Buying property in an individual name is often straightforward and may preserve access to the main residence exemption and the capital gains tax discount where the relevant requirements are met. Those benefits depend on the property and the owner's circumstances. A company generally cannot claim the individual 50% capital gains tax discount and a company-owned home will not qualify for an individual's main residence exemption merely because a shareholder lives there.
A trust may help with succession planning and the allocation of income or capital where the deed and tax law permit. However, a trust does not automatically provide complete asset protection or better tax outcomes. The availability of the capital gains tax discount depends on the trust type, the asset, the holding period and the statutory rules. A trustee generally calculates the trust's net capital gain and may make an appropriate distribution under the tax rules; it is not accurate to assume the discount can always be claimed at trustee level or simply passed to any beneficiary. Trusts can also face different land tax thresholds or rates.
A self-managed superannuation fund (SMSF) is subject to superannuation law and must be operated for retirement purposes. It generally cannot acquire a residential property from a related party, allow members or related parties to use residential property, or treat the property as a personal home. Borrowing is restricted and, where permitted, is commonly structured as a limited recourse borrowing arrangement. Commercial property leased to a member's business may be possible if strict rules are satisfied.
Asset protection is fact-specific. Guarantees, personal liability, insolvency law, family law, lender security and transactions made to defeat creditors can affect the result. Land tax, negative gearing, GST, capital gains tax and succession consequences should be modelled before the contract is signed.
This is the kind of matter CMK Legal's business structuring team handles.
Do not choose an entity based on one tax rate or a general claim about asset protection. Get legal and tax advice before signing, because a later transfer to a company, trust or SMSF may be treated as a new dutiable or taxable transaction.
Law referenced: *Income Tax Assessment Act 1997* (Cth); *Duties Act 2000* (Vic); *Land Tax Act 2005* (Vic); *Superannuation Industry (Supervision) Act 1993* (Cth) and related regulations.