How cost to company works in South Africa
Cost to company (CTC) is the total amount an employer spends to employ you. Your basic salary is only part of it: the same figure carries the employer's share of UIF, the Skills Development Levy, retirement fund contributions and often medical aid and allowances. The calculator above separates these employer costs from your own deductions, so you can see where each rand of the package goes.
What is in a CTC package?
A CTC figure bundles together cash pay, benefits paid on your behalf and statutory employer costs:
- Basic salary. The cash amount on your payslip, and the base for PAYE and UIF.
- Retirement fund contributions. The employer's share of pension or provident fund contributions, usually a fixed percentage of salary.
- Medical aid. The part of your medical scheme premium the employer pays.
- Allowances. Car, travel or cellphone allowances, each with its own tax treatment. A travel allowance has 80% of its value included for PAYE unless at least 80% of your travel is for business.
- Risk benefits. Group life, disability and funeral cover.
- Statutory employer costs. Employer UIF, SDL and the annual COIDA assessment paid to the Compensation Fund.
- Annual bonus. Some annual CTC figures already include a 13th cheque, so dividing by 12 overstates your monthly salary.
CTC vs gross salary vs net salary
The three terms describe different amounts. For the R 40 000,00 package in the worked example below:
| Term | What it means | Example |
|---|---|---|
| Cost to company | Everything the employer spends, including employer UIF, SDL and benefits | R 40 000,00 |
| Gross salary | Your payslip total before any deductions | R 36 703,25 |
| Net salary | What is paid into your account after PAYE, UIF and your own contributions | R 27 963,97 |
Employer costs: UIF, SDL and COIDA
UIF. The employer deducts 1% from the employee's pay and adds a matching 1%, both on earnings up to the R17,712 monthly ceiling. The employer share is normally counted inside CTC. See the UIF Calculator.
SDL. The Skills Development Levy is 1% of total payroll, paid only by employers whose annual payroll is expected to exceed R500,000, and never deducted from the employee. The SDL Calculator works it out for a whole payroll.
COIDA. Employers pay an annual assessment to the Compensation Fund based on their industry rate and declared earnings; employees do not contribute. Not every employer counts it inside CTC, so this calculator leaves it out. Estimate it with the COIDA Calculator.
Worked example: a R 40 000,00 CTC package
Take a monthly CTC of R 40 000,00, with UIF and SDL included and retirement fund contributions of 7.5% from both the employer and the employee. Using the 2026/2027 tax tables:
- The employer costs come out first: UIF of R 177,12, SDL of R 367,03 and a retirement contribution of R 2 752,74. That leaves a basic salary of R 36 703,25.
- Your own retirement contribution of R 2 752,74 is deducted before tax, so PAYE is worked out on R 33 950,51 a month, or R 407 406,08 a year. PAYE for the month comes to R 5 809,41.
- Employee UIF is R 177,12, bringing your total deductions to R 8 739,27.
- Take-home pay is R 27 963,97 a month, or R 335 567,69 a year. That is 69.9% of the package.
Take-home pay at common CTC packages (2026/27)
Based on your current settings: UIF included, SDL included, retirement contributions of 7.5% (employer) and 7.5% (employee), with no medical aid or allowances.
| Monthly CTC | Gross salary | PAYE | Take-home pay | Take-home share |
|---|---|---|---|---|
| R 15 000,00 | R 13 698,94 | R 795,87 | R 11 738,66 | 78.3% |
| R 20 000,00 | R 18 270,46 | R 1 557,03 | R 15 166,02 | 75.8% |
| R 30 000,00 | R 27 487,29 | R 3 491,69 | R 21 756,93 | 72.5% |
| R 40 000,00 | R 36 703,25 | R 5 809,41 | R 27 963,97 | 69.9% |
| R 50 000,00 | R 45 919,87 | R 8 452,27 | R 33 846,49 | 67.7% |
| R 75 000,00 | R 68 961,42 | R 16 213,92 | R 47 398,28 | 63.2% |
| R 100 000,00 | R 92 002,98 | R 24 749,88 | R 60 175,75 | 60.2% |
The take-home share falls as the package grows, because income tax is progressive and UIF stops at the ceiling. See every bracket on our SARS tax tables page.
How this calculator works out your figures
- PAYE uses the 2026/2027 brackets and the R17,820 primary rebate, for someone under 65.
- The employer's retirement contribution is a taxable fringe benefit that is deducted again, so it has no net PAYE effect within the 27.5% and R430,000 limits.
- Medical aid and other benefits are shown as employer costs only. For the medical aid fringe benefit and tax credits, use the Medical Aid Tax Credit Calculator.
- Untick SDL if the employer's annual payroll is at or below R500,000.
Comparing job offers quoted as CTC
Two offers with the same CTC can pay very different amounts in cash, depending on how much goes to retirement or medical aid. Ask for a written breakdown and run both through the calculator. If you only have a gross salary, use the Salary Calculator or the PAYE Calculator, and the Bonus Tax Calculator for a 13th cheque.
Frequently Asked Questions
What does cost to company (CTC) include?
A CTC package is everything the employer spends on you. It starts with your basic salary and adds the employer's retirement fund contribution, any employer medical aid, allowances, employer UIF at 1% of salary (capped at R177.12 a month) and the Skills Development Levy at 1% of payroll. Some employers also include a 13th cheque, so ask for a written breakdown.
How do I convert CTC to take-home pay?
Work in two steps. First remove the employer costs from the CTC figure to find your gross (basic) salary. Then take your own deductions off the gross: PAYE, employee UIF and your retirement fund contribution. What is left is your take-home pay. The Salary to CTC mode runs the sum in reverse.
What is the difference between CTC, gross salary and net salary?
CTC is the total cost to the employer. Gross salary is the figure on your payslip before deductions, which is CTC minus the employer-side costs. Net salary is what reaches your bank account after PAYE, UIF and your own contributions.
What is SDL and does every employer pay it?
The Skills Development Levy is an employer levy of 1% of total payroll that funds training through the SETAs and the National Skills Fund. Only employers whose annual payroll is expected to exceed R500,000 pay it, and it is never deducted from the employee's pay.
Is employer UIF part of my CTC?
In most CTC packages it is. The employer pays 1% of your salary to the Unemployment Insurance Fund on top of the 1% taken from your pay. Both are capped at R177.12 a month, because UIF only applies to earnings up to R17,712. When the employer's share sits inside your CTC, your gross salary is slightly lower.
How much of my CTC will I take home?
It depends on the size of the package and how much of it goes to benefits. In the worked example on this page, a R 40 000,00 monthly package with 7.5% retirement contributions from each side leaves R 27 963,97 in take-home pay, which is 69.9% of CTC. Larger packages keep a smaller share because more of the salary falls into higher tax brackets.
Does a higher pension contribution lower my tax?
Yes. Contributions to a pension, provident or retirement annuity fund are deductible up to 27.5% of the greater of your remuneration or taxable income, capped at R430,000 a year. The employer's contribution is a taxable fringe benefit but falls inside the same deduction. Because the deduction lowers PAYE, take-home pay drops by less than you contribute.
Is employer medical aid in a CTC package taxed?
Yes. When an employer pays towards your medical aid, SARS treats that contribution as a taxable fringe benefit. You then receive a monthly medical scheme fees tax credit of R376 for the main member, R376 for the first dependant and R254 for each additional dependant, which reduces PAYE. Use the Medical Aid Tax Credit Calculator for the exact effect.
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