Insights

When it comes to building and protecting wealth in Australia, choosing the right investment structure is just as important as choosing the right investments. Whether you’re a business owner, investor, or planning for intergenerational wealth, understanding how family trusts and investment entities work – and how they’re taxed – can unlock powerful advantages.

What Is a Family Trust?

A family trust is a type of discretionary trust set up to hold and manage assets for the benefit of family members. The trustee (an individual or company) controls the trust and decides how income and capital are distributed among beneficiaries

Family trusts are popular because they offer:

• Flexibility in income distribution
• Asset protection
• Tax planning opportunities
• Succession and estate planning benefits

Tax Benefits and Considerations

Family trusts are not taxed as separate entities. Instead, income is generally taxed in the hands of beneficiaries who are “presently entitled” to it. This allows trustees to distribute income to beneficiaries in lower tax brackets, reducing the overall tax burden

Key tax advantages:

• Income streaming to minimise tax
• 50% CGT discount on assets held for more than 12 months
• Asset protection from creditors or relationship separation & divorce
• Estate planning without triggering CGT or stamp duty

Risks and limitations:

• Negative gearing losses are trapped in the trust
• Land tax thresholds may not apply in some states
• Stamp duty and CGT may apply when transferring assets into a trust

Other Investment Structures to Consider

Beyond family trusts, there are several other entities used for tax-efficient investing:

Companies

• Taxed at a flat rate (25–30%)
• No CGT discount
• Good for retaining earnings and reinvesting
• Less flexible in income distribution

SMSFs (Self-Managed Super Funds)

• Tax-effective retirement savings
• Strict compliance and investment rules
• Ideal for long-term wealth building particularly if wanting to hold an investment or commercial property including your own business premises

Bucket Companies

• Used to “cap” income at the company tax rate
• Can hold profits for future distribution
• Often used alongside trusts for tax planning

Choosing the Right Structure

There’s no one-size-fits-all solution. The best structure depends on:

• Your income level and tax position
• Asset protection needs
• Estate planning goals
• Business or investment strategy

Working with a financial planner and tax advisor ensures your structure supports your long-term goals while staying compliant with Australian tax laws.

Need Help Structuring Your Investments?

At Altitude Advisers we help individuals, families, and business owners choose and manage the right investment structures for their goals. Whether you’re considering a family trust, company, or SMSF, our financial planning services are designed to optimise your tax outcomes and protect your wealth.

Contact us today to schedule a strategy session and get the big picture right – from structure to success.

Altitude Financial Planning is a Corporate Authorised Representative of Altitude Financial Advisers Pty Ltd ABN 95 617 419 959 AFSL 496178

The information contained on this website is general in nature and does not take into account your personal circumstances, financial needs or objectives. Before acting on any information, you should consider the appropriateness of it and the relevant product having regard to your objectives, financial situation and needs. In particular, you should seek the appropriate financial advice and read the relevant Product Disclosure Document