If you own and run a company, you face a question employees never have to think about: how do you actually pay yourself? πΌ
It sounds simple, but getting it wrong quietly costs directors thousands in unnecessary tax every year, or lands them in trouble with SARS. Salary? Dividends? Director’s fees? A mix? And what are the rules you have to follow? Here’s the 2026 guide for company owners.
π° The three ways directors take money out
As an owner-director, money generally reaches you through one (or a mix) of these:
πΌ Salary / director’s remuneration – a regular, PAYE-taxed income, deductible for the company
π Dividends – paid from after-tax company profit, subject to 20% dividends tax
π§Ύ Director’s fees – remuneration for your role as a director specifically, also subject to PAYE
Each is taxed differently, and the right blend depends on your profit, your other income and your goals. There’s rarely a single “correct” answer, but there’s usually an optimal one π―
βοΈ Salary vs dividends – the core trade-off
This is the heart of director pay, and we’ve covered it in depth in our salary vs dividends guide. The short version:
β Salary reduces company profit (and company tax), is taxed once on the sliding scale, builds your retirement annuity room, and counts as income for bonds and finance.
β Dividends avoid PAYE and UIF, but come from profit that’s already been taxed at 27% company tax, and then attract 20% dividends tax on top.
Because dividends are effectively taxed twice (company tax, then dividends tax), they’re not automatically “cheaper” than salary. For most owner-managed companies, the smart answer is a blend,Β and finding the right split is where real tax planning pays off π‘
π A 2026 note on director’s fees
There’s a recent development worth knowing: SARS updated its process around director’s fees in the context of the Tax Compliance Status / Approval for International Transfer system. In short, where a director’s fees are involved in certain applications, SARS now expects supporting documentation, such as an appointment letter and confirmation that PAYE is being withheld. It’s a small administrative tightening, but it’s a reminder that director’s remuneration needs to be properly documented and PAYE handled correctly, not treated casually π
β Do I have to pay myself a salary as a director?
Not strictly, but paying yourself only dividends and no salary has downsides: it limits your retirement annuity contributions, leaves you with no “income” on paper when applying for a bond or finance, and an artificial structure purely to dodge PAYE can attract SARS scrutiny. A sensible, commercially justifiable salary is usually part of the picture π©
β Am I a provisional taxpayer as a director?
Very likely, yes, especially if you receive dividends or other income not fully taxed through PAYE. That means provisional tax: estimating and paying tax twice a year, in August and February. Get the estimate wrong and underestimation penalties follow, so this is one to handle carefully rather than guess π
β What’s the most tax-efficient way to pay myself in 2026?
For many owner-directors, an efficient structure looks something like: a salary up to a sensible level (using lower brackets, building RA room, reducing company profit), topped up with dividends from remaining profit, while making full use of retirement contributions and checking whether the company qualifies as a Small Business Corporation for lower rates. But the exact split is genuinely personal, it depends on your profit, your tax bracket and whether you’re planning to buy property or build retirement savings. This is one of the highest-return conversations a business owner can have with their accountant π―
π― Get your pay structure right, every year
How you pay yourself isn’t a set-and-forget decision. It should flex each year with your company’s profit, your personal tax position and your plans. Done well, it’s one of the most valuable pieces of tax planning available to a business owner, and it keeps you firmly on the right side of SARS.
Go2 Accounting helps company directors across Pretoria and Tshwane structure the most tax-efficient, compliant way to pay themselves, and reviews it each year as the business grows. Get in touch for a no-obligation chat.
Because how you pay yourself matters almost as much as how much your company makes π
