Key takeaways

  • The money in your company is not yours to spend freely. There are four legitimate ways to get it out, each with different tax consequences.
  • The four routes are a PAYE salary, a year-end shareholder salary, drawings through your shareholder current account, and dividends. Most owners use a combination.
  • The decision in 2026 turns on the gap between the 28% company tax rate and your personal rate, which tops out at 39% over $180,000.
  • Drawings need careful tracking. An overdrawn shareholder current account can trigger fringe benefit tax or interest charges.
  • From 1 April 2026 the employer KiwiSaver contribution rate rises to 3.5%, which slightly increases the cost of paying yourself a PAYE salary.

Your company is making money. The problem is that the money is sitting in the company’s bank account, and the company is a separate legal entity from you. You cannot simply transfer it to your personal account and treat it as yours. How you move that money out determines how much tax you pay and whether you stay on the right side of IRD.

This guide covers every legitimate way to get money out of your New Zealand company in 2026, how each one is taxed, and how to combine them sensibly.

What are my options for taking money out of a company?

There are four main routes, plus one special case. Each gets the money into your hands, but the tax treatment and the admin differ.

  • A PAYE salary: the company employs you and pays you a regular wage with tax deducted as you go.
  • A year-end shareholder salary: a lump sum declared at the end of the financial year, with tax managed by you.
  • Drawings through your shareholder current account: informal withdrawals during the year that are squared up at year-end.
  • Dividends: a distribution of the company’s after-tax profit to shareholders.

The special case is repaying a genuine loan you made to the company. If you put your own money in to get the business started, drawing that back out is a repayment, not income, so it is not taxed. Everything else eventually has to be characterised as salary, dividend, or a current account adjustment, and taxed accordingly. There is no legitimate way to extract company profit without it being taxed at some point.

How does a shareholder current account (drawings) work?

This is the most informal method, and the one most small company owners actually use day to day. You withdraw money from the company as you need it, and each withdrawal is recorded as a debit in your shareholder current account. At the end of the year, the total is dealt with by declaring a shareholder salary or a dividend (or a combination) to offset the balance.

The upside is flexibility. You take money when you need it, in amounts that suit your personal cash flow.

The downside is that it requires careful record keeping. If your shareholder current account goes into a negative balance (meaning you have taken out more than the company owes you), the company may have to pay fringe benefit tax on that overdrawn amount, or charge you interest at the IRD prescribed rate. This is one of the most common issues IRD picks up in reviews, so reconcile the account regularly rather than letting it run.

How does paying yourself a PAYE salary work?

The company employs you as a shareholder-employee and pays you a regular salary with PAYE deducted. This works exactly like being employed by someone else. The company registers as an employer, runs payroll, deducts income tax, ACC Earners’ Levy, and KiwiSaver contributions, and files employment information with IRD each payday.

Advantages

You get a regular, predictable income. PAYE is handled as you go, so there are no large year-end tax bills. The company makes employer KiwiSaver contributions. Having regular salary payments can make it easier to get a mortgage or personal loan.

Disadvantages

The salary must be at a fair market rate for the work you do. You cannot underpay yourself to keep company profits low and avoid personal tax. IRD watches for this.

Once you start paying yourself a PAYE salary, you generally need to keep it going year after year (though you can adjust the amount). The company also has to pay your salary even in lean months, which can pressure cash flow if revenue dips.

What is a shareholder salary (non-PAYE) and how is it different?

This is a year-end adjustment rather than a regular payment. The company declares a lump-sum salary to you at the end of the financial year, which offsets the drawings you have already taken through your shareholder current account. No PAYE is deducted during the year. Instead, you include this income on your personal tax return and manage your own tax payments, usually through provisional tax.

Advantages

More flexible than a PAYE salary. Fewer compliance requirements during the year. You keep more cash in the business until you need it.

Disadvantages

You need to estimate your income and set aside money for provisional tax throughout the year. If you underestimate, IRD may charge use-of-money interest. Not having a regular salary can make mortgage and loan applications harder.

How do dividends work?

After the company has paid all its costs (including any shareholder salary) and the remaining profit has been taxed at the 28% company rate, the company can distribute the after-tax profit to shareholders as dividends.

Dividends are treated as income in the shareholder’s personal tax return. The 28% company tax already paid is credited against your personal tax obligation through imputation credits. If your personal tax rate is higher than 28%, you pay the difference. If it is lower, you may get a credit.

Dividends can only be paid when the company has distributable profits, has paid sufficient taxes and meets certain solvency requirements. You cannot pay dividends from a loss-making company or before sufficient income tax has been paid for the dividend.

What about resident withholding tax on dividends?

