Three routes exist in both countries: pay yourself a salary or director's fees, pay yourself a dividend, or take money you owe back to the company later. Each route is reported differently and the label you use is not always the label the tax authority accepts. Everything on this page is general information from the Australian Taxation Office (ATO) and GOV.UK guidance, not advice for your circumstances.
Australia
The company's money is not your money
Start here, because it explains every rule that follows. The ATO states that a company is a separate legal entity — separate from you even if you are a shareholder, a director, or both — and that means the company's money is not your money (Division 7A myths debunked, ATO, last updated 20 June 2025). Taking funds out is therefore a transaction the tax law recognises, not a transfer from your wallet.
Salary and director's fees: wage payments trigger withholding
The ATO sets out the ways you can access private company money: salary and wages, director's fees or dividends, and all of these amounts are included in the recipient's assessable income.
If your company, or a trust with a corporate trustee, pays you a wage or director's fees, pay-as-you-go (PAYG) withholding amounts must be sent to the ATO (Types of payments to employees, ATO, last updated 11 June 2025). So this route creates work for the company, not just income for you.
Dividends: the route the ATO points to
A properly paid dividend is outside Division 7A. The ATO states that Division 7A does not apply to amounts already assessable to the shareholder or their associate under other parts of the income tax law, such as normal dividends or director's fees (Private company benefits – Division 7A dividends, ATO, last updated 12 August 2020).
The ATO also explains why it prefers this route: a Division 7A deemed dividend is generally unfranked, and given that, the most effective way to provide a payment or benefit to a shareholder or their associate is to pay it as a normal dividend.
Drawings and "I'll call it a loan": Division 7A
Payments and benefits from a private company to a shareholder or their associate can be treated as a dividend for income tax purposes under Division 7A, even if the people involved treat the transaction as something else — a loan, an advance, a gift, or writing off a debt. Calling it a loan does not settle the question.
There are two ways out:
- Repay it, or convert it, in time. The payment is not treated as a dividend if it is repaid or converted into a Division 7A complying loan by the company's lodgment day for the income year in which the payment or benefit occurs.
- Meet the loan conditions. To be a "complying loan", a loan has to meet three criteria: a minimum interest rate, a maximum term, and a written agreement (Loans by private companies, ATO, last updated 2 July 2026). The maximum term is seven years for an unsecured loan and 25 years where the loan is secured by a mortgage. Interest must be charged at not less than the ATO's Division 7A benchmark interest rate, which the ATO publishes for each income year. The written agreement needs to be in place before the company's lodgment day.
The practical difference matters: if the arrangement fails, the amount can come back to you as a generally unfranked deemed dividend rather than as salary or a franked dividend.
United Kingdom
Salary: register the company as an employer first
If you want the company to pay you or anyone else a salary, expenses or benefits, you must register the company as an employer (Running a limited company: taking money out of a limited company, GOV.UK). Registered employers operate Income Tax and National Insurance contributions on those payments.
Dividends: profits, paperwork, and no Corporation Tax deduction
A UK dividend is a distribution of profit, and three constraints follow from that:
- Available profits only. Your company must not pay out more in dividends than its available profits from the current and previous financial years.
- No Corporation Tax deduction. Dividends are not deductible when the company works out its Corporation Tax.
- Declare it properly. Hold a directors' meeting to declare the dividend, keep minutes of the meeting even if you are the only director, and issue a dividend voucher for each payment.
As a shareholder you normally receive dividend income, and it is the paperwork — minutes and vouchers — that shows which payment was a dividend and which was not.
Drawings: the director's loan account
Money you take out that is not a declared dividend or salary ends up as an amount you owe the company, recorded in a director's loan account. Two thresholds then apply (Director's loans: if you owe your company money, GOV.UK):
- £10,000 and it becomes a benefit. If you are a shareholder and director and you owe your company more than £10,000 (£5,000 in 2013 to 2014) at any time in the year, your company must treat the loan as a "benefit in kind" and report it accordingly.
- Nine months, and the company pays tax. If the loan is not repaid within nine months of the end of the Corporation Tax accounting period, the company must pay Corporation Tax at 33.75% of the outstanding amount — or 32.5% if the loan was made before 6 April 2022. The company can reclaim that tax once the loan is repaid, but the interest on it cannot be reclaimed.
The charge lands on the company, not on you directly, but it is company cash that cannot be used elsewhere until the loan is cleared.
The three routes side by side
| Route | Australia (ATO) | United Kingdom (GOV.UK) |
|---|---|---|
| Salary or director's fees | Included in your assessable income; PAYG withholding amounts must be sent to the ATO | Register the company as an employer and operate Income Tax and National Insurance contributions |
| Dividend | Also assessable; Division 7A does not apply to it, so it avoids the deemed-dividend outcome | Only out of available profits from current and previous financial years; declared at a directors' meeting, minuted even as sole director, with a voucher per payment; not deductible for Corporation Tax |
| Money taken as drawings | Deemed dividend unless repaid or converted to a complying loan by the company's lodgment day; a complying loan needs minimum interest, maximum term (7 years unsecured, 25 years mortgage-secured) and a written agreement | Recorded as a director's loan; over £10,000 owed at any time is a benefit in kind; unpaid nine months after the Corporation Tax accounting period end costs the company Corporation Tax at 33.75% (32.5% for loans made before 6 April 2022) |
What this page does not cover
This comparison is about the mechanics of getting money out and the obligations each route creates. It does not set out Income Tax bands, the Personal Allowance or National Insurance thresholds in the UK, the dividend allowance or dividend tax rates for any tax year, company tax rates or franking credit mechanics in Australia, super guarantee treatment of owner-director pay, or the personal liability directors can incur in Australia for unpaid withholding, GST or super guarantee amounts. Those figures change by year and by individual; check the current figures with the ATO, GOV.UK or your adviser before deciding how to pay yourself.