Dividend vs Salary Calculator

How it is calculated

The tool takes one amount of owner pay and applies a single all-in tax percentage to each route: salary net = amount × (1 − salary tax % ÷ 100) and dividend net = amount × (1 − dividend tax % ÷ 100). The difference shown is dividend net − salary net, so a positive figure means dividends leave more and a negative one (printed like -$8,000.00) means salary does. Amounts are in dollars and the tax fields are percentages (35 means 35%). It does not look up any tax bands or credits. Each percentage must already be your combined effective rate for that route, including payroll-type charges for salary, and for dividends any company-level tax paid before the dividend. A negative amount, or a tax rate below 0 or above 100, gives no result.

Common mistakes

• Entering only the personal dividend tax rate and forgetting that dividends are paid from profit the company has already been taxed on. The dividend field should include that corporate layer.
• Leaving payroll-type charges out of the salary rate, which makes salary look cheaper than it is.
• Using a marginal rate for one route and an average rate for the other, so the comparison is not like for like.
• Reading the difference sign backwards. It is dividend minus salary, so a negative number favours salary.
• Entering a rate such as 0.35 instead of 35. The field is a percentage, so 0.35 means 0.35% and both routes look almost untaxed. A rate above 100 or below 0 gives no result.