When a company pays a dividend, it generally needs to deduct resident withholding tax (RWT) so that the total tax (imputation credits plus RWT) equals 33% of the gross dividend. The shareholder receives the net amount; the RWT is paid to IRD on their behalf.

On a fully imputed dividend, the imputation credit covers the 28% company tax, and the RWT tops it up by an additional 5% to reach 33%. If the shareholder’s actual marginal rate is higher (39%), the shareholder tops up the difference at year-end. If it is lower, they may receive a refund.

What is different about getting money out in 2026?

The mechanics have not changed, but a few current settings shape the decision.

  • The rate gap. Company profit is taxed at a flat 28%, while personal income is taxed progressively up to 39% over $180,000. The bigger the gap between your personal rate and the company rate, the more the timing of when you take money out matters.
  • Dividends still settle at 33%. The imputation credit plus RWT brings a fully imputed dividend to 33%. A shareholder on the 39% rate tops up the rest at year-end, so dividends are not a way to escape the top rate, only to defer part of it while profit stays in the company.
  • KiwiSaver costs more from 1 April 2026. The default employer contribution rate rose from 3% to 3.5%, then to 4% from 1 April 2028. If you pay yourself a PAYE salary, the company matches at the higher rate, so a salary costs slightly more than it did.
  • Overdrawn current accounts still bite. The fringe benefit tax and prescribed-interest rules on an overdrawn shareholder current account remain in force, so sloppy drawings are as costly as ever.

None of this changes the four routes. It changes the balance between them, which is why the right mix is worth reviewing each year rather than setting once and forgetting.

Which option should I choose?

For most small company owners, the answer is a combination. A common approach:

  • Pay yourself a modest PAYE salary to cover your regular living costs and maintain a consistent income record.
  • Use the shareholder current account for additional withdrawals as needed during the year.
  • Declare a year-end shareholder salary or dividend to reconcile the account balance and optimise the overall tax position.

The right mix depends on your income level, your personal tax rate versus the company rate, your cash flow needs, and whether you have a mortgage or loan to service. This is one area where getting advice from an accountant or using a tool like Afirmo’s company tax tracking is genuinely valuable.

How do I set a fair market salary for myself?

Look at what the role would pay if someone else were doing it. A small business owner running operations, sales, and admin in a $300,000 turnover company is probably doing the work of a $90,000 to $130,000 employee, depending on industry.

Trying to pay yourself $30,000 to keep company profits high (and save tax in the short term) usually backfires if you’re consistently pulling more money out of the company to fund your lifestyle. If deemed unreasonable, IRD can reassess the salary, and you may face penalties on top of the recalculated tax. Pay yourself fairly and use the other levers (timing, dividends, reinvestment) for genuine tax planning.

What records do I need to keep?

Keep clear, accurate records of every transaction between you and the company. Every dollar in, every dollar out, with a description of what it was for. Messy shareholder current accounts or using the company business bank account as though it’s your personal account are one of the most common issues IRD picks up in reviews, and they can create unnecessary admin and tax headaches.

A simple spreadsheet or accounting software entry showing the date, amount, and reason for each withdrawal or repayment is enough. Reconcile the shareholder current account monthly so the balance is always known and explained.

Frequently asked questions

Can I just transfer money from my company account to my personal account?

You can physically make the transfer, but it still has to be characterised for tax. It becomes either a drawing against your shareholder current account, a salary, a dividend, or the repayment of a loan you made to the company. The transfer itself is not the end of the story; how it is recorded determines the tax.

Can I take money out of my company tax-free?

Only if you are repaying a loan (or funds introduced) you previously made to the company (a genuine shareholder loan). Otherwise, every withdrawal eventually needs to be characterised as salary, dividend, or repayment of a current account credit balance. There is no legitimate way to extract company profit without it being taxed at some point.

Do I need to register as an employer if I pay myself a PAYE salary?

Yes. The company registers as an employer with IRD, runs payroll, files employment information each payday, and pays PAYE, ACC Earners’ Levy, and KiwiSaver contributions. From 1 April 2026 the employer KiwiSaver rate is 3.5%. Most accounting software or a payroll provider handles this with minimal setup.

What is the most tax-efficient way to take money out?

It depends on your overall income, the company’s profit, and your future plans. For owners earning under the top tax bracket, a fair PAYE salary is usually simplest and close to optimal. For higher earners or those reinvesting profits, a mix of salary and dividends with imputation credits is often more efficient. Get specific advice for your situation.

Afirmo tracks shareholder current accounts, salary payments, and dividends in one place, so the numbers are clear when it is time to file. Start a free trial at afirmo.com.