Super for company directors¶

People sometimes think being a director is different from being an employee, so super does not apply. That is not right. If a director is paid for performing their duties, the super rules treat them as an employee for that pay. So super applies to it.

The key is whether the director is paid for their duties — including directors' fees. If they are, super is due on that remuneration in the normal way.

In one line

A director paid for performing their duties — including directors' fees — is treated as an employee for super, so super applies to that pay.

Why this matters¶

Directors are often the owners of the business, so it is tempting to think the usual rules do not apply to them. But if a director is paid for their work as a director, super is owed on that pay. Missing it means the business owes super it did not pay.

What you will learn¶

That a paid director is treated as an employee for super
That super applies to a director's remuneration, including directors' fees
The difference between a paid working director and an unpaid director

Understanding the concept¶

The ATO explains that super guarantee coverage includes company directors. A director who is paid to perform their duties as a director is treated as an employee for super purposes, in relation to those duties. So the company must pay super on that remuneration, just as it would for any other employee.

This includes directors' fees — amounts paid to a person for performing the role of director. It also covers other pay a working director receives for their duties. Super is worked out on that pay in the normal way, using the same ordinary time earnings rules that apply to other employees.

Being a director does not remove the obligation. The label "director" does not change the super result. What matters is the pay for the duties.

The distinction to keep in mind is between a paid director and an unpaid one. If a director performs their role but is not entitled to any payment for it, there is no remuneration for super to be worked out on. Once a director is paid for their duties, super applies to that pay.

For accountants & bookkeepers

The super guarantee rules extend the ordinary meaning of "employee" to include a person entitled to payment for the performance of duties as a member of the executive body of a body corporate. The entitlement to payment is the trigger — a director who is not entitled to payment for performing their duties is not, on that basis, treated as an employee for super. Where the director is paid, work out super on their ordinary time earnings, the same as for any other employee. Some specific arrangements (for example, fees received on behalf of a partnership) can differ — check the ATO for those.

Example¶

Nina is a director of a small company and is paid directors' fees for performing her role. Because she is paid for her duties, the super rules treat her as an employee for that pay. The company works out super on Nina's directors' fees and pays it into her fund, at the normal rate and by the normal due dates.

By contrast, if Nina held the directorship but was not entitled to any payment for it, there would be no remuneration to calculate super on. It is the payment for her duties that brings super into play.

Common mistakes¶

Thinking a director is never an employee, so super never applies — a paid director is treated as an employee for super.
Leaving super off directors' fees — super applies to that pay in the normal way.
Forgetting super for a working director who is also the business owner.

How this works in myaccountant¶

In the app — a paid director set up as an employee is handled like any other eligible employee: myaccountant works out and pays super on their pay, including directors' fees, and holds their fund details. Super is worked out on the pay you record for the director, so record their remuneration correctly for the calculation to be right.

Key points¶

A director paid for performing their duties is treated as an employee for super.
Super applies to that remuneration, including directors' fees.
Being a director does not remove the super obligation.
Super is worked out on the director's ordinary time earnings, like other employees.
An unpaid director with no remuneration has no pay for super to be worked out on.
Some specific arrangements differ — check the ATO if unsure.

Learn next¶

General information only — not tax, super or financial advice.

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