IRD has refreshed an earlier GST ruling which provides guidance for directors on when they may charge GST on their director fees.

The ruling confirms that engagement as a company director is not, of itself, a taxable activity.  This means that if a person accepts appointment as a director which is unconnected with carrying on any other taxable activity, the person should not be registered for GST and should not charge GST on their director’s fees. 


Some other key points

Other key points of the ruling include:

  • If a person accepts a director appointment as part of carrying on a broader taxable activity, the director services are treated as supplied as part of that taxable activity and GST must be accounted for on the director fees.  For example, a GST registered accountant, lawyer, or consultant who takes on a directorship for a client as part of the wider professional relationship should charge GST on the director’s fees.
  • If a person supplies director services to a company under a contract between a GST-registered third party and the company, and the person accepts the director appointment as part of their own taxable activity, then GST is charged by law on both the person’s contractual supply to the third party and on the third party’s taxable supply of the director services to the company.
  • If, as part of their employment, an employee is engaged as a director of a company under a contract between their GST-registered employer and the company, the director cannot personally charge GST but the employer must charge GST on the employer’s supply of the director’s services performed by the employee.


Appointments to Crown entities, statutory bodies and advisory boards

A new separate ruling notes that appointments by order in council or similar process, such as to a statutory entity, are generally personal in nature and not supplied as part of the appointee’s broader taxable activity (if any), so such board members should not charge GST on their fees.  IRD notes an exceptional case where the person appointed is a partner in a partnership carrying on a taxable activity.

Other board member appointments

There is also a further new GST ruling on fees charged where a person is appointed as a member of local authority, board, council, committee, or other body, and the appointment is not by order in council or similar process.    As with director appointments, the GST implications largely depend on whether the services are supplied in the course of a taxable activity of the person or an entity who is treated as supplying the person’s services.

Incorrectly GST-registered directors or board members

Directors or board members who are incorrectly registered for GST should ask IRD to cancel their registration.

Get in touch with one of our contacts if you’d like any advice related to these matters.


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