How to pay yourself from your (Pty) Ltd: salary or dividends?

Updated 1 November 2026 · 4 min read

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In short

Pay yourself from your (Pty) Ltd with a salary, taxed through PAYE [1], or with dividends, paid after the company is taxed on its profit [2], less 20% dividends tax [3].
The company’s money isn’t yours. It is a separate legal entity and a taxpayer in its own right [4].
A dividend is taxed twice: company tax, 27% for most companies, then 20% of what’s paid out [5], [3]. A salary is taxed once, at your own rates [6].

Salary or dividends?

An example: R100,000 taken out of the company each way.

As a salary

Salary from the company: R100,000
Company tax: − R0
Your income tax: − R180
Yours: R99,820

A salary for work you actually do is a business expense, taken off before the company’s profit is taxed [2]. R180 is the tax on R100,000 in the 2027 tax year if it is your only income and you are under 65 [6]. UIF may take 1% from you and 1% from the company [7].

As a dividend

Company profit: R100,000
Company tax at 27%: − R27,000
Dividends tax at 20% of R73,000: − R14,600
Yours: R58,400

Company tax comes first [5], then 20% of the dividend paid out [3].

Together the two taxes on a dividend take 41.6% of the profit. A salary is taxed on top of your other income, at 18% rising to 45% [6]. A small business corporation may pay less than 27% company tax [5]: Small business corporation tax rates. Which leaves you more depends on both rates.

A director’s salary and PAYE

A director of a private company counts as an employee, so a director’s salary goes through PAYE (pay as you earn) [1].

Register the company for PAYE with SARS
Within 21 business days of becoming an employer, unless no one it pays is liable for income tax [8].
Deduct PAYE from each salary payment
It counts toward your own income tax for the year [2].
Submit the EMP201 and pay SARS every month
Within 7 days after the month ends, or the business day before a weekend or public holiday [9].

Paying other people too? See Hiring your first employee.

Dividends tax: the rate and the return

Dividends tax is the shareholder’s tax, but the company deducts it and pays SARS [3].

Have the board approve it first
By resolution, finding the company still passes the solvency and liquidity test: its assets cover what it owes, and it can pay its debts for the next 12 months [10], [11].
Company tax comes first
The company’s profit is taxed, then paid out or kept [2].
Withhold 20% dividends tax
Unless an exemption or reduced rate applies [3].
Pay SARS with the DTR01 and DTR02 returns
By the last day of the month after the dividend is paid [3].
Not taxed again as your income
A dividend from a South African company is generally exempt from your income tax [2].

Your loan account

Money you lend the company and money it lends you are treated differently.

Money you lent it

Keep a record of every amount in and out [2]
A dividend credited to your loan account counts as paid, so dividends tax is due [12], [3]

Money it lends you

Below SARS’s official interest rate, the interest you don’t pay counts as a dividend [12]
The company pays 20% dividends tax on it, unless it’s taxed as your fringe benefit as an employee [12]
If you’re a director, it needs a shareholders’ special resolution, and the board must be satisfied the company passes the solvency and liquidity test straight after, on terms fair and reasonable to it [10], [11]

Still choosing a structure? See Sole proprietor or company?

References

General guidance, not tax or legal advice.

[1]South African Revenue Service, “Guide for Employers in Respect of Employees’ Tax (2027),” SARS, Apr. 17, 2026. Accessed: Nov. 1, 2026. [Online]. Available: https://www.sars.gov.za/guide-for-employers-in-respect-of-employees-tax-2027/ (opens in a new tab)
[2]South African Revenue Service, “Tax Guide for Small Businesses 2025/2026,” SARS, Sep. 30, 2026. Accessed: Nov. 1, 2026. [Online]. Available: https://www.sars.gov.za/wp-content/uploads/Ops/Guides/Legal-Pub-Guide-Gen09-Tax-Guide-for-Small-Businesses.pdf (opens in a new tab)
[3]South African Revenue Service, “Dividends Tax,” SARS, Aug. 19, 2026. Accessed: Nov. 1, 2026. [Online]. Available: https://www.sars.gov.za/types-of-tax/dividends-tax/ (opens in a new tab)
[4]South African Revenue Service, “Private Companies,” SARS, Mar. 10, 2021. Accessed: Nov. 1, 2026. [Online]. Available: https://www.sars.gov.za/businesses-and-employers/small-businesses-taxpayers/starting-a-business-and-tax/private-companies/ (opens in a new tab)
[5]South African Revenue Service, “Companies, Trusts and Small Business Corporations (SBC),” SARS, Oct. 28, 2026. Accessed: Nov. 1, 2026. [Online]. Available: https://www.sars.gov.za/tax-rates/income-tax/companies-trusts-and-small-business-corporations-sbc/ (opens in a new tab)
[6]South African Revenue Service, “Rates of Tax for Individuals,” SARS, Oct. 28, 2026. Accessed: Nov. 1, 2026. [Online]. Available: https://www.sars.gov.za/tax-rates/income-tax/rates-of-tax-for-individuals/ (opens in a new tab)
[7]South African Revenue Service, “Unemployment Insurance Fund,” SARS, Aug. 19, 2026. Accessed: Nov. 1, 2026. [Online]. Available: https://www.sars.gov.za/types-of-tax/unemployment-insurance-fund/ (opens in a new tab)
[8]South African Revenue Service, “Registering for Employees’ Tax [Pay-As-You-Earn (PAYE)],” SARS, Aug. 19, 2026. Accessed: Nov. 1, 2026. [Online]. Available: https://www.sars.gov.za/types-of-tax/pay-as-you-earn/registering/ (opens in a new tab)
[9]South African Revenue Service, “Pay As You Earn,” SARS, Sep. 23, 2026. Accessed: Nov. 1, 2026. [Online]. Available: https://www.sars.gov.za/types-of-tax/pay-as-you-earn/ (opens in a new tab)
[10]Republic of South Africa, “Companies Act 71 of 2008,” South African Government. Accessed: Nov. 1, 2026. [Online]. Available: https://www.gov.za/documents/companies-act (opens in a new tab)
[11]Republic of South Africa, “Companies Amendment Act 3 of 2011,” South African Government, Apr. 26, 2011. Accessed: Nov. 1, 2026. [Online]. Available: https://www.gov.za/documents/companies-amendment-act-4 (opens in a new tab)
[12]South African Revenue Service, “Comprehensive Guide to Dividends Tax (Issue 5),” SARS, May 12, 2022. Accessed: Nov. 1, 2026. [Online]. Available: https://www.sars.gov.za/lapd-it-g19-comprehensive-guide-to-dividends-tax (opens in a new tab)