Saving Tax When You Invest: Personal vs Trust vs Company vs Investment Bond

This article was written by Ben Nash from Pivot Wealth | Free 7-day money challenges here .

Disclaimer: General information for Australians. Not personal tax or legal advice. Speak with a licensed adviser and tax agent before acting.

Why ownership structure matters

The investments you pick drive your returns. The entity you hold them in decides how much you keep after tax, how to reduce your taxable income , how flexible your cash flow is, and how simple life is at tax time. The good news is a typical brokerage account can sit in most structures. Platforms like Pearler support accounts for individuals, and in many cases for trusts and companies too. Always check the current account types and documentation before you set up.

This guide compares four ways to own an investment account in Australia: personal name , discretionary family trust , company , and investment bond . You’ll get the core tax rules, who each option tends to suit, and where the traps are, since the upside of getting this right can be significant. The cost of guesswork can be bigger than any fee you save doing it yourself.

Quick tax primer

• Income tax: Interest and unfranked distributions are taxed at your marginal rate or the entity’s rate.
• Franking credits: Company tax already paid can be passed on with dividends. Credits reduce your tax or create refunds.
• Capital gains tax: Individuals and trusts may access the 50% CGT discount after 12 months. Companies don’t.
• Losses: Net capital losses carry forward to offset future gains.
• Records: Keep contract notes, distribution statements, and a clean cost base ledger. Entities add extra paperwork, so a simple folder system pays for itself.

With that baseline, here’s how each structure works.

Personal name

What it is
You hold the brokerage account in your own name or joint names. It’s the default option and the lightest on admin. Most investment account providers support personal accounts with straightforward onboarding.

Tax rules

• Income is taxed at your marginal rate .
• Franking credits can offset your tax or trigger refunds.
• The 50% CGT discount may apply after 12 months.
• Capital losses carry forward to offset future capital gains.

Best for

• New investors and set-and-forget portfolios.
• Couples where the lower earner owns more of the income-producing assets.
• High earners who value the CGT discount and simplicity.

Pros

• Lowest setup and ongoing cost.
• Access to the CGT discount.
• Easiest to set up

Cons

• No income splitting once balances are large.
• Limited asset protection.
• Top-bracket rates can drag on your investment returns

Common traps
Owning everything in the higher earner’s name, selling inside 12 months and missing the CGT discount, and poor record keeping that wrecks cost bases.

Discretionary family trust

What it is
A trustee holds assets for beneficiaries under a trust deed. In a discretionary trust, the trustee decides who receives income and capital each year. Most major brokers, including Pearler, accept trust accounts subject to ID checks and a copy of the deed.

Tax rules

• When the trust distributes income, beneficiaries are taxed at their marginal rates.
• Trusts can stream franked dividends and capital gains if the deed allows and resolutions are valid.
• The 50% CGT discount generally applies after 12 months and can flow through to individual beneficiaries.
• Undistributed income is usually taxed to the trustee at the top marginal rate .
• Distributions to minors are subject to special penalty rates on unearned income.
• Corporate beneficiaries and Division 7A require careful handling.

Best for

• Families with different marginal rates.
• Investors who value year-by-year flexibility and some asset protection.
• Larger non-super portfolios where tax and control matter.

Pros

• Income splitting within the rules.
• Streaming of gains and franking credits.
• CGT discount.
• Useful for succession planning and control.

Cons

• Setup and annual compliance costs.
• Resolutions and paperwork must be on time and correct.
• You need discipline to keep trust money separate from personal money.

Common traps
Template deeds that block streaming, late or invalid resolutions, and ignoring unpaid present entitlements or Division 7A when using a company beneficiary.

Company

What it is
A separate legal person that can own a portfolio. Many platforms, Pearler included, support company accounts with ASIC documentation.

Tax rules

• Profits are taxed at 25% for eligible base rate entities or 30% otherwise. Passive income tests apply.
• There is no 50% CGT discount . The whole gain is taxed inside the company.
• After-tax profits can be paid as franked dividends . Shareholders include the grossed-up dividend in their return and claim franking credits.
• Loans to shareholders are regulated by Division 7A and need compliant loan agreements.

Best for

• Business owners who want to retain profits and invest at a flat company rate.
• Families combining a company with a trust to control the timing of franked dividends.

Pros

• Flat rate on profits retained for reinvestment.
• Franking credits for future dividends.
• Clean separation of business or investment risk.

Cons

• No CGT discount, which can outweigh the headline rate over long horizons.
• Pulling profits to top-rate shareholders can still approach personal tax after franking.
• More admin than personal ownership.
• Base rate status can be lost if passive income is high.

Common traps
Setting up only for optics, breaching Division 7A with casual shareholder loans, and high-turnover trading that amplifies tax drag inside the company.

Investment bond

What it is
A tax-paid investment issued by a life company. You contribute after-tax dollars. The provider pays tax on earnings inside the bond, generally up to 30% , and handles the admin. If you follow the 10-year and 125% contribution rules, withdrawals after year 10 can be received without further personal tax in many cases.

Tax rules

• Earnings are taxed within the bond at up to 30% . You don’t report those earnings personally.
• Withdrawals after 10 years can be tax free if the rules are followed. Earlier withdrawals may include assessable amounts with offsets.
• Franking credits and CGT are managed inside the bond, not by you.

Best for
High earners who have maxed super and want a long-horizon, admin-light bucket, often for kids’ education or legacy goals.

