Salary Versus Dividend Calculator

Salary and Company Profit

Salary paid to a shareholder reduces the profit the company pays tax on. The company tax return guide says net profit is the amount after allowable business expenditure, including shareholder salaries paid or credited. That salary is then part of your own taxable income.

Most companies pay 28% on profit. Inland Revenue’s tax rates for businesses put self employed people on the individual rates instead. From 1 April 2025 those individual rates are 10.5% to $15,600, 17.5% to $53,500, 30% to $78,100, 33% to $180,000, and 39% above that. A payslip estimate for a wage sits on the PAYE calculator. This page is the company choice between that salary and a dividend.

Fully Imputed Dividend

A dividend is not a company expense. It is a share of profit after the company tax. Imputation lets the company attach credits for income tax it has already paid, so that profit is not taxed twice in full.

The maximum imputation ratio is 28 cents of credit for each $1 of gross dividend. Inland Revenue writes that ratio as 28:72, meaning 28 cents of credit on each 72 cents of profit. The same page describes it as 38.89 cents of imputation credit on each $1 of profit after tax. The tool attaches that full ratio. It assumes the company has the credits in its imputation credit account. If the credits are not there, the dividend is not fully imputed and the result will be different.

Resident Withholding Tax on Dividends

The company withholds resident withholding tax before it pays the dividend. Inland Revenue’s rate page says the resident withholding tax rate for dividend payments is 33%, and imputation credits may offset that withholding.

The October 2025 payer guide, IR284, works the withholding out as 33% of the gross dividend, then subtracts the imputation credit. The gross dividend includes the credits. Inland Revenue’s own example is a cash dividend of $2,000 with a $200 imputation credit. The formula gives $526 of resident withholding tax, and the net dividend paid is $1,474. That example is not a fully imputed dividend. The same guide says that if the dividend is fully imputed there will still be an amount of resident withholding tax to pay. The tool uses that formula on a 28:72 dividend.

What changes	Salary	Fully imputed dividend
Company profit	The salary is deducted first	Company tax at 28% comes off first
Your income tax	Individual rates on the salary	Individual rates on the cash plus the imputation credit
Credit for company tax	None. The salary was never taxed in the company	Imputation credit at 28:72
Withholding	Depends how the salary is paid through the year	33% of the gross dividend, reduced by the imputation credit
Earners levy in this tool	$1.75 per $100, up to $156,641	Not applied. That cash is not entered as salary

ACC Earner Levy on Salary

The earners levy is collected with liable earnings, and the amounts include GST. For 1 April 2026 to 31 March 2027, Inland Revenue sets it at $1.75 per $100, on earnings up to $156,641, and the most payable is $2,741.22.

The salary cards include that levy. The dividend cards do not, because the dividend is not typed in as salary. If you already earn other wages, those wages can use up the same $156,641 cap. This tool does not know about that other levy. It caps only the salary you set here.

When Your Rate Is Above 28%

Company tax at 28% does not finish the bill when your own rate on the gross dividend is higher. An Inland Revenue officials paper on shareholder loans says that for a shareholder on 39% who receives a fully imputed dividend, the top up is 11% of the grossed up dividend, or approximately 15% of the cash dividend.

The same gap shows up in the tool as resident withholding tax plus any amount still to pay. At 33% on the gross dividend, the 33% withholding and the 28% imputation credit are meant to meet the income tax on that gross amount. At 39%, the extra is still to pay. Other taxable income matters, because the individual rates apply to your total, not to the dividend in isolation.

Credits Left Over

An imputation credit that is larger than the tax on your income is not cash in this tool. Inland Revenue’s tax technical note on excess imputation credits says credits received by an individual, above the tax for the year, are carried forward. They are not converted into a net loss.

Resident withholding tax is different. It is tax already taken. If that withholding is more than the income tax still owing after the imputation credit is used, the tool shows the extra withholding as an amount coming back. The unused imputation credit stays in the carried forward line.

A Split of Salary and Dividend

Owners rarely face a pure choice. The slider keeps one profit pool and moves dollars from salary to the dividend path. Salary lowers the profit that is taxed at 28%. The remainder is taxed in the company, then paid as a fully imputed dividend with 33% withholding reduced by the credit.

The three cards always use the same profit and the same other income. All as salary deducts the whole profit as salary. All as dividend leaves the whole profit in the company first. Your split follows the slider. Cash in hand is the figure to compare. It is not a verdict on which path is lawful for the work you do.

What This Comparison Leaves Out

KiwiSaver, employer contributions, student loan repayments, and the independent earner tax credit are not in the arithmetic. A salary can trigger those. A dividend does not, in the same way. Adding them can change which card has more cash, or more money set aside.

Profit you leave in the company is not modelled as a second year dividend. It has already been taxed at 28% if it is profit after salary. A later dividend can still carry the imputation credits, if they remain in the imputation credit account. After the first year, Inland Revenue says businesses pay tax in instalments called provisional tax. The timing of those instalments is on the provisional tax calculator. A person who invoices in their own name, with no company, uses the self employed tax calculator instead of this split.