Structures to maximise borrowing - Trust & Company

When it comes to ownership structure, there is no one fit for all solutions, you can checkout different type of investment for long term . But making the effort to find an ownership structure that works best for you will help you in multiple ways.

Employing Company And Trust Structures To Maximise Borrowings

Property investment has become one of the most popular methods of wealth creation in Australia. However, while the market has more than one recommendation when it comes to buying an investment property or selecting a property to invest in or loan packages, little is said about the correct ownership structure for your investment property.

Most first-time investors focus mainly on identifying properties with high growth potential and high rental income as an investment option, and often disregarding the need to diversify their portfolios. It's important to choose a structure that aligns with your investment plans and investment strategies and analyse your risk tolerance.

When it comes to ownership structure, there is no one fit for all solutions, you can checkout different type of investment for long term . But making the effort to find an ownership structure that works best for you will not only help you maximise returns but also save on taxes.  

Besides common ownership structures, like joint and individual ownership, there are other options that may seem unconventional to the new property investor, but are known to give high returns when meticulous planning is involved.  


1. Company ownership– Setting up a company to hold your investment property provides good asset protection due to the limited liability of shareholders. However, all profits are shared between the shareholders of the company and a flat tax rate of 30% applies to all profits.

Benefits of Company Ownership:

a.Lower Tax Rate: The company tax rate is set at 30% or 30 cents to the dollar as compared to the tax rates on personal income which are much higher. Essentially, the company will pay tax on business profits and you can draw down whatever you need for yourself.

b.Limited Liability: In a company structure, shareholders are liable to pay in proportion to their share of the company.  

c.Internal Income Splitting: In company ownership, your families can also be shareholders, thus the income is floating around your own family.

Drawbacks of Company Ownership: Most people have a misconception that they are protected at all times. However, under rules set by the Australian Securities and Investments Commission under the Corporations Act 2001, directors of proprietary limited, unlimited proprietary, and public limited companies can still be held personally liable for the following negligible or fraudulent reasons:

-Debts related to insolvency

-Losses associated with a breach of duties

-Guilty of Illegal Activity

-Debts from the company acting as a trustee as part of a trust business structure.

2.Trusts: Trusts are a form of property investment that has become a popular option amongst property investors in recent years. A trust will essentially let a third party, called a trustee, hold and manage the property on the behalf of a beneficiary.

This greatly expands your options when it comes to managing your assets, whether you’re trying to shield your wealth from taxes. In case of your demise, a trust can also enable you to control not only to whom your assets will be disbursed, but also how the money will be paid out

— a crucial point if the beneficiary is a child or a family member whose ability to properly handle money is questionable.

Unlike common beliefs, trusts can be used by individuals from varying economic backgrounds, and not just elites.  

So how is a trust set up? The following are the stakeholders or parties involved in a trust:  

a.Settlor: The person who settles money on the trust.

b.Trustee: Legal owner of the property. They must strictly abide by the terms and conditions of the deed and act in the best interests of the beneficiaries.  

c.Appointer: Responsible for appointing a new trustee in case of death, bankruptcy or incompetence of the previous trustee.  

d.Beneficiaries: People who will receive the capital gains and whose name is mentioned in the deed.

  Benefits of Trust Ownership:

a.Asset Protection: Since the property is registered in the name of the trustee and not in the name of the beneficiary, creditors and litigators don’t have recourse to repossess their property or income.

b.No Tax Payments: One of the biggest advantages of trusts is that they don't incur any tax.

  Drawbacks of a Trust Ownership:

a.Scope for personal liability: In case your trustee gets stuck in financial turmoil and the assets in hand aren't enough to pay your debts, creditors can very well make a claim against the beneficiaries.  

b.No lower tax rate: What makes trusts an attractive option is the no tax payment. However, in a situation wherein you can’t effectively income split to beneficiaries to leverage tax benefits, a trust won’t benefit you at all.  

Now that we know what ownership structures benefit you, it's important to discuss which factor your ownership structure revolves around. The one factor you must keep in mind before selecting one of these alternatives, i.e. Asset Protection. You can speak to your property manager or your financial advisor to analyse your property portfolio to identify your operating income.

Real estate is one of your most expensive assets that helps you gain good capital growth. Thus choosing a structure that facilitates asset protection should be your first and foremost priority. Make sure your structure keeps your realestate property remote for other liabilities so creditors cannot attach the property to offset losses from bad debts and helps you from losing money.



  • In this structure, the asset is directed by the trustee but being a fluid structure, is owned by no particular entity.
  • Since the asset is not registered in your name, creditors cannot offset losses against the property.
  • Set up costs for trusts are extremely high; between $1000-$2000.  


  • In a company structure, you own the assets, meaning you reap the gains and incur the losses.
  • Creditors can get access to your asset in case of bad debts.  
  • A company can sue and can be sued, and you may be put in a position wherein you are personally liable for costs that are not covered by your business insurance.

A company can sue and can be sued, and you may be put in a position wherein you are personally liable for costs that are not covered by your business insurance.  

For any queries or financial consultation, reach out to us and we promise professional service that strives to empower you and to acheive your financial goals.

Deals Mortgage is a professional Mortgage broker based in Bentleigh East, Melbourne. We put our customers first and ensure you get the best deals from our panel of 40+ lenders. We work closely with you through out the process to help you acheive your financial Goals. Till date we have worked with multiple clients all across Australia, We serve major states in Australia, with our presence in Melbourne Victoria, we cover Queensland, Auralia and South Australia. Our happy clients are present across the suburbs of Tarneit , Pankenham, Truganina, Cranbourne, Mckinnon, Werribee, Clyde, Ormond, Point Cook, Cheltenham, St kilda, Wyndham, Brighton, North Craigieburn and Bentleigh.

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DISCLAIMER : This is no legal or financial/ investment advice, nor should you treat it as a substitute for financial advice. All individual situations are different and need to be assessed fully prior to giving any financial advice. Please consult your Accountant/Tax Lawyer/Mortgage broker/Financial planner before making any final decision.

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