top of page
Search
  • ChongAccounting

Director Remuneration - Fee or Salary

First, lets make sure we have same understanding, Director here mean the person named in Section 58 as Officer of the Company under the Companies Act 2016 (#CA2016) (or Form 49 under Companies Act 1965)


What is Director Remuneration?

* Anything paid/payable to Director or benefits given to Director for his/her enjoyment, e.g. motor vehicle, accommodation.

* Salary

* Fee


What is Director Fee ?

Some of the definition of Director Fee ...

(https://www.lawinsider.com/dictionary/directors-fees)

Companies Act 2016 did not define Director Fee but Section 230 stipulates the approval procedure.


So, how is Director Fee different from Salary payable to Director?

  • Some Director sits in the Board (Section 210, 211 CA2016) but may not be involve in day to day operation.

    • Director fee is appropriate as he/she provide service as Board member, attending meeting and participating the Board decision.

  • Some Director involves in day to day operation as "employee" of the company.

    • Salary would be appropriate as he/she employed to serve the company.


PCB (income tax) ?

  • Regardless Fee or Salary, income received by Director is subject to Income Tax (PCB)


EPF ?

  • Fee - not subject to EPF Contribution

  • Salary - subject to EPF Contribution as other employees

Socso & EIS

  • Fee - not subject to Socso / EIS Contribution

  • Salary - subject to Socso / EIS Contribution as other employees

Documentation

  • Salary - Employment Contract; Payslip; EA Form

  • Fee - Director Resolution; Member Resolution; EA Form


FAQ

Can Director Fee be paid on monthly basis ?

  • If qualify as Fee, approved by Board and by Member, it is up to the company to pay in one lump sum or monthly (like installment);

  • If full Fee can be received in Jan, why would Director agree to have it paid over next 12 months? (usually won't be due to cash flow issue)

  • If paid monthly before approval of Board and Member via resolution, EPF might impose penalty for non-compliance. (i.e. salary in-nature but name it as Fee to avoid EPF contribution)



280 views0 comments

Recent Posts

See All

人脉

很多人都听过或明白,人脉就是钱脉。美国著名的人际关系学鼻祖戴尔·卡耐基曾说:“一个人的成功,专业知识占15%,85%取决于人际关系”。 然而,很多人都误会了人脉真正的意思。人脉不是你认识的人有多少个,而是有多少人认识你,而且还认可你。当彼此有合作共赢的机会和有等价交换的利用价值时,这才是真正的人脉! 原文 https://www.enanyang.my/%E5%90%8D%E5%AE%B6%E4%

Doctor, Private Hospital and Income Tax

The Inland Revenue Board “IRB” has issued the guidelines on Tax Treatment on the Income of Medical Practitioners (Specialist Doctors) in Private Hospitals on 16th March 2022. The guidelines explain wh

bottom of page