One of the main ways you can take money from your company is through salary, wages, and directors fees.
If you are a director or shareholder of a company you can be paid salary, wages or directors fees depending on your arrangements with the company.
If the company is paying money out in these ways it will pay the wage, salary, or directors fees through its payroll system. That payroll system needs to have Single Touch Payroll-enabled software that reports payroll information to the ATO.
The company must withhold tax from the payments and make compulsory employer superannuation contributions. Failure to withhold may mean a deduction is not allowed.
If you are receiving salary, wages or directors fees from a company, those payments are taxable, and you need to report them in your individual income tax return.
The ATO website explains how to calculate and report directors fees through Single Touch Payroll. This information is very helpful, especially if the company is not paying wages or directors fees on a regular basis. If you want more information about Single Touch Payroll and closely held payees there is a recorded webinar specifically on that topic on ato.gov.au.
