A discretionary trust may suit you if:

• You run a family business
• You want income splitting flexibility
• You want asset protection
• You have adult children in lower tax brackets
• You are investing in property

It allows flexible annual profit distribution for tax efficiency.

Discretionary Trust Tax:

• Trustee must distribute income before 30 June.
• Beneficiaries pay tax at their marginal tax rates.
• Undistributed income may be taxed at the highest marginal rate.

Unit Trust Tax:

• Income must follow unit ownership.
• Less flexibility for tax planning.

Company Tax Comparison:

• Flat 25% company tax rate (for base rate entities).
• Dividends may include franking credits.
• Profits can be retained inside company.

Example: Trust vs Company Tax Planning
If a business earns $200,000 profit:

With a discretionary trust:

• Income can be distributed across family members
• Potential tax savings

With a company:

• 25% company tax (base rate entity)
• Dividends taxed when distributed

Choosing the right structure can significantly impact long-term tax outcomes.

No.
Trust losses:

• Cannot be distributed to beneficiaries
• Stay inside the trust
• Can be carried forward (subject to trust loss rules)

Company losses:

• Stay in the company
• Used against future profits

This is an important factor when deciding business structure.

Discretionary Trust:

• Often allowed if the trust deed permits
• Usually done via trustee resolution
• Must be handled carefully to avoid tax consequences

Unit Trust:

• New investor must acquire units
• May trigger CGT or stamp duty

A trust can:

• Operate a business
• Own investment property
• Invest in shares
• Trade under a registered business name

Since a trust is not a legal entity, the trustee signs contracts on behalf of the trust.

We strongly recommend using a corporate trustee.

Benefits:

• Better asset protection
• Limited liability
• Easier succession
• Cleaner legal structure

Example structure:
XYZ Pty Ltd as trustee for The ABC Family Trust

Yes.
A common structure is:

Trust → owns shares in → Pty Ltd Company

This provides:

• Asset protection
• Tax flexibility
• Profit retention at company tax rates
• Long-term structuring flexibility

Very common for growing businesses.

• Asset protection
• Income splitting
• Estate planning flexibility
• Privacy
• Potential land tax planning advantages

• If you want to retain profits long-term at 25% tax
• If you expect significant start-up losses
• If you want a simple, low-cost structure
• If investors require fixed ownership rights

At Accounting Mate, we help business owners and investors::

• Decide between trust vs company structure
• Set up discretionary, unit or hybrid trusts
• Establish corporate trustees
• Register ABN, TFN and GST
• Implement tax-effective distribution strategies
• Restructure existing businesses
• Plan succession and asset protection

Every situation is different. The right structure depends on:

• Income level
• Family situation
• Asset risk exposure
• Growth plans
• Long-term objectives

Professional advice before setting up a trust is essential.