For years, many Australian business owners followed a familiar formula when setting up a new business structure: a trading company owned by a family trust with a corporate trustee. It offered flexibility, tax planning opportunities and an extra layer of asset protection.

But according to Latitude Accountants CEO John Saade’s latest CEO Breakdown, business owners may need to think differently moving forward.

In his recent discussion, John unpacked one of the biggest questions Australian business owners are asking: what is the best business structure for 2026?

During the breakdown, he explored how proposed Federal Budget discussions and potential tax changes may affect family trusts, business sales, capital gains outcomes, investment strategies, holding companies and long-term asset protection planning.

Importantly, many of the measures discussed remain proposals and should not be treated as active law unless formally legislated. However, John’s analysis highlights an important reality: business structures are not set-and-forget decisions.

The wrong structure can affect tax outcomes, future flexibility, cash flow and long-term wealth creation.

So what exactly is changing — and why are accountants beginning to rethink traditional advice?

What Happened?

Recent Federal Budget discussions have raised questions around proposed changes affecting:

• Trust taxation
• Capital gains tax (CGT) treatment
• Business sale outcomes
• Wealth accumulation strategies
• Long-term tax planning

Historically, many accountants recommended a structure where:

• A trading company operated the business
• Shares in that company were owned by a family trust
• A corporate trustee controlled the trust

This structure often created flexibility for tax planning while also supporting asset protection objectives.

The concern now is that proposed changes may alter the advantages these structures previously offered.

For example:

• Trusts may face reduced tax effectiveness
• Capital gains tax treatment could change
• Future sale proceeds may become less tax efficient
• Holding profits inside different entities may become more important

Importantly, proposed budget announcements do not automatically become law.

Business owners should avoid restructuring solely based on media reports or early announcements.

Why Does This Matter?

Business structure decisions are not simply paperwork exercises.

The structure you choose can affect:

Tax paid today

Different entities can face different tax outcomes.

Companies generally have access to corporate tax rates, while individuals pay marginal rates.

For some taxpayers, top individual tax rates can approach 47% including Medicare levy.

Tax paid when selling your business

Many owners focus only on annual tax savings.

But eventual sale outcomes can create significant tax consequences.

A structure that works while operating the business may produce very different outcomes when exiting.

Asset protection

Business owners often assume incorporating alone protects assets.

Reality is more nuanced.

Personal guarantees, legal disputes and ownership arrangements all influence risk exposure.

Ability to invest business profits

Many owners reinvest profits into:

• Commercial property
• Residential investments
• Shares
• New ventures
• Expansion opportunities

How profits move through your structure matters.

The Traditional Structure Explained

For many years, a common recommendation looked something like this:

Individual owners

↓

Family Trust

↓

Corporate Trustee

↓

Trading Company

The advantages often included:

Flexible income distribution

Trusts could distribute income among beneficiaries under trust rules.

This potentially allowed profits to be directed toward family members on lower tax rates where legally appropriate.

Asset protection opportunities

Trust ownership can create additional legal separation between individuals and business assets.

Business succession flexibility

Trust structures may create flexibility for ownership transitions and long-term planning.

Why Some Accountants Are Reconsidering This Approach

Proposed tax discussions have caused many advisers to reassess whether the traditional trust-first model remains the default option.

Several concerns have emerged:

Capital gains outcomes

Future CGT treatment could affect how sale proceeds are taxed.

Historically, certain trust arrangements may have provided tax efficiencies unavailable elsewhere.

Changes could alter this.

Profit retention challenges

If profits eventually land in individual names, taxpayers may face significantly higher personal tax rates.

Increased complexity

Trusts create additional:

• administration
• compliance obligations
• annual reporting
• accounting costs

For many smaller businesses, complexity can outweigh benefits.

The Emerging Alternative: Holding Company Structures

Some advisers are increasingly considering a simpler approach:

Individual

↓

Holding Company

↓

Trading Company

Under this model:

The holding company owns the operating company rather than using a trust structure immediately.

This may create advantages including:

Retaining profits at corporate tax rates

If profits remain within company structures, they may be taxed at lower corporate rates compared with top marginal personal rates.

This can create opportunities for future planning.

Future investment opportunities

Retained profits could potentially be used for:

• acquisitions
• shares
• property purchases
• expansion opportunities

rather than immediately distributing funds to individuals.

Lower setup and compliance costs

Compared with multiple entities and trust arrangements, a holding company structure may reduce:

• ASIC fees
• annual compliance
• tax return requirements
• administration costs

Who Should Pay Attention?

