Sole trader, company, or trust?
A tax-only comparison of the three main structures at different income levels. The cheapest tax outcome isn't always the right structure — but knowing the gap is the right starting point.
Tax-only model. Doesn't account for asset protection, distribution flexibility, ASIC fees, complexity, beneficiaries' other income, retained-earnings tax (47% on undistributed trust income), franking credits, or the CGT / stamp-duty cost of changing structures. Use this to frame the conversation with your solicitor or chartered tax adviser — not to decide on your own.
The three structures, side by side.
The model uses 2025–26 resident income tax brackets for individuals (and trust beneficiaries) and the flat 25% base-rate-entity rate for companies.
- Sole trader. All profit taxed at your personal marginal rate. Simplest and cheapest to set up, but no asset protection and tax becomes painful above ~A$135K.
- Company (Pty Ltd, base rate entity). Profit taxed at a flat 25%. Limited liability. Higher set-up and ongoing cost (ASIC fees, separate return, dividend admin).
- Discretionary trust. Profit flows to beneficiaries and is taxed in their hands. Powerful for splitting income if multiple beneficiaries have low other income. Strict 30 June distribution deadline; undistributed income taxed at 47%.
What this model doesn't capture: asset protection, distribution flexibility year-on-year, franking credits on company dividends, beneficiaries' OTHER income (the model assumes none), retained-profit tax in trusts, multi-tier structures, or the CGT / stamp duty / professional-fee cost of changing structures.
We model the tax impact; your solicitor or chartered tax adviser handles the legal execution of any structural change. Use this calculator to take a clear picture into that conversation.
This information is general in nature and does not constitute personal financial or tax advice. Tax laws are subject to change.
Model the numbers first.
A 30-minute discovery call is enough to flag whether your current structure still fits — and whether the cost of changing is justified by the long-run tax outcome.