Income tax: are Tax Instalment Deductions (T.I.D.'s) required to be made from directors fees where the director is an employee of a related company and it is a condition of his employment that the directors fees be paid to the related company?

No. T.I.D.'s are not required to be made from directors fees, where the director is an employee of a related company and it is a condition of his employment that the directors fees be paid to the related company.

Directors fees qualify as salary or wages as defined by section 221A of the Income Tax Assessment Act 1936. An employer is required to deduct T.I.D.'s from payments of salary or wages in line with section 221C.

However, the company which is making the payment for directors fees may apply to have the rate of deduction of tax varied in line with section 221D of the ITAA. It would not be appropriate to require deduction of tax instalments from directors fees paid in these circumstances.