When a taxpayer receives South African dividends, the income is exempt from normal taz as the company paying the dividends is liable for the payment of dividend tax. Advise your client on the concept of dividend tax as he was informed that instead of taking a salary from his private company, he can pay it as a dividend to avoid personal income tax. $($Mark allocation $25)$

Before answering the question take note of the question guidelines below

$1.$ This is a theory question, make sure to explain the advantages and disadvantages in terms of profit disribution and dividends from tax perspective, which option will work to the benifit of the taxpayer.

$2.$ Use bullet points for your discussion, and use the mark allocation as a guide on how much to include in your discussion