Pros

• No personal tax returns for the investment.
• Potential tax-free outcome after 10 years.
• Simple ownership and beneficiary options.

Cons

• Internal tax and fees can be higher than a DIY portfolio that uses franking and the CGT discount well.
• Flexibility is reduced by the 10-year and 125% rules.
• Investment menus can be limited and costs higher with some providers.

Common traps
Using bonds as a shortcut when a trust or personal ownership would be better, breaking the 125% rule and resetting the 10-year clock, and ignoring underlying investment quality because the tax sounds tidy.

Side-by-side comparison

Feature	Personal	Family trust	Company	Investment bond
Tax on income	Marginal rate	Beneficiary’s marginal rate	25% or 30%	Up to 30% internal
CGT after 12 months	50% discount	50% discount flows through	No discount	Internal rules
Franking credits	Claimed personally	Can be streamed	Create franking for dividends	Consumed inside bond
Income splitting	Limited	Strong, within rules	Via dividends	Not applicable
Asset protection	Low	Medium to high	Medium to high	Medium
Setup and ongoing cost	Low	Medium	Medium	Medium to high
Admin complexity	Low	Medium	Medium	Low day to day, rules apply
Who it suits	Simplicity and ease	Flexibility and family planning	Retain profits	Long-horizon simplicity

How to pick the right structure

Start with your horizon and cash flow
Early stage or short horizon usually points to personal ownership. Longer horizons and higher balances increase the value of trust flexibility. If you retain profits inside a business, a company may play a role. Bonds are niche and long term.

Set your strategy
Decide how much of your income you’ll direct to investing with a view to automating this moving forward. It’s important you understand strategies like whether to invest or pay off your mortgage so you’re confident to move forward with the path you choose.

Map household tax rates
If one partner’s marginal rate is much lower, either hold assets in that partner’s name or use a trust that can distribute there. Keep minors’ penalty rates in mind.

Do the 10 to 20 year math
The 50% CGT discount for individuals and trusts can outweigh a 25% company rate over time. Model real numbers before you chase headline rates.

Decide how much admin you’ll run
Trusts and companies have moving parts. Many families prefer the admin because the tax and control benefits compound. If you want the simplest possible path and a very long horizon, a bond can fit, but compare costs and menus carefully.

Choose the account based on your entity
Once you know what entity you want to use, look at the accounts available, search out your key features like automation, and open your account and get started.

Three quick examples

Dual-income family, different tax rates
They begin with an investment account in the lower earner’s name to use the CGT discount and reduce tax on income. As balances grow, they add a trust account and stream franked dividends to the lower earner and capital gains in years that suit their tax map.

Business owner with surplus cash
Rather than extract every dollar to the top personal bracket, the owner invests through a company account. Profits are taxed at the company rate and reinvested. Later, franked dividends are paid to family members through an existing trust when personal rates are lower. The model factors in the lack of a CGT discount.

High earner funding education goals
They’ve maxed super and dislike admin. An investment bond with a specialist provider is used for a 12-year education goal, following the 125% and 10-year rules. Their day-to-day portfolio runs in personal and trust accounts.

Setup, costs, and why this isn’t DIY

You can open a personal account with most providers in minutes. Trusts and companies need care. A good team will help you:

• Draft a deed that allows streaming and has clean appointor clauses.
• Choose a corporate trustee where it makes sense.
• Register a company with the right share classes.
• Open the correct entity bank accounts and entity investment account.
• Build a distribution or dividend policy that fits your family tax map.
• Keep records so tax time is calm.

The fees are real. The long-run after-tax lift from the right structure, used well, usually repays those costs many times over. If you’re busy, it’s smart to get help setting this up once and then focus your energy on earning and living.

Common mistakes

• Mixing personal and entity money.
• Trying to do this all yourself - this is a complex area where you need professional support if you want to get things right.
• Using a trust deed that blocks streaming or missing year-end resolutions.
• Breaching Division 7A with casual loans from a company to shareholders.
• Assuming bonds are “tax free” without reading the 10-year and 125% rules.
• Letting tax drive asset selection instead of quality and risk fit.

Simple action plan

Week 1

• List goals, horizon, and household tax rates.
• Pick your preferred structure based on flexibility, admin, and control.
• Book a short call with a financial adviser or accountant to sanity-check the direction.

Week 2

• Map accounts and decide which should be personal, trust, or company.
• If a bond genuinely fits a decade-plus goal, note it as an off-platform bucket.
• Gather documents to open your accounts.

Week 3

• Run 10 to 20 year projections with your adviser.
• Include CGT discount effects, franking, and fee differences, not just headline rates.
• Choose your core portfolio and automation settings.

Week 4

• Open or tidy the right entity accounts .
• Automate contributions and investment buys.
• Set calendar prompts for trust resolutions and company compliance.

The wrap

The right investments grow your wealth. The right ownership keeps more of it in your hands. For most long-term investors, personal , trust , and company accounts can all suit, the key is looking at your goals, current situation, and the path forward from here.

This is a complex area, and you may need to get some help, but the right strategy here will often mean a financial difference of six or seven figures in the future. Get your structure right once, then let your investing system do the heavy lifting.

Disclaimer: The information contained in this article is general in nature and does not take into account your personal objectives, financial situation or needs. Therefore, you should consider whether the information is appropriate to your circumstances before acting on it, and where appropriate, seek professional advice from a finance professional.