Tax is often seen as an exercise in review and reflection. However, proactive tax planning, especially for a business’s structure, can position the group for optimal tax results.
Below are important structuring considerations to assist your business through key stages.
Businesses should also remain aware of proposed Federal Budget measures that may affect future structuring factors using trusts, noting these changes are yet to be legislated.
Growth
As your business grows, structuring becomes increasingly important. Considerations include sourcing capital, protecting assets, profit distributions and ensuring an optimal tax environment for the group, among other factors unique to your situation.
Companies offer access to various equity-raising options as well as franking credits, which can be highly valuable for tax planning. However, Division 7A loans can create complexity, and upcoming case law developments require close monitoring. Trusts provide useful profit distribution flexibility but do not offer access to the company tax rate.
A combination of companies and trusts provides a balanced and efficient structure if set up properly. Where an existing structure is no longer fit for purpose, a rollover into an improved structure may be possible without triggering unnecessary capital gains tax.
Succession
You’ve smashed the routine and now you’ve got to nail the dismount. Aligning your business structure with your superannuation strategy (self-managed or otherwise) can generate valuable retirement benefits. This may include coordinating the use of franking credits and super contributions in a tax-effective way. Used appropriately, these strategies can support long-term retirement planning, including building and protecting assets within a super fund that may later generate concessionally taxed income.
Separately, if your structure includes trusts, a pertinent consideration is whether a family trust election has been made and the potential application of family trust
distributions tax. The controversial tax can have significant implications, even where minor and unintentional distributions are made outside of the family group.
Exit
Strong structuring and long-term planning can help ensure an efficient exit or wind down.
An efficient tax structure periodically transitions earnings into protected and tax-efficient environments. Poor planning can leave large amounts of earnings in your business that can lead to unwieldy lump sum distributions in the future with adverse tax consequences.
Conclusion
Ultimately, proactive, long-term tax planning can help identify your next steps when navigating the complexities of business.
This article was authored by Garrison Cox, Senior in HLB Mann Judd Perth’s Tax Advisory division. It was first published in the Winter 2026 issue of Client Alert.