These discussions may be particularly relevant for:

New business owners

Starting with the wrong structure can become expensive to unwind later.

Growing businesses

Businesses approaching higher profitability often need more sophisticated planning.

Investors

Property and investment strategies may be affected by future tax changes.

Family businesses

Trust distribution strategies can impact tax planning opportunities.

Businesses considering a future sale

Exit planning matters long before a sale occurs.

Property Investment and Trust Strategies

One area where family trusts may continue playing an important role is investment property ownership.

Some structures discussed by advisers involve:

Trading Company

↓

Holding Company

↓

Family Trust

↓

Investment Property

The goal may be to use profits generated in business structures to help fund investments without immediately triggering additional personal tax consequences.

This approach can become particularly relevant where business owners wish to accumulate assets over time.

However, these arrangements often involve complex considerations including:

• Division 7A rules
• loan agreements
• repayment obligations
• security arrangements
• lender requirements

Professional advice becomes essential.

Division 7A Considerations

Division 7A rules aim to prevent private companies from providing tax-free benefits to shareholders or related parties.

Where money moves between companies and trusts, formal arrangements may be required.

Business owners sometimes assume:

“It is my company, so I can move money wherever I want.”

Unfortunately, tax law does not work that way.

Incorrect loan arrangements can create unexpected tax consequences.

What Are the Tax and Business Implications?

Business owners should think beyond this year’s tax return.

Questions worth asking include:

How will profits be distributed?

What happens if I sell?

How are my assets protected?

Can I invest profits efficiently?

Will this structure still work in five years?

What ongoing costs apply?

The cheapest structure today is not always the cheapest long-term decision.

What Should Business Owners Do Now?

Rather than rushing to restructure, consider:

Review your existing setup

Ask whether your current structure still aligns with your goals.

Focus on future plans

Growth plans matter.

A business expecting $100,000 profit may need different planning than one forecasting $1 million.

Consider exit planning early

The tax outcome when selling a business often depends on decisions made years beforehand.

Understand compliance obligations

Additional entities create ongoing costs.

Seek tailored advice

No single structure suits every business owner.

What works for one industry or family situation may not work for another.

Common Mistakes to Avoid

Choosing a structure solely for tax savings

Tax is important, but asset protection and long-term planning matter too.

Assuming trusts suit everyone

Trusts remain useful but are not automatically the answer.

Following social media advice

Online examples rarely consider individual circumstances.

Ignoring future sale outcomes

Exit strategies should form part of initial planning.

Forgetting compliance costs

Extra entities usually create ongoing obligations.

Frequently Asked Questions

1. Are proposed budget changes already law?

No. Budget announcements and proposals do not automatically become legislation.

2. Should I restructure my business immediately?

Not necessarily. Seek advice before making major decisions.

3. Is a family trust still useful?

Yes. Family trusts may still provide planning and asset protection benefits in certain situations.

4. What is a holding company?

A holding company generally owns shares in another company but does not actively trade itself.

5. Does a company automatically protect personal assets?

Not always. Personal guarantees and legal obligations can still create exposure.

6. Can trusts reduce tax?

Potentially, depending on circumstances and legal requirements.

7. What is Division 7A?

Division 7A contains rules around loans and payments involving private companies.

8. Can I invest business profits into property?

Potentially, although structure and tax consequences require careful planning.

9. Are trust structures expensive?

They can involve additional setup and annual compliance costs.

10. What structure is best for small business owners?

There is no universal answer. Business goals and circumstances differ.

Final Thoughts

John’s breakdown highlights an important reminder: business structures should evolve as businesses evolve.

Family trusts are not disappearing.

Holding companies are not a universal answer.

And proposed tax changes are not active law until legislated.

What matters is understanding whether your current structure still supports your business goals.

Need Help Choosing the Right Business Structure for 2026?

If you are unsure how proposed business structure changes, trust strategies, or tax planning considerations may affect your business, speak with Latitude Accountants.

Whether you’re starting a new business, reviewing your current structure, planning future investments, or preparing for long-term growth, our team can help you understand your options, stay compliant, and make confident business decisions backed by practical advice.

📍 Sydney Olympic Park | Marrickville | Melbourne | Loxton
📞 1300 706 597
📧 info@latitudeaccountants.com.au

Disclaimer:

This article is general information only and does not constitute financial, tax, legal, or business structuring advice. Information is based on publicly available reporting, proposed policy discussions, and commentary available at the time of writing and may change. Proposed measures discussed may not become law. Individual circumstances vary, and professional advice should be obtained before making business or financial decisions.