Whether a company director is entitled to — and must receive — Super Guarantee contributions depends on the nature of their engagement. Directors who perform work for the company and receive remuneration are generally treated as employees for SG purposes, even if they hold a directorship rather than a formal employment contract.
The General Rule — Directors as Employees
The Super Guarantee Administration Act 1992 (SGAA) has a broad definition of “employee” that captures many working arrangements beyond traditional employment. For SG purposes, an individual is treated as an employee if they are:
- A common law employee (employed under a contract of service), or
- A deemed employee — including certain contractors who work principally for their labour, and directors receiving remuneration for their work in the company
Section 12(2) of the SGAA specifically includes individuals who are engaged under a contract that is wholly or principally for their labour — which can include directors acting in a managerial or executive capacity.
Key point: If a director draws a salary, wage, or regular remuneration for working in the company, that remuneration is generally ordinary time earnings (OTE) and attracts the 12% SG obligation.
Working Directors vs Non-Executive Directors
| Type of Director | SG Applicable? |
|---|---|
| Working/executive director — receives a salary for managing the company | Yes — SG applies on OTE received |
| Non-executive director — receives only director fees, no salary, attends board meetings only | Generally no SG on director fees alone — but check specific circumstances |
| Sole director/shareholder — company of one person | Depends — see below |
The ATO’s position is that director fees paid for performing director duties (attending board meetings, formal governance) are generally not subject to SG. However, remuneration paid for ongoing working services in the business is treated as salary/wages and attracts SG.
Sole Director/Shareholder Companies — The “Draw” Issue
Many small business owners operate through a company structure and are the sole director and shareholder. They may:
- Pay themselves a salary (wages from the company) — SG applies on the salary
- Draw dividends instead of or in addition to salary — SG does not apply to dividends
- Not pay themselves anything formally, relying on retained earnings — SG may still apply if they are performing work
The “Deemed Salary” Concept
If a company director is working in the business but not drawing a formal salary, the ATO may examine whether they should have been paid salary (and therefore whether SG should have been paid on an appropriate amount). The concept of “deemed salary” arises in some SGC audit situations — the ATO may estimate what arm’s length salary should have been and calculate SG on that amount.
This is more commonly an issue in ATO audits of close family companies where director remuneration has been minimised to avoid super obligations.
Practical guidance: If you are a director working substantively in a company, paying yourself an appropriate salary and super on that salary is the lower-risk approach. Not paying any salary while working full-time in the company creates audit risk.
How SG Is Calculated for Directors
If a director is entitled to SG, the calculation follows the same OTE rules as for regular employees:
- Base: Ordinary Time Earnings — the salary or wages paid for ordinary hours of work
- Rate: 12% (from 1 July 2025)
- Excluded: Dividends, loan repayments, and amounts not classified as salary/wages
Example: A director receives $120,000 salary per year from the company for working as CEO. SG due: $120,000 × 12% = $14,400 per year.
If they also receive $30,000 in dividends: the dividends are not OTE and do not attract SG.
Payment Timing — Same Quarterly Due Dates
Directors entitled to SG are subject to the same quarterly payment obligations as other employees:
| Quarter | Due Date |
|---|---|
| Q1 (Jul–Sep) | 28 October |
| Q2 (Oct–Dec) | 28 January |
| Q3 (Jan–Mar) | 28 April |
| Q4 (Apr–Jun) | 28 July |
From 1 July 2026, payday super will apply — SG must be paid with each payroll run, including for directors on payroll.
Director Penalty Notices — Personal Liability for Unpaid Super
Directors of companies that fail to pay SG can face Director Penalty Notices (DPNs) from the ATO. A DPN makes the director personally liable for:
- Unpaid SGC (Super Guarantee Charge)
- Unpaid PAYG withholding
- Unpaid GST (in some circumstances)
This personal liability is separate from the company’s debt — it means the ATO can pursue directors personally for unpaid super obligations of their company. This is a significant risk for directors of small companies experiencing financial difficulty.
PAYG Withholding for Directors
Directors who are paid a salary from the company are employees for PAYG withholding purposes. The company must:
- Withhold PAYG from director salaries at the applicable marginal rate
- Remit withheld PAYG to the ATO per the company’s withholding schedule
- Report via Single Touch Payroll (STP)
Directors can also claim work-related deductions in their personal tax return for costs incurred in their director capacity, but these are individual tax matters separate from the company’s obligations.
Frequently Asked Questions
I’m the only director and I take money from the company account as needed — is super required? If the withdrawals are treated as salary or wages (i.e. they are remuneration for your work in the company), SG should be paid on them. If they are shareholder loans or dividends, they may not attract SG — but this distinction requires proper accounting treatment and ideally advice from your accountant or tax agent. Drawing money informally from a company without proper classification creates tax and SG risk.
I’m on the board of a non-profit as a non-executive director — do I get super? If you receive director fees for attending board meetings and no other salary, generally no SG applies to those director fees. However, if the non-profit also pays you for other services (e.g. as a part-time manager or consultant), SG may apply to that portion.
The company is struggling financially — can I defer paying my own super as a director? No — your SG obligation as an employer is the same regardless of the company’s financial position. If the company cannot pay super, you must lodge an SGC statement. The Director Penalty Notice regime means you may face personal liability for unpaid SGC. Seek advice from an insolvency practitioner or tax agent if the company is in financial difficulty.
See also: Employer Super Obligations. For further guidance, see the ATO’s Super for Employers or ATO Director Penalty Notices guidance, or consult a registered tax agent.