Many Asian founders start their Australian business in the simplest way: one company that trades, owns the premises and holds the cash. As the business grows, that one company may carry the lease risk, the employee risk and the family’s savings at the same time.
Families from Singapore, Malaysia, Hong Kong and mainland China often know holding company groups from home. Australia uses similar building blocks, but its tax rules, director liability and stamp duty make the detail different, and the 2026 tax reforms change the picture. This article outlines the usual layers, the limits of their protection and the issues that arise on a later restructure. Which structure suits a family depends on its facts.
The typical layers of a family business group
- Operating company (OpCo): trades, employs staff and signs contracts, so the commercial risk sits here.
- Asset-holding entity: a separate company or trust that may own premises, trade marks and other valuable assets and lease or license them to OpCo.
- Holding company (HoldCo): owns the OpCo shares and may receive surplus profit as dividends.
- Family discretionary trust: often with a corporate trustee, may hold the HoldCo shares and decide which beneficiaries receive income.
- Bucket company: a company beneficiary of the trust, sometimes used in relation to distributed profit.
- Personal holdings: the home, superannuation and personal investments, often kept outside the group.
Not every family needs every layer, and each entity adds cost and compliance.
Separating risk from assets, and where protection ends
If OpCo fails, its creditors can generally pursue OpCo’s assets. Assets held elsewhere may be harder to reach, but the protection has limits:
- Guarantees. Banks and landlords often require personal guarantees from directors and sometimes from other group entities.
- Director penalties. Under the director penalty regime in Schedule 1 to the Taxation Administration Act 1953, directors can become personally liable for certain unpaid company tax and superannuation obligations, and timing can affect the options available.
- Insolvent trading and phoenixing. Directors can be liable for debts incurred while insolvent, and the Corporations Act provisions on creditor-defeating dispositions (s588FDB) target transfers of company property that keep it from creditors.
- Bankruptcy clawback. Some transfers into a trust before financial trouble can be undone; our article on family trusts and creditors discusses this.
How the tax works
Company tax rates
Australian companies are taxed at one of two rates, depending on whether the company is a base rate entity. That turns on aggregated turnover and the proportion of passive income such as dividends, rent and interest. A trading company and a holding company in the same group may be treated differently.
Franking
Company tax paid can generate franking credits on dividends. Where companies in a group pay tax at different rates, a further amount may be payable as profit moves up the group. Tax consolidation can change this, but brings its own costs and conditions.
Division 7A
Profit retained in a company is not the family’s to use freely. Under Division 7A of the Income Tax Assessment Act 1936, payments, loans or debt forgiveness to shareholders or their associates can be treated as dividends unless the requirements are met within time. Our article on Division 7A loans discusses this.
Trust distributions to a bucket company
In Commissioner of Taxation v Bendel [2026] HCA 18, the High Court held that an unpaid present entitlement owed by a trust to a company beneficiary is not, by itself, a Division 7A loan. The ATO’s decision impact statement indicates that Subdivision EA and section 100A remain relevant. Existing arrangements may warrant review.
Capital gains and the 2026 reforms
- Small business CGT concessions in Division 152 of the ITAA 1997 continue, with changes to some eligibility conditions from 1 July 2027. Whether a family qualifies can depend on the structure.
- CGT reform. Under the Treasury Laws Amendment (Tax Reform No. 1) Act 2026, from 1 July 2027 individuals and trusts lose the CGT discount for gains accruing after that date, which is replaced by indexation and a minimum tax. Companies never had the discount, so the comparison between trust and company ownership changes, and valuations at that date may become relevant.
- Proposed trust minimum tax. Bills introduced on 14 October 2026 propose a minimum tax on discretionary trust income from 1 July 2028. They are not law. As introduced, the treatment of corporate beneficiaries raises questions for the bucket company model, and restructuring relief is also proposed.
Foreign owners
- Resident director: under s201A of the Corporations Act 2001, a proprietary company needs at least one director who ordinarily resides in Australia. That person carries real duties and potential liability.
- Director ID: every director, including those overseas, needs one.
- FIRB: foreign investment rules may apply, with different thresholds depending on the investor and the asset.
- Withholding: payments to non-resident owners can attract withholding tax; our article on paying family overseas discusses this.
Restructuring later: rollovers and stamp duty
The ITAA 1997 contains CGT rollovers that may defer tax on some restructures, including:
- Subdivision 122-A: transfers of assets by an individual to a wholly owned company.
- Subdivision 615: interposing a new holding company.
- Subdivision 328-G: the small business restructure rollover, which has its own eligibility conditions.
Rollovers do not address stamp duty. Transfers of land, business assets or interests in landholding entities can attract state duty, and exemptions, where available, have strict conditions.
A worked example (illustrative)
A hypothetical scenario, not a real case.
A couple from Malaysia ran a food import company in Melbourne that also owned its warehouse. They asked whether to add a family trust and a holding company, whether to move the warehouse into a separate entity, how profits would be taxed as they moved through the group, and how the proposed trust minimum tax might affect them. Each step raised rollover, duty and tax questions. The right approach depended on facts that needed advice.
Practical checklist: questions to discuss with your adviser
- Which entity should own each asset, and why?
- Are dealings between group entities documented on supportable terms?
- Are PAYG, GST and superannuation obligations up to date?
- How does Bendel affect any existing loans or unpaid entitlements?
- Do the 2026 reforms make valuations or a restructure worth considering?
- Do the shareholders agreement, trust deed and Wills work together? Trust-held shares do not pass under a Will.
Frequently asked questions
What is the best family business structure in Australia: company or trust?
There is no single answer. Many families combine several entities, and the 2026 reforms change the comparison. The right structure depends on the family’s circumstances and needs advice.
Why use a holding company structure in Australia?
A holding company can separate accumulated profit from trading risk and may make a sale or restructure easier. It may also raise tax-rate and franking questions.
Does a family trust protect my business assets?
It may help in some situations, but guarantees, director penalties and the rules against creditor-defeating transfers limit its effect, and timing matters.
Can a foreigner own an Australian company?
Generally yes, subject to requirements such as a resident director, director IDs and possibly FIRB rules.
Every family’s situation is different, and the answer often turns on details. Book a consultation so we can review your documents and circumstances before you act.
How Chua Tan Associates can help
Justin Chua trained in accounting (Bachelor of Commerce, accounting major) and advises on the legal and tax structure of family wealth together. He is an affiliate member of STEP (the Society of Trust and Estate Practitioners), an Accredited Family Business Advisor and a Nationally Accredited Mediator. We assist with mapping a family group, trust deeds, constitutions and shareholders agreements, and coordinate restructures with the family’s accountant and registered tax agent. For families with owners in Asia, we work with lawyers there and advise in English, Mandarin and Cantonese.
Important: This article is general information only and must not be relied on. It is not legal, tax or financial advice, does not take your circumstances into account, and may not reflect changes in the law after publication. Laws of other countries may also apply. Do not act or refrain from acting on the basis of this article. Reading it or contacting us does not create a lawyer–client relationship. Please book a consultation for advice on your situation.
Related reading
Chua Tan Associates acts for families, executors, trustees and their professional advisers in estate planning, estate administration and estate disputes in Australia and across borders. To arrange a confidential consultation, please contact our Melbourne office on +61 3 9602 3988 or submit an enquiry. Advice is available in English, Mandarin and Cantonese.
Justin Chua (蔡智勋), lawyer and mediator, Chua Tan Associates, Melbourne. General information only, not legal or tax advice.
简体中文 
English (Australia) 
繁體中文