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When it comes to growing and protecting your wealth, the structure you choose for each investment can be just as important as the investment itself.
Whether you’re acquiring your first rental property, building a share portfolio, or diversifying into private businesses, the right entity will optimise your tax position and safeguard your assets. In this brief overview, we’ll explore:
1. Why structure matters
2. Top vehicles for property investors
3. How trusts can work in your favour
4. Tax-efficient strategies for high net worth individuals
Imagine two investors earning the same income from identical shares—but one pays significantly less tax. The difference? How their holdings are owned and reported. A well chosen structure can:
It isn’t a one size fits all solution. The best approach depends on your goals, risk tolerance, and time horizon, so speaking with the Attune team for an approach tailored to you is incredibly important, but for now, let’s unpack the leading options in brief.
a) Direct Ownership (Individual or Joint)
• Pros: Simplicity in setup, direct control.
• Cons: Taxed at your marginal rate; exposure to personal liabilities.
b) Company Structure
• Pros: Flat 25–30% corporate rate; limited liability.
• Cons: No access to franking credits for individuals; dividend distribution may trigger further tax.
c) Unit Trust or Property Trust
• Pros: Income streamed to beneficiaries on their marginal rates; flexible profit distribution.
• Cons: Trust setup and compliance costs; trustee duties and record keeping.
Tip: Many savvy property investors use a company as trust trustee. This hybrid approach leverages corporate tax rates for undistributed profits, while flowing income to beneficiaries when distributions make sense.
Trusts are among the most powerful tools for both tax planning and asset protection:
• Discretionary (Family) Trusts
Allow trustees to allocate income and capital gains among family beneficiaries each year—optimising tax outcomes by utilising lower rate tax brackets.
• Unit Trusts
Beneficiaries hold fixed units. Ideal for joint ventures and partnership style investments where each party’s stake is proportionate to their contribution.
Key considerations:
• Choose your trustee carefully—often a company with robust governance.
• Prepare a clear trust deed outlining powers, beneficiaries, and distribution rules.
• Keep meticulous minutes of distribution decisions to satisfy the ATO.
High net worth (HNW) clients typically juggle multiple asset classes—each with unique tax implications. Here are a few advanced strategies:
1. Private Ancillary Funds (PAFs)
Philanthropy can deliver a 30% tax deduction on contributions and align with social-impact goals.
2. Family Investment Companies (FICs)
A corporate entity wholly owned by family members—retains profits at corporate tax rates and facilitates generational wealth transfer with dividend imputation benefits.
3. Spousal Loans
Lending funds at the ATO benchmark rate from a higher income spouse to a lower income spouse can shift investment income—and tax liability—down to the lower rate bracket.
4. Negative Gearing and Depreciation
Strategically pairing interest expenses with high depreciation assets (e.g., commercial fit outs, fixtures) to maximise deductible losses in rental properties.
Every investor’s situation is unique, and the “best” structure will hinge on your:
💡 Pro tip: Review your structures annually to ensure they remain fit for purpose as tax laws and personal circumstances evolve.
At Attune Advisory, we work closely with you to craft bespoke structures that not only unlock tax efficiencies but also stand the test of time. Ready to explore your optimal investment framework?
Book a Strategy Session today and let’s map out a structure aligned with your objectives.
Contact the Attune Advisory team on 1300 866 113 or send us an email to find a time that works for you and we can show you what’s possible with the right structures in place.
