Blog & Resources

Benefits of having a company’s shares owned by a family trust

This strategy involves having a company’s ordinary shares owned by a family trust structure (instead of the individual directors). This applies irrespective of whether the company operates a business or holds investments. The advantages of this strategy include: 

  • Provides asset protection - If the directors personally go bankrupt the company is protected as the shares in the company are owned by the family trust.

  • Enables the company to pay fully franked dividends to the family trust.  This can then be streamed to beneficiaries in the most tax effective manner.  Beneficiaries in low income tax brackets will have some (or all) the dividends franking credits refunded to them.

  • Enables the company to initiate a share buyback, so capital gains accruing to the family trust can be streamed to beneficiaries in the most tax effective manner.  Ideally distributions will be made to beneficiaries with carried forward capital losses.

  • Ability to distribute fully franked dividend income to adult children (aged over 18 years) who are either studying or working part-time and are in low tax brackets.  If $18,200 is distributed to a child studying full-time then they benefit from having the franking credits refunded.

If you would like to discuss further please contact us:
 McNamara & Company - Chartered Accountants, located minutes from the Melbourne CBD
 Phone +61 3 9428 1062

Please refer to disclaimer at the bottom of the page.