There has been increasing talk around potential changes to Capital Gains Tax (CGT), particularly the 50% discount. Nothing has been confirmed yet — but if changes do happen, the structure you use today could make a big difference to how much tax you pay in the future.
So the key question is: Are you set up in a way that gives you options?
Why This Matters
Right now, individuals and trusts can access the 50% CGT discount when assets are held for more than 12 months. Companies, on the other hand, do not get this discount at all. If the rules change — for example, if the discount is reduced — some structures may become more favourable than others. That is why planning ahead matters.
Using a Family Trust: Keeping Your Options Open
A family trust is often used because of its flexibility. Under current rules, it can access the CGT discount. But more importantly, it allows you to decide who receives the capital gain at the time of sale.
This means you can:
- Distribute gains to lower-income family members
- Offset gains against losses where available
- Adjust your strategy depending on the tax rules at the time
In simple terms, you are not locked into one outcome.
Using a Company: Simplicity and Certainty
A company works differently. It does not get the CGT discount, but it does offer:
- A flat tax rate (currently 25% for base rate entities)
- The ability to retain profits and reinvest
If CGT discounts are reduced in the future, the gap between individuals or trusts and companies may narrow. For some investors — especially those focused on long-term growth — a company can be a useful structure.
Which One Is Better?
It really depends on your situation. A trust gives you flexibility. A company gives you certainty. Because we do not know what future tax rules will look like, many investors prefer not to rely on just one structure.
A Practical Approach
In many cases, a combination works well. For example, holding investments in a trust with a company as a beneficiary can give you flexibility now, while also allowing you to manage tax outcomes more effectively depending on future changes.
Final Thoughts
We cannot predict exactly what will happen with CGT. But we can make sure you are not caught in a structure that limits your options. Getting the structure right early can save significant tax later.
If you are investing or planning to sell assets in the future, it is worth reviewing your setup now. At Impact Taxation & Financial Services, we can help you:
- Check if your current structure is still suitable
- Model different tax scenarios
- Put a structure in place that gives you flexibility going forward
Feel free to reach out if you would like to discuss your situation. Our initial consultation for new clients is complimentary — call us on 1300 TAX SAV (1300 829 728).
