TAX PLANNING 2020

TAX PLANNING 2020

TIP #3 – DIRECTORS FEES

Did you know that it can be more wealth and tax effective to pay year end bonuses to business owners than retain earnings in the business?

Does your business have one or more Directors that are not employees?

One of our many TAX SAVING strategies is to consider paying Directors what is known as a Directors Fee, as remuneration for holding this position of high responsibility.

Here’s what to do next!

🚩 Refer to our last Tax Planning Tip #2 BONUSES and follow the helpful tasks

🚩 Prepare your Annual Tax Plan and assess your net profit position

🚩 Review your company’s constitution to ensure it permits payment of Directors Fees

🚩 Alternatively, hold a Shareholders Meeting prior to 30 June to obtain in writing approval to pay Directors Fees

What to be aware of when paying Directors Fees:

✅ Directors Fees attract SUPER, so include this when assessing net profit

✅ Directors Fees should be distributed in line with their personal TAX POSITION, and where it is more tax effective to distribute profit than retain in the business

✅ Director(s) of a CORPORATE TRUSTEE are not entitled to remuneration unless the company passes a special resolution

✅ Consider your CASH FLOW, does the business have spare cash to pay Directors Fees

*** NOTE *** If you do not have a TAX PLAN 2020, the time to reach out for assistance is NOW!

If you have any questions at all regarding financial and business matters, please don’t hesitate to contact me by email or phone.