantee which is currently at 10.5% for 2022-2023 financial year, so make sure you’re paying minimum super to your directors if you haven’t been doing so!

Earning Type

STP 2 Category

PAYGW

Superannuation

Directors Fees paid to Working Directors

Directors Fees

Yes

Yes

Directors Fees paid to Non-Working Directors

Directors Fees

Yes

Yes

    

Earning Type

STP 2 Category

PAYGW

Superannuation

Wages paid to Directors

Gross Payments

Yes

Yes

Bonuses paid on top of Wages

Bonuses & Commissions

Yes

Yes

Dividends paid to Directors

Not Reportable

N/A

N/A

Payments coded as Drawings

Not Reportable

N/A

N/A

Payments coded as Directors’ Loans

Not Reportable

N/A

N/A

 

For all Xero users, adding a directors fees pay item can be as follows:

  1. Click on the organisation name, select Settings, then click Payroll settings.
  2. Select the Pay Items tab, then select Earnings.
  3. Click Add, then select Directors Fees.
  4. Enter an earnings name, and complete other details.
  5. Select the relevant Expense Account.
  6. (Optional) Select the Exempt from Superannuation Guarantee Contribution checkbox. 
  7. Click Add.

You can now add the directors fees pay item to relevant employees’ pay template or payslip and process a pay run.

 

Author

May Aung