Q: A client, who is the chairman of a medium-sized not-for-profit (NFP) organization in the employment service sector, received conflicting advice about whether non-executive directors (NEDs) should be considered employees. Can you clarify the situation regarding their employment status and the organization's super contribution obligations?
A: To determine if a non-executive director (NED) is an employee, we need to consider factors outlined in taxation ruling TR 2005/16 and superannuation Guarantee ruling SGR 2005/1. However, regardless of their status, both PAYG tax and superannuation may apply to the remuneration paid to the director (TAA 1953 Sch 12-40(1); SGAA s12(2)). So, whether the NED is an employee or not, tax and superannuation obligations still apply